The Internal Revenue Service announced on Friday, March 22, that they are expanding penalty relief to taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.
The IRS is lowering to 80 percent the threshold required to qualify for this relief. Under the relief originally announced Jan. 16, the threshold was 85 percent. The regular penalty avoidance threshold is 90 percent.
Taxpayers who have already filed for tax year 2018 but qualify for this expanded relief may claim a refund by filing Form 843, Claim for Refund and Request for Abatement and include the statement “80% Waiver of estimated tax penalty” on Line 7. This form cannot be filed electronically.
The full news release from the IRS is available here: IR-2019-55 >>
AAFCPAs advises clients to check their withholding for 2019, as the penalty avoidance threshold is expected to revert back to 90%. This is especially important for anyone now facing an unexpected tax bill when they file. This is also an important step for those who made withholding adjustments in 2018 or had (or are expecting) a major life change to ensure the right tax is still being withheld.
If you have any questions, please contact: Richard Weiner, CPA, MST at 774.512.4078, firstname.lastname@example.org; or your AAFCPAs Partner. We welcome the opportunity to provide strategic tax advice for you.