The IRS has announced that it will be waiving the penalty for the underpayment of estimated tax for many taxpayers whose estimated tax payments and federal income tax withholdings came up short for the 2018 tax year.
The underpayment penalty relief is intended to provide assistance to taxpayers that were unable to properly adjust withholding and estimated payments to reflect the numerous changes made to the income tax law under the Tax Cuts and Jobs Act (TCJA).
Generally, the IRS will be waiving the underpayment penalty for taxpayers who have paid at least 85% of their total tax liability during the year. These payments could have been made through federal income tax withholding, quarterly estimated tax payments or a combination of the two methods.
The typical percentage of current year tax that must be paid to avoid an underpayment penalty is 90%.
If you have any additional questions, please contact Brian Reed at email@example.com or 314-576-1350.