If you did not pay enough tax either through withholding or by making estimated tax payments, you will have an underpayment of estimated tax and you may have to pay a penalty. Generally, you will not have to pay a penalty for 2000 if any of the following situations apply to you.

• The total of your withholding and estimated tax payments was at least as much as your 1999 tax, you are not subject to the special rule limiting use of the prior year’s tax, and you paid all required estimated tax payments on time.
• The tax balance due on your return is no more than 10% of your total 2000 tax, and you paid all required estimated tax payments on time.
• Your total 2000 tax (defined later) minus your withholding is less than $1,000.
• You did not have a tax liability for 1999.
• You did not have any withholding taxes and your current year tax less any household employment taxes is less than $1,000.

Special rules apply if you are a farmer or fisherman. See Farmers and Fishermen in chapter 4 of Publication 505 for more information.

IRS can figure the penalty for you. If you think you owe the penalty but you do not want to figure it yourself when you file your tax return, you may not have to. Generally, the IRS will figure the penalty for you and send you a bill. However, you must complete Form 2210 and file it with your return if you have a reason that may reduce or eliminate your penalty. Exceptions to the penalty are explained in chapter 4 of Publication 505.

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