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.
Applicable Laws and Rules
This document provides statements or interpretations of the following laws and regulations in effect as of October 23, 2019: Sections 71.03, 71.09 and 71.64, Wis. Stats., and sec. Tax 2.04, Wis. Adm. Code.
Laws enacted and in effect after October 23, 2019, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to October 23, 2019, that is contrary to the information in this document is superseded by this document, pursuant to sec. 73.16(2)(a), Wis. Stats.
FOR QUESTIONS OR COMMENTS CONTACT:
WISCONSIN DEPARTMENT OF REVENUE
Customer Service Bureau
PO Box 8949
Madison, WI 53708-8949
Phone: (608) 266-2776
Fax: (608) 327-0232
Email additional questions to