Certain people must make estimated income tax payments. The department will charge a penalty if a person fails to make any required payment.
Use Form 221 (Underpayment of Estimated Tax by Individuals) to figure if you paid enough estimated tax. Also use this form to see if you are subject to penalty for any late or underpaid payment. The penalty is equal to the interest that would accrue on the underpayment. The penalty cannot be more than 10% of the underpayment.
Are You Subject to the Penalty? You are subject to the penalty if you had to make estimated payments, but did not pay the right amount or made a payment late.
If your Arizona gross income was less than the prescribed thresholds for either of the previous 2 years, you are not subject to the penalty.