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I had a summer internship that continued part-time into the fall, and will continue on that basis until January. As of this week I have earned approximately $14,500 and paid $1,234 in federal income tax (not including social security, etc). I have also earned income from selling online; this will be about $5,000 in profit. I also have about $1,000 in interest from bank accounts. I have not yet paid any taxes on this money. What I am worried about is that I will have to pay a penalty for underpayment during the year, but I am not really sure what my tax liability will be or how much it could be underpaid.

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    Will anyone (such as a parent) be claiming you as a dependent on his or her tax return? – Ben Miller Dec 1 '16 at 15:18
  • Yes @BenMiller I will be claimed as a dependent – SVN600 Dec 6 '16 at 13:39
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The only way you will incur underpayment penalties is if you withhold less than 90% of the current year's tax liability or 100% of last years tax liability (whichever is smaller). So as long as your total tax liability last year (not what you paid at filing, but what you paid for the whole year) was more than $1,234, you should not have any penalty.

What you pay (or get back) when you file will be your total tax liability less what was withheld. For example, you had $1,234 withheld from your pay for taxes. If after deduction and other factors, your tax liability is $1,345, you will owe $111 when you file. On the other hand, if your tax liability is only $1,000, you'll get a refund of $234 when you file, since you've had more withheld that what you owe.

Since your income was only for part of the year, and tax tables assume that you make that much for the whole year, I would suspect that you over-withheld during your internship, which would offset the lack of withholding on the other $6,000 in income.

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Your tax return will be due on April 18th of 2017 for the amounts made in 2016. Based on the figures that you have provided, assuming you are 18, and assuming you are a single taxpayer your total tax will be around $2600.00 ($2611.25 to be exact, without additional credits or deductions to AGI accounted for). The $1,234 in fed. inc. tax that you have already paid is considered to be a prepaid by the government. If at year-end you have provided more than you have made the government will refund you the excess (federal tax return).

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