Great question! The answer is, not necessarily. The penalty that might kick in is the underpayment penalty, which is .5% of the tax owed for each month it remains unpaid.
However, if you paid in at least 90% of your current year tax liability or 100% of your prior year’s tax liability, the penalty is waived.
If you’re unsure whether you’ve withheld enough, there is still time to make an estimated tax payment before the end of the year.
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Sarah is a staff writer at Keeper Tax and has her Enrolled Agent license with the IRS. Her work has been featured in Business Insider, Money Under 30, Best Life, GOBankingRates, and Shopify. She has nearly a decade of public accounting experience, and has worked with clients in a wide range of industries, including oil and gas, manufacturing, real estate, wholesale and retail, finance, and ecommerce. Sarah has extensive experience offering strategic tax planning at the state and federal level. During her time in industry, she handled tax returns for C Corps, S corps, partnerships, nonprofits, and sole proprietorships. Sarah is a member of the National Association of Enrolled Agents (NAEA) and maintains her continuing education requirements by completing over 30 hours of tax training every year. In her spare time, she is a devoted cat mom and enjoys hiking, baking, and overwatering her houseplants.