Yep, over 1K and its a penalty. Also if you had no withholding and made no quarterly payments even if under 1K.
Correct but it's not much of a penalty. Also, I find it funny that people are talking about how much better off they are by earning interest by not overpaying.
Unless that money is in a high return investment of some sort, they're not making anything worth worrying about. What little one might make in a bank brings with it it's own additional tax.
If these were the days that banks were paying 7% then it might be something. But to be significant, that 7% would end up being more like 4% because the money saved would have to come from someone in a high tax bracket to begin with.