An employee with outside income may be able to avoid the penalty for underpayment of estimated tax by having his employer increase income tax withholdings.

Question

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An employee with outside income can avoid the penalty for underpayment of estimated tax by having his employer increase income tax withholdings. This is because the additional tax withheld by the employer counts towards the employee's total tax payments, which reduces the amount of estimated tax that the employee is required to pay.

An Employee with Outside Income May Be Able to Avoid