Underpayment Penalty

Underpayment Penalty of Estimated Tax
You are required to pay your income tax liability throughout the year. You can make your payments through employer withholding, through installment payments of estimated taxes, or through a combination of employer withholding and estimated tax payments.

If you did not pay in advance at least 90% of your 2005 income tax liability (after applying your credits) or 100% of your 2004 income tax liability (after applying your credits) you may have to pay interest on the underpayment of your estimated taxes.

If you are required to pay interest on your underpayment, you can use this short method to determine your interest, but you can use this short method only if:

You made non-estimated tax payments or your payments were only Montana withholding, or
You made four equal estimated payments by the required due date.

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