Why you should change your withholding or make estimated tax payments Ordinarily, you can avoid this penalty by paying at least 90 percent of your tax during the year. You can also avoid interest or a penalty for paying too little tax during the year. This will help you avoid a surprise tax bill when you file your return. Making quarterly estimated tax payments during the year.Withholding from your pay, your pension or certain government payments, such as Social Security.This means that you need to pay most of your tax during the year, as you receive income, rather than paying at the end of the year. Having enough tax withheld or making quarterly estimated tax payments during the year can help you avoid problems at tax time. There are some simple tips to help taxpayers. This is especially important for people in the sharing economy, those with more than one job and those with major changes in their life, like a recent marriage or a new child. Adjusting withholding on their paychecks or the amount of their estimated tax payments can help prevent penalties. The IRS urges taxpayers to check into their options to avoid these penalties.

The penalty amount varies, but can be several hundred dollars. The number of people who paid this penalty jumped from 7.2 million in 2010 to 10 million in 2015, an increase of nearly 40 percent. The IRS has seen an increasing number of taxpayers subject to estimated tax penalties, which apply when someone underpays their taxes.

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