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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29963
Experience:  Taxes, Immigration, Labor Relations
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Who is single and 22 years old, was unemployed few months

Customer Question

who is single and 22 years old, was unemployed for a few months during 2014. He earned $6,700 in wages before he was laid off, and he received $1,400 in unemployment compensation afterwards. He had no other income. Even though he had gross income of $8,100, he did not have to pay income tax because his gross income was less than the filing requirement for a single person under age 65. He filed a return only to have his withheld income tax refunded to him. In 2015, ***** ***** began regular work as an independent contractor and earned $28,000. ***** ***** made no estimated tax payments in 2015 and he did owe tax at the end of the year. What amount does ***** ***** owe for the underpayment penalty in 2015?
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Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

If the taxpayer had ZERO tax liability in 2014 -

regardless of his tax liability on 2015 tax return - there will NOT be any underpayment penalty on 2015 tax return.

There will be income and self-employment tax liability - that is correct - but NO underpayment penalty.