Is the IRS income tax underpayment penalty based solely on income, or is it also based on IRA withdrawals?
When I retired, I rolled over to a traditional IRA the 403b account I had with my employer. In 2020, I withdrew money from the IRA. I also worked briefly as a lifeguard in 2020, earning about $600. No income tax was withheld for my lifeguard job. Upon doing my taxes, I see that I was charged an underpayment penalty of about $40. Is this underpayment penalty only directly related to my employment (because they did not withhold income tax) or is it also related to my withdrawal from my IRA account?