A tax refund is not guaranteed if you underpaid federal taxes. If you underpay your taxes throughout the year, you may end up owing the IRS when you file your tax return, rather than receiving a refund.
When you underpay your taxes, you may be subject to penalties and interest on the amount owed. The IRS expects taxpayers to pay their taxes throughout the year, either through withholding from paychecks or estimated tax payments. If you don’t pay enough tax during the year, you may face underpayment penalties.
To avoid underpayment penalties and ensure that you don’t owe taxes at the end of the year, it’s essential to accurately estimate your tax liability and adjust your withholding or make estimated tax payments as needed. This may involve reviewing your income, deductions, and credits regularly and adjusting your withholding allowances or making estimated tax payments accordingly.
In summary, while a tax refund is a possibility if you overpaid your taxes throughout the year, underpaying taxes could lead to penalties, interest, and potential tax debt owed to the IRS. It’s important to strive for accurate withholding or estimated tax payments to avoid these consequences.
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