Estimated Tax Penalty


IRS Definition

If you don’t pay enough tax through withholding and estimated tax payments, you may be charged a penalty. You also may be charged a penalty if your estimated tax payments are late, even if you are due a refund when you file your tax return.

More from H&R Block

If you didn’t pay enough taxes during the year by withholding taxes from your paycheck or by making estimated tax payments, the IRS may charge you an estimated tax penalty. The IRS charges estimated tax penalties because, by law, you’re required to pay taxes as you receive income throughout the year.

This penalty can be avoided if:

  • You owe less than $1,000 in tax, or
  • You paid at least 90% of the tax you owe for the current year, or you paid 100% of the tax you owed for the prior year (whichever is less).

You may be able to reduce estimated tax penalties when you file your tax return with IRS Form 2210. This form allows you to provide an exception or reduce the amount of the penalty by applying one of the many IRS rules. Going forward, it may be a good idea to adjust your withholding or make estimated tax payments.

In rare circumstances of financial hardship, the IRS can abate estimated tax penalties.

Learn how to address an IRS estimated tax penalty.

Get help from an IRS expert

H&R Block’s experts can solve any IRS problem, no matter how complex.

Make an appointment

Or call 855-536-6504

Related Information

How to Address IRS Penalties

Learn how to address and understand an IRS tax penalty from the tax experts at H&R Block.

How Long Does It Take? IRS Penalty Abatement

How long penalty abatement takes depends on the type of penalty relief you’re requesting. Learn more from the tax experts at H&R Block.

Don’t Pay an IRS Penalty Without Looking Into Penalty Relief

The IRS grants four types of penalty relief, but many taxpayers don't ever ask. Learn how to request penalty abatement from the IRS.

What To Do When You Have an Estimated Tax Penalty

Learn more about your options to reduce or remove an IRS estimated tax penalty. Get the facts from the tax experts at H&R Block.