How much is the penalty for underpayment of income taxes?
United States law requires corporations, citizens and resident aliens to pay taxes depending on their level of income. The Internal Revenue Service (IRS) will penalize you for nonpayment or underpayment of income taxes.PenaltyThe IRS penalizes you for lateness whether you failed to pay the entire tax or underpaid it. Whatever amount you still owe after April 15 incurs a penalty.Calculating the PenaltyThe usual penalty accumulates at the rate of 0.5 of 1 percent of the unpaid amount for each month or portion of a month as long as the amount is not paid. The maximum penalty is 25 percent.Estimated Tax PenaltyIf you pay quarterly estimated taxes, underpayment carries a different penalty. Form 2210 tells whether to figure this penalty using the “short” or “regular” method. Both multiply the overdue amount by rates that change every year. The regular method also multiplies by the number of days that each quarterly payment is overdue.
