- What is underpayment interest?
Wisconsin law requires that you pay tax on your income as it is earned or received. Your employer will generally withhold income tax from your wages. However, if you have taxable nonwage income or wages not subject to withholding, you may need to make estimated tax payments throughout the year. Nonwage income includes dividends, alimony, unemployment compensation, pensions, self-employment income and gambling winnings.
If you wait to pay the tax on this nonwage income with your Wisconsin income tax return instead of making estimated tax payments throughout the year, you may be charged underpayment interest. Underpayment interest is computed at the rate of 12% per year for the period of the underpayment. The later you make your payment, the larger your underpayment interest will be.
- How do I report underpayment interest?
File a Wisconsin Schedule U, Underpayment of Estimated Tax by Individuals and Fiduciaries, with your Wisconsin income tax return to report underpayment interest. For more information about underpayment interest, including exceptions, read the Schedule U instructions.
Last updated February 11, 2013