Tax Guru,

I heard that some people do not have to pay penalties and interest even though they owe money $10,000’s on their taxes whereas I had to pay penalties and interest on owing a few thousand in taxes?? HELP me understand this rational, TAX GURU??

Dear Amir,
The reason is in general, one rule by IRS to avoid penalties and interest, is if you pay 100% of prior years taxes either through withholding or by making timely estimated tax payments, you would generally not incur penalties and interest on additional amounts owed.

I would recommend that you pay 100% of prior years tax liability and I am sure you would not be assessed penalties and interest on additional liabilities when you file your tax return.

Regards
Tax Guru