Under what circumstance will the IRS charge you a late-payment penalty for taxes?
"The IRS provides a little more information on the subject on this FAQ: Will I be charged interest and penalties for filing and paying my taxes late?: If you did not pay your tax on time, you will generally have to pay a late-payment penalty, which is also called a failure to pay penalty. Some guidance on what constitutes ""reasonable cause"" is found on the IRS page Penalty Relief Due to Reasonable Cause: The IRS will consider any sound reason for failing to file a tax return, make a deposit, or pay tax when due. Sound reasons, if established, include: Note: A lack of funds, in and of itself, is not reasonable cause for failure to file or pay on time. However, the reasons for the lack of funds may meet reasonable cause criteria for the failure-to-pay penalty. In this article from U.S. News and World Report, it is suggested that the IRS will generally waive the penalty one time, if you have a clean tax history and ask for the penalty to be waived.  It is definitely worth asking them to waive the penalty." I just got hit with the late payment penalty due to a bug in the H&R Block tax program.  The underpayment was only $2 and the penalty was a whopping 1 cent.   The letter that informed me of the error also said that they did not consider the $2.01 worth collecting, the amount owed had been zeroed. In practice the IRS seems to apply the late payment penalty when they issue a written paper notice.  Those notices typically have a pay-by date where no additional penalty applies.  The IRS will often waive penalties, but not interest or tax due, if the taxpayer presses the issue. Assuming US/IRS: If you filed on time and paid what you believed was the correct amount, they might be kind and let it go. But don't assume they will. If you can't file on time, you are supposed to file estimated taxes before the deadline, and to make that payment large enough to cover what you are likely to owe them. If there is excess, you get it back when you file the actual forms. If there is a shortfall, you may be charged fees, essentially interest on the money you still owe them calculated from the submission due date. If you fail to file anything before the due date, then the fees/interest surcharge is calculated on the entire amount still due; effectively the same as if you had filled an estimated return erroneously claiming you owed nothing. Note that since the penalty scales with the amount still due, large errors do cost you more than small ones. And before anyone asks: no, the IRS doesn't pay interest if you submit the forms early and they owe you money. I've sometimes wondered whether they're missing a bet there, and if it would be worth rewarding people to file earlier in order to spread out the work a bit better, but until someone sells them on that idea... Years ago I mailed my personal tax return one day after the due date, and my check was deposited as normal, and I never heard anything about it. As an employer, I once sent in my employee's withheld federal taxes one day after the due date, and I later received a letter stating my penalty for being late worked out to be around $600. The letter stated that since this was my first time being late they would waive the fee. In both cases, they could have charged me a late fee if they wanted to.
"Basically, a 401(k) can have what is called a ""loan"", but is more properly a ""structured withdrawal and repayment agreement"". This allows you to access your nest egg to pay for unforeseen expenses, without having to actually cash it out and pay the 10% penalty plus taxes. You can get up to half of your current savings, with an absolute cap of $50k, minus the balance of any other loan outstanding. While there is a balance outstanding, you must make regular scheduled payments. The agreement does include an interest rate, but basically that interest money goes into your account. The downside of a 401(k) loan is the inflexibility; you must pay the scheduled amount, and you also have to keep the job for which you're paying into the 401(k); if you quit or are fired, the balance of the loan must usually be paid in 60 days, or else the financial institution will consider the unpaid balance a ""withdrawal"" and notify the IRS to that effect. Now, with a Roth account, it works a little differently. Basically, contributions to any Roth account (IRA or 401(k)) are post-tax. But, that means the money's now yours; there is no penalty or additional taxes levied on any amount you cash out. So, a loan basically just provides structure; you withdraw, then pay back under structured terms. But, if you need a little cash for a good reason, it's usually better just to cash out some of the principal of a Roth account and then be disciplined enough to pay back into it." I assume the OP is the US and that he is, like most people, a cash-basis tax payer and not an accrual basis tax payer. Suppose the value of the rental of the unit the OP is occupying  was reported  as income on the OP's 2010 and 2011 W-2 forms but the corresponding income  tax was not withheld.  If the OP correctly transcribed these income numbers onto his tax returns, correctly computed the tax on the income reported on his 2010 and 2011 1040 forms, and paid the amount due in timely fashion,  then there is no tax or penalty due for 2010 and 2011. Nor is the company entitled to withhold tax on this income for 2010 and 2011 at this time; the tax on that income has already been paid by the OP directly to the IRS and the company has nothing to do with the matter anymore. Suppose the value of the rental of the unit the OP is occupying  was NOT reported as income on the OP's 2010 and 2011 W-2 forms.  If the OP correctly transcribed these income numbers onto his tax returns, correctly computed the tax on the income reported on his 2010 and 2011 1040 forms, and paid the amount due in timely fashion,  then there is no tax or penalty due for 2010 and 2011. Should the OP have declared the value of the rental of the unit as additional income from his employer that was not reported on the W-2 form, and paid taxes  on that money? Possibly, but it would be reasonable to argue that the OP did nothing wrong other than not checking his W-2 form carefully: he simply assumed the income numbers included the value of the rental and copied whatever the company-issued W-2 form said onto his 1040 form. At least as  of now, there is no reason for the IRS to question his 2010 and 2011 returns because the numbers reported to the IRS on Copy A of the W-2 forms match the numbers reported by the OP on his tax returns.    My guess is that the company discovered that it had not actually declared the value of the rental payments on the OP's W-2 forms for 2010 and 2011 and now wants to include this amount as income on subsequent W-2 forms. Now, reporting a lump-sum benefit of $38K (but no actual cash)  would have caused a huge amount of income tax to need to be withheld, and the OP's next couple of paychecks might well have had zero take-home pay as all the money was going towards this tax withholding. Instead, the company is saying that it will report the $38K as income in 78 equal installments (weekly paychecks over 18 months?)  and withhold $150 as the tax due on each installment. If it does not already do so, it will likely also include the value of the current rent as a benefit and withhold tax on that too. So the OP's take-home pay will reduce by $150 (at least) and maybe more if the current rental payments also start appearing on the paychecks and tax is withheld from them too. I will not express an opinion on the legality of the company withholding an additional $150 as tax from the OP's paycheck, but will suggest that the solution proposed by the company (have the money appear as taxable benefits over a 78-week period, have tax withheld, and declare the income on your  2012, 2013 and 2014 returns) is far more beneficial to the OP than the company declaring to the IRS that it made a  mistake on the 2010 and 2011 W-2's issued to the OP, and that the actual income paid was higher. Not only will the OP have to file amended returns for 2010 and 2011 but the company will need to amend its tax returns too. In summary, the OP needs to know that He will have to pay taxes on the value of the waived rental payments   for 2010 and 2011. The company's mistake in not declaring this as income to the OP   for 2010 and 2011 does not absolve him of the responsibility   for paying the taxes What the company is proposing is a very reasonable solution to the   problem of recovering from the mistake. The alternative, as @mhoran_psprep points out, is to amend   your 2010 and 2011 federal and state tax returns to declare the   value of the rental during those years as additional income,   and pay taxes (and possibly penalties) on the additional   amount due. This takes the company completely out of the picture,   but does require a lot more work and a lot more cash now rather   than in the future. If you have a one-time event, you are allowed to make a single estimated payment for that quarter on Form 1040-ES.  People seem to fear that if they make one such payment they will need to do it forevermore, and that is not true.  The IRS instructions do kind of read that way, but that's because most people who make estimated payment do so because of some repeating circumstance like being self-employed. In addition, you may qualify for one or more waivers on a potential underpayment penalty when you file your Form 1040 even if you don't make an estimated payment, and you may reduce or eliminate any penalty by annualizing your income - which is to say breaking it down by quarter rather than the full year.  Check on the instructions for Form 2210 for more detail, including Schedule AI for annualizing income.  This is some work, but it might be worthwhile depending on your situation. https://www.irs.gov/instructions/i2210/ch02.html "While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do   I quantify the travel expenses? Generally, ""necessary and ordinary"" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say ""no"" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000   miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (""pleasure"") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is ""business"" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the   property? Although, again, the ""necessary and ordinary"" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA)." Welcome to the working world.  I will answer these a bit out of order. C)  Your withholding has almost zero chance of being correct.  Just about everyone has to pay or gets a refund.  I typically shoot for +- of $1000, and that is tough. A)  Your W-2 is where you adjust the amount of tax that is withheld.  You should fill out a new one as soon as possible.  You can use a paycheck calculator to figure out the proper tax that should be withheld.   B) No. D)  Yes you will owe Utah state tax.  See this site. The rub of this all is that you may have to pay Idaho tax prior to being refunded your Federal.  If you want to avoid this file your federal return as soon as possible (Goal:  File by 7 Feb).  You should have the return in 3 weeks or less (presuming you are owed one).  That will give you plenty of time to file and pay any Idaho tax owed.   I say all of this because you may be tempted to go to a tax preparation shop and take an advance on your income tax return.  Those loans are for people that hate money and are designed to tempt the foolish.  They are only slightly better than payday loans. The only way you will incur underpayment penalties is if you withhold less than 90% of the current year's tax liability or 100% of last years tax liability (whichever is smaller).  So as long as your total tax liability last year (not what you paid at filing, but what you paid for the whole year) was more than $1,234, you should not have any penalty. What you pay (or get back) when you file will be your total tax liability less what was withheld. For example, you had $1,234 withheld from your pay for taxes.  If after deduction and other factors, your tax liability is $1,345, you will owe $111 when you file.  On the other hand, if your tax liability is only $1,000, you'll get a refund of $234 when you file, since you've had more withheld that what you owe. Since your income was only for part of the year, and tax tables assume that you make that much for the whole year, I would suspect that you over-withheld during your internship, which would offset the lack of withholding on the other $6,000 in income. Yes, you can send in a 2012 1040-ES form with a check to cover your tax liability. However, you will likely have to pay penalties for not paying tax in timely fashion as well as interest on the late payment. You can have the IRS figure the penalty and bill you for it, or you can complete Form 2210 (on which these  matters are figured out) yourself and file it with your Form 1040. The long version of Form 2210 often results in the smallest extra amount due but is considerably more time-consuming to complete correctly. Alternatively, if you or your wife have one or more paychecks coming before the end of 2012, it might be possible to file a new W-4 form with the HR Department with a request to withhold additional amounts as Federal income tax. I say might because if the last paycheck of the year will be issued in just a few days' time, it might already have been sent for processing, and HR might tell you it is too late. But, depending on the take-home pay, it might be possible to have the entire $2000 withheld as additional income tax instead of sending in a 1040-ES. The advantage of doing it through withholding is that you are allowed to treat the entire withholding for 2012 as satisfying the timely filing requirements. So, no penalty for late payment even though you had a much bigger chunk withheld in December, and no interest due either.  If you do use this approach, remember that Form W-4 applies until it is replaced with another, and so  HR will continue to withhold the extra amount on your January paychecks as well.  So, file a new W-4 in January to get back to normal withholding. (Fix the extra exemption too so the problem does not recur in 2013). Estimated tax payments should be a reasonable estimate of what you owe for that time period. If it seems reasonable to you, it is probably reasonable. Sure, you can adjust for varying-length periods. As long as, in the end, you can and do pay what you owe, and don't underpay the estimated/withholding by enough that you owe a penalty, the IRS isn't all that picky about how the money is actually distributed through the year.