The IRS is raising the stakes for those who underpay their taxes by ratcheting up the interest penalty come spring’s tax filing.
- Earlier this fall, the IRS increased its interest penalty on estimated tax underpayments to 8% – a notable jump from 3% just two years ago.
- Self-employed workers and independent contractors, including many gig workers, will be at risk of being hit with the underpayment penalty if they fail to pay the amount the IRS believes they owe.
- Such workers are required to make estimated tax payments at least once each quarter if they don’t have at least 90% of their taxes withheld during the regular pay periods.