March 25, 2019

Owe Taxes On Your 2018 Individual Income Tax Return? You May Be Eligible For Relief Of Penalties For Tax Underpayment.

2018 Individual Income Taxes


If you pay any attention to national news, you've heard about the grumbling of people who did not correctly adjust the income tax withholding or estimated tax payments, and are finding they owe federal taxes on their 2018 tax returns.

Well, the IRS has noticed these grumblings, and has decided to give some taxpayers a bit of relief.

How so?  Well, if you owe taxes on your 2018 Form 1040 Individual Income Tax Return, you're still going to owe the taxes.  But you may get a break on any penalty for underpayment of taxes.  Generally, the IRS waives this underpayment penalty if you have paid at least 90 percent of your total tax liability for the year.  For 2018 taxes, the IRS has decreased this threshold to 80 percent.  So, if you've paid at least 80 percent of your total tax liability for the year, the IRS will generally waive any associated underpayment penalty.

The IRS has not stated if this new 80 percent threshold will be a permanent change.  At this time, it is slated to apply only to 2018 individual income tax returns.

Tax Concerns?
About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients throughout the United States.  For more information visit FoutsFinancialGroup.com.

Mary Rae Fouts

2 comments:

  1. What if I filed taxes before this new penalty relief was made public?

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    Replies
    1. Great question! If you owed taxes, have already filed your 2018 taxes and paid an under penalty tax payment, but would not have to pay the penalty with the new 80 percent rule, you are in luck.

      You can request a refund of the penalty tax by filing Form 843, Claim for Refund and Request for Abatement. Include the statement “80% Waiver of estimated tax penalty” on Line 7 of the form and mail the form to the appropriate IRS address. Good Luck!

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