am I in for a penalty for underwithholding?

You need to fill out form 2210 and find out:

For 2011, to avoid a penalty you'll need to make timely payments (withholding and estimated) of the lesser of 100% of your 2010 tax or

Famous tax hack: withheld tax is treated as though it were paid in four equal installments, even if it wasn't, so if you see in October or November that it won't be enough, tell your employer to crank it up for the rest of the year.

Regards, John Levine, snipped-for-privacy@iecc.com, Primary Perpetrator of "The Internet for Dummies", Please consider the environment before reading this e-mail.

In general, there is no federal underwitholding penalty if the amount owed is less than the larger of $1000 or 10% of tax shown on the return.

This assumes that you had all of the tax withheld and did not have any estimated payments. If you made estimated payments, there could be additional complications.

See the line 77 instructions at

Now, I am not a tax pro, but it seems to me you are safe on both counts, since $800 is both less than $1,000 and also less than 10% of the tax due, which from what you wrote I assume should be somewhere around $8650 + $800 = $9450.

No.

Assuming you didn't make any 2010 estimated tax payments, no. Your

Phil Marti VITA/TCE Volunteer Clarksburg, MD