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Can someone provide some guidance on paying taxes on year-end distributions from mutual funds and the penalties for owing a large (over $1000 I think) tax bill?

In Dec 2000 my taxable mutual funds had large (unexpected) distributions resulting in a tax bill of over $3000 when I filed my taxes in April 2001. I was not charged a penalty (at least Turbo Tax did not say I owed a penalty and the IRS has not sent me any notices) and I think the reason was because my income in 2000 was significantly higher (just about double) than it was in 1999 and thus my withholdings were double.

Turbo Tax recommended that I make quarterly payments in 2001 to avoid the situation from the previous year. However, I only had $180 in total distributions by years end. I had budgeted a Jan 15 quarterly payment but since the amount was so low I didn't make it. I will continue to get pay raises every year but probably only around 5-10%.

My question is if I continue to get pay raises every year do I need to worry about getting hit with a penalty for underpayment of taxes due from those year-end distributions? I have the appropriate withholding from my wages; I just don't have any withholding for mutual fund distributions.

I hope that made some sense!

Thanks in advance,
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