Generally, you're exempt from IRS penalty if you do either of: - pay >90% of owed amounts via estimated taxes or withholdings - pay >=100% of your previous yea

Generally, you're exempt from IRS penalty if you do either of: - pay >90% of owed amounts via estimated taxes or withholdings - pay >=100% of your previous year's earnings If you're underpaying by more than that, there's a high chance you're doing so on purpose. Or made a fairly egregious error (in which case, the penalty was probably assessed later upon audit). And if you overpay, you get a refund, not nothing.