2021 Tax Year Ending Computation of Penalty Due Based on Underpayment of Colorado Corporate Estimated Tax and DR 0205-2025

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Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is
Examples of valid reasons for failing to file or pay on time may include: Fires, natural disasters or civil disturbances. Inability to get records. Death, serious illness or unavoidable absence of the taxpayer or immediate family.
25% of the total tax amount due, regardless of any payments or credits made on time.
Failure to pay proper estimated tax If you owe more than $1,000 when you calculate your taxes, you could be subject to an underpayment of estimated tax penalty. To avoid this you should make payments throughout the year via tax withholding from your paycheck or estimated quarterly payments, or both.
tax refund but with penalty? The IRS levies underpayment penalties if you dont withhold or pay enough tax on income received during each quarter. Even if you paid your tax bill in full by the April deadline or are getting a refund, you may still get an underpayment penalty.
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The penalty will be the appropriate Colorado income tax interest rate multiplied by the amount of the underpayment for each quarter multiplied by the underpayment period.
You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you.
The underpayment penalty is calculated by multiplying how much tax you owed for each quarter by the interest rate for that quarter. This quarter (January through March), the underpayment penalty interest rate is 7%. This is down 1 percentage point from last quarter.

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