With the massive overhaul to the code in 2018, many filers are finding out that their tax situation has changed.
The IRS has announced that it will waive the underpayment penalty for taxpayers who paid at least eighty-five percent of their total tax liability during calendar year 2018. This is a temporary change from the normal ninety percent of current year tax or one hundred percent of last year’s tax. The latter figure is increased to one hundred ten percent if your adjusted gross income exceeded $150,000. However, this penalty relief is only for the 2018 tax year.
Taxpayers should adjust their withholdings to avoid penalties when 2019 taxes come due.
Taxpayers can use the IRS withholding calculator available at:
https://www.irs.gov/individuals/irs-withholding-calculator to review their withholdings.
The IRS has updated its withholding tables to reflect the changes from the Tax Cuts and Jobs Act. Taxpayers should use Form W-4 to updated their withholding allowances with their employer.
Retired individuals can use Form W-4P to withhold taxes from their pensions and Form W-4V to withhold taxes from their social security.
Taxpayers with other situations should contact their CPA to review their situation and determine if estimated tax payments are necessary.
If you have any additional questions, please contact Brian Reed at 314-576-1350 or firstname.lastname@example.org.