Do I have to pay underpayment tax penalty?

There are exceptions to the underpayment penalty.

Exceptions to the Penalty

You will not have to pay an underpayment penalty if either 1 or 2 applies.

1. You had no tax liability for 2006, you were a U.S. citizen or resident for the entire year, and your 2006 tax return was (or would have been had you been required to file) for a full 12 months.

    

2. The total tax shown on your 2007 return minus the amount of tax you paid through withholding is less than $1,000.

How to request that the IRS waive the underpayment penalty?

You can also request in writing that the IRS waive the penalty if the underpayment was due to a casualty, disaster, or other unusual circumstance and it would be unfair to impose the penalty.

The same request can be made if you retired in 2006 or 2007 after age 62 or became disabled and the underpayment was due to a reasonable cause. You must attach a statement to your return.