It is time to start year-end tax planning, and this year I'm doing something different. For the first time, I'm planning to owe taxes next April 15 instead of getting a refund.

This means I'll be parting company with most tax filers. Last year, nearly two-thirds of the nation's 166 million filers of individual income-tax returns were owed refunds by the Internal Revenue Service. The average amount was $3,167.

My motivation for avoiding a refund is fear of a snafu or delay that takes precious time to resolve. Now, I have no doubt the IRS is trying mightily to avoid such problems and often succeeding. But in reports on the recent tax-filing season, three agency watchdogs have flashed warnings about IRS service issues that are likely ongoing.

According to the Treasury Inspector General for Tax Administration and the Government Accountability Office, the IRS lost 31,000 people-nearly one-third of its staff-from January 2025 to January 2026, and the agency answered a lower percentage of phone calls and had longer wait times than last year.

In a June report, National Taxpayer Advocate Erin Collins said that while most filers received refunds without long delays, there is a "growing divide" between filers whose issues can be resolved through automated systems and those needing individual help: "Taxpayers who required assistance from the IRS often struggled to get it."

I've also gotten an earful from filers and preparers about delayed refunds for 2025 returns.

One is Richard Weiss, a retired finance professional in the Washington, D.C., area who says he hasn't gotten a five-figure refund for a return he e-filed in February. The IRS has provided him with a phone number to call.

But, he says, "I call it day after day after day, and I can't get through."

Eric Korbitz, a CPA in Milwaukee, says five of his clients have had delayed refunds for e-filed returns for no apparent reason. Four are still in limbo, while one got his refund in August. (It included interest, which is taxable.)

The IRS said in a statement that it has no evidence of widespread refund delays for the 2026 filing season and that over 90% of refunds were issued in less than 21 days. The agency recommends that filers experiencing delays check online IRS resources.

Still, I'm planning to owe taxes this year. Just as I signed up with the IRS for an IP PIN to guard against tax ID theft, I'm hoping to sidestep future refund snafus.

Weiss says he's considering avoiding refunds in the future, and Korbitz says he'll be working with clients on this as well: "It's often a lot easier to owe the IRS than to have them owe you."

Going this route means threading a needle, however. Overpaying could risk refund delays, and it also provides an interest-free loan to Uncle Sam. But paying too little will bring penalties. The underpayment penalty is an interest charge that is currently 7%, and the rules for avoiding it are complex. There are workarounds, so here's what taxpayers should know.

Rules of the road

Taxpayers who owe $1,000 or more of tax typically must pay 90% of their bill for the year long before the April 15 deadline to avoid penalties.

Filers can pay through withholding, quarterly estimated taxes, or both. Withholding applies to wages and bonuses, and taxpayers can elect for income such as pensions, Social Security payments and individual retirement account withdrawals. The deadline for withheld taxes is Dec. 31, and the 90% threshold often prevents penalties even if income is uneven.

For employees and pension recipients, the IRS has a withholding calculator that provides a revised W-4 form. I'll be using it to adjust my withholding so I have a balance due next April.

Estimated taxes are due quarterly on other income, such as from investments or self-employment. The deadlines for 2026 quarterly estimates are April 15, June 15, Sept. 15, and Jan. 15, 2027. Note: These aren't all three-month intervals.

'Safe harbors' can help

Filers can avoid penalties if they pay 100% of their prior-year tax if their income is $150,000 or less, and 110% if it is more. Those who pay quarterly should pay the safe-harbor amount quarterly in equal installments.

This provision can prevent penalties even if income balloons. For example, say a filer owed $40,000 of federal tax for 2025 and pays a total of $44,000 in equal installments this year. If she then has a windfall that will raise her 2026 tax bill to $90,000, she would likely owe no underpayment penalties.

The safe harbor is often unhelpful if prior-year taxes were higher. If our filer owed $90,000 last year due to a windfall, then this year's safe harbor amount would be at least $90,000-even if her tax for this year will be only $40,000.

Beware of undeserved penalties

The IRS systems typically treat income as if it is earned equally through the year, which means they can impose unwarranted penalties.

Say someone does a Roth IRA conversion or gets large fund payouts in the fourth quarter and pays correct tax then. The IRS's system will likely assume this income was equally earned over four quarters, while the tax due wasn't paid until the last one-and impose a penalty.

To avoid such penalties, filers can submit Schedule AI of Form 2210, which details when income was actually earned and taxes paid. This is usually cumbersome, so it is often easier to use a safe harbor.

The IRS typically waives estimated tax penalties for recent retirees or filers who became disabled. If this is you, see the instructions for Form 2210.

Use withholding strategically

Many filers-especially employees and retirees-have substantial income that qualifies for withholding. The law considers withheld taxes to come in evenly throughout the year even if they don't. So withholding can free filers from owing quarterly estimates.

Say a filer is an employee with substantial interest and dividends. If he raises his paycheck withholding to include projected taxes on this extra income, he could avoid quarterly payments-even if his investment income is uneven. This is what I'll be doing for taxes on my investment income this year.

Some older owners of traditional IRAs use the same move to simplify their taxes dramatically. Instead of paying quarterly, these filers wait until late in the year, when their income is known, to make a large IRA withdrawal. Then they withhold as much tax as needed for all their income-even from investments. When I retire, I plan to use this strategy.

Meanwhile, I'll be doing the math to sidestep a refund-and penalties.