What action can lead to an underpayment penalty?

An underpayment penalty can occur when a taxpayer does not pay enough of their tax liability by the due date. This typically happens if insufficient tax is withheld from wages or if estimated payments are not made on time or in sufficient amounts throughout the year. The United States tax system requires taxpayers to either pay their tax liability through withholding or estimated tax payments, and if the total payments fall below specific thresholds, the IRS may impose a penalty for underpayment.

In contrast, simply claiming too many deductions does not directly lead to an underpayment penalty, as tax deductions decrease taxable income but do not in themselves determine whether proper payments have been made. Additionally, delaying tax form submissions may lead to penalties or interest for not filing on time, but it does not directly relate to the actual payment of taxes owed. Applying for tax relief may actually provide relief from penalties depending on the circumstances but can also increase liabilities if full payment is not made. Therefore, the action leading to an underpayment penalty specifically hinges on the failure to adequately pay taxes owed by the deadlines set by the IRS.