IRS Waives Penalties for Certain Individuals Affected by the TCJA of 2018
If you are a taxpayer whose 2018 federal income tax withholding and estimated tax payments were less than your total tax liability for the year, then you are in luck. The IRS announced today that it is waiving the penalties for individuals whose tax withholding and estimated tax payments fell short in the 2018 tax year.
This relief is aimed at helping individuals who did not properly adjust their withholding and estimated tax payments based on the changes under the Tax Cuts and Jobs Act (“TCJA”) enacted in December 2017.
In Notice 2019-11, the IRS provides for a waiver of the addition to tax under Section 6654 of the Internal Revenue Code (the “I.R.C.”) for the underpayment of estimated income tax for certain individuals who would otherwise be required to make tax year 2018 estimated income tax payments on or before January 15, 2019. To be eligible for the waiver, your total withholding and estimated tax payments must have equaled or exceeded 85% of the tax shown on the return for the 2018 taxable year.
This means that you will not owe a penalty if you paid at least 85% of your total 2018 tax liability. If, however, you paid less than 85%, you are not eligible for the waiver.
As part of this announcement, the IRS conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do what is known as a Paycheck Checkup. More information can be found on IRS.gov, or by clicking here. Most individuals are expected to get refunds when they file their 2018 taxes, but some will unexpectedly owe tax when they file. You may be entitled to relief from penalties under these new provisions.
For CPAs who are assisting their clients, good news. The waiver announced today will be integrated into commercially-available tax software. IRS indicates that it will be contained in the forthcoming revision of Form 2210 and its instructions.
If you wish to discuss the impact of the law on your particular situation, contact Porter Law Office, LLC today.
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If you have tax questions, contact the experienced tax lawyer at Porter Law Office, LLC. For any other IRS or state of Ohio tax controversy, contact the experienced Columbus, Ohio tax attorney at Porter Law Office, LLC today for a consultation to discuss your particular IRS tax needs and options.