The United States income tax is a pay–as–you–go tax, which means that taxes must be paid income is received during the year. If a taxpayer did not pay enough taxed through the year they may have to pay an underpayment penalty. In certain situations, taxpayers will not have to pay the penalty, such as if they had no tax liability in the prior year or if your current year tax minus withholding is $1,000 or less.