If you owe more than $150 to the state of Virginia at the end of the tax year, you may be subject to pay underestimated tax.
How do I know if I need to complete form 760C?
Both the IRS and state taxing authorities require you pay your taxes throughout the year. For most people, this is done through payroll taxes. However, if you do not pay enough taxes or are self-employed, you may need to pay your taxes in installments on a quarterly basis.
- You are not required to file Form 760C if your income tax liability (after subtracting the Spouse Tax Adjustment and tax credits) is $150 or less, or if you were not required to file an income tax return.
- If you do not pay in at least 90% (66 2/3% for farmers, fishermen and merchant seamen) of your income tax due by withholdings or estimated payments, you may be charged an addition to tax.
An exception to the above rule applies if your total payments are equal to or more than your prior year income tax liability. For example, if your 2021 withholdings and timely estimated payments are equal to or more than your 2020 tax liability, before payments are applied and after credits, then you will not owe additional penalties.
How do I calculate the penalty?
Complete form 760C by visiting:
- State Section
- Virginia Return
- Miscellaneous Forms
- Form 760C Underpayment of Estimated Tax
- Enter your prior year tax as requested and the program will calculate any addition to your tax as necessary