Have you ever had to pay IRS penalties?

[stepford]

Mea Culpa. I screwed up this year and will owe $42 in underpayment penalties. I've done this a couple of times before over the years, cutting things a bit too close, but fortunately always with similarly trivial penalties resulting.

So, is anyone else willing to fess up?

 

[Midpack]

Never anything significant, but I have paid several times, including $12.76 on my 2025 return. Every time it was for a discrepancy in timing of income vs quarterly estimated payments - even though I had not underpaid in total. I don't care at all...

 

[N02L84ER]

Just once, to the state of IL for $32.

 

[PaunchyPirate]

Gosh yes. Back in my earning years when I was getting irregular bonuses, exercising stock options and dividends all over the place from investments, I never paid attention to trying to do estimated taxes on it. I had no clue how any particular year was going to pan out. But the penalties were never all that much when you put it in the bigger picture of the year's income. I just paid them and moved on.

Now that I'm retired with a more predictable income stream, I have a system to pay my estimated taxes and be done with it.

 

[AudiDudi]

I received a settlment from a taxable lawsuit in Nov. one year that triggered a $29 State penalty. I could have avoided it by showing income for 3 different date range during the year. Something like Jan-May Jan -Aug and Jan - Nov. For $29, it wasn't worth the effort.

 

[marko]

Been paying the penalty every year for 50 years, literally since I was 23 years old. It's my personal BTD as I refuse to pay estimateds and only want to think about taxes one day a year. Let 'em wait for my money!

My accountant hates me.

 

[Flieger]

Paid a $6 underpayment penalty this year. I'm not sure how since I paid some by W2, and the rest monthly from WD's. Just wan't worth investigating.

Flieger

 

[MichaelB]

Yes. More than once. I’m between the OP and marko @ post 6.

 

[CO-guy]

Been paying the penalty every year for 50 years, literally since I was 23 years old. It's my personal BTD as I refuse to pay estimateds and only want to think about taxes one day a year. Let 'em wait for my money!

My accountant hates me.

Agree, though not quite as long. The difference is minimal, if any, between the IRS penalty and what I earned on that money by setting things like my 401K on autopilot and ignoring estimated taxes. So why bother?

 

[RetiredHappy]

$4 a couple of years ago even though we had a refund of almost $5K.

 

[CalBird]

A few dollars for interest of not holding enough tax per quarter. That was before turbo tax was available. The hassle of figuring out the exact penalty is so complicated.

 

[Koolau]

One of the reasons I (occasionally) seem down on Financial Advisors is that an FA got me into what were considered to be "abusive" tax shelters - much smaller amount but similar to what happened to Willie Nelson back in the day. The IRS came after us like we were the devil himself. THOUSANDS of dollars of back taxes and penalties! NOT fun!

 

[Kings over Queens]

Yes, 2021 or 22 I think.

I finally got paid on a property I had sold and was holding the mortgage, and didn't make a quarterly payment. I didn't know about safe harbor and all that because I was a W2 employee and hadn't had to make quarterlies in quite some time. Lesson learned.

 

[Beldar]

Not any penalties, but I've made errors in several returns that resulted in lower refunds.

_B

 

[RetiredHappy]

Oh, I forgot that I sent in 2 amended returns and paid almost $1K in penalties because TT did not prompt me to put in capital gains when I filed, so I went back to amend 2 past year returns.

 

[Sunset]

Yep, once to both Fed and State, as I incorrectly estimated income. Now I just do safe harbor of 110% so never bugged again.

 

[Taco]

A few times - always small amounts.
Owed too much / hit with underpayment penalty.

 

[razztazz]

Over the years there have been a few times I sold a chunk which resulted in a tax bomb.
Also, my first ever mutual fund was not in an IRA or 401k. It was a pretty vanilla large cap managed fund as most were in those days. Some years it was like an index fund. No or hardly any turnover. Other years it's was like they sold everything and bought new stuff. Lots of distributions!

 

[Stormy Kromer]

Happened to me yesterday when I got my 2025 return filed. $73 for an underpayment penalty on my 2025 estimates.

I got stung by a larger than expected CG distribution from an actively managed mutual fund....tossed me over the 110% I had already deposited based on the previous year's return.

If I can get rid of the IRS for $73 I will, no questions asked.

 

[Steelpony]

I do a quick estimate using that years tax form based on what I know each April and send in the complete balance for Fed and state each year and/or $5 over last years taxes

I once received a $12 penalty after not reporting savings bond interest my parents gave the kids for college. They were in my wife’s and the kids name. i got the “we forgot, sorry”.

 

[Sunset]

Happened to me yesterday when I got my 2025 return filed. $73 for an underpayment penalty on my 2025 estimates.

I got stung by a larger than expected CG distribution from an actively managed mutual fund....tossed me over the 110% I had already deposited based on the previous year's return.

If I can get rid of the IRS for $73 I will, no questions asked.

You don't have any penalty if you paid 110% of last years return. That is why it's called safe harbor.

 

[azxracer]

Once, about $250 (as I recall). The first year after retiring I got a lump sum payout on some deferred income that i got without taking out taxes.

 

[jebmke]

sure; it isn't a big deal. I don't sweat the small stuff

 

[finnski1]

Yes, like many here, a minimal amount.

 

[jebmke]

I should add so have they; they held a large refund for almost two years quesstioning a major deduction that was eventually deemed correct.