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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Underpayment Penalty


Synonyms:disciplinary action, fine
Filed Under: financial-banking, taxation
Tags: banking, taxes
 

Definition of underpayment penalty

underpayment penalty
1. A penalty for not paying enough total estimated tax and withholding. To avoid underpayment penalties, you can pay a percentage of last year's tax due or of the current year's expected tax due. The taxes may be paid in the form of combined estimated and withholding tax payments.

Related Terms and Acronyms:

  • tax deferral   The postponement of taxes to a later year, usually by recognizing income or a gain at a later time. Remember, this only delays your tax liability; it doesn't eliminate it.
  • tax refund   To receive money back from the government.

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