IRS: 40% Increase in Americans Penalized for Shorting Estimated Taxes

Over a five-year period, the number of Americans who were penalized by the Internal Revenue Service for underpaying their quarterly estimated taxes ballooned to 10 million — a 40 percent increase, The Wall Street Journal reported.

Quarterly taxes was set up by Congress to make fair non-wage earners — who have no withholdings — with wage earners, who have taxes taken out of every paycheck.

And from 2010 to 2015, nearly 3 million more Americans have neglected to keep up with paying their quarterly estimates and have incurred penalties — average of $130 in 2015 — as a result, the Journal reported.

"The data suggest that millions of people don’t understand they need to pay quarterly taxes, or at least increase their withholding to avoid penalties," IRS spokesman Eric Smith told the Journal.

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