New Threshold Expands Penalty Relief For Taxpayers
Hey taxpayers, it’s your lucky day! Well, as lucky as it can be when it comes to paying taxes … The Internal Revenue Service (IRS) has expanded its penalty relief to taxpayers. This helpful change will affect those whose 2018 estimated tax payments and income tax withholding came up short of their total tax liability for the year.
Read Also: Form 1040 Gets A Face Lift
The new threshold to qualify for relief has been lowered to 80 percent. This is a substantial decrease from the usual threshold of 90 percent to avoid a penalty. To put it simply, the IRS is waiving the tax penalty for any person who paid at least 80 percent of their total tax liability for the year. However, if an individual has paid less than 80 percent of their 2018 tax liability, they are not eligible for relief and will be penalized accordingly.
Listen to episode 170, “Let’s Talk About Tax, Baby!,” on unsuitable on Rea Radio to hear Cindy Kula talk to us about this year’s filing season and what to expect.
Who Does This Help?
This change to the penalty relief threshold will benefit taxpayers who owe taxes back to the federal government. Taxpayers who didn’t appropriately adjust their withholding and estimated tax payments to correctly adhere to the changes brought about from the Tax Cuts and Jobs Act will also be helped.
Those who have already filed for 2018 but who qualify for relief can file a Form 843 to claim a refund. However, unlike other tax forms, this form cannot be filed electronically. It’s important to remember when you’re filing Form 843, be sure to include “80% Waiver of estimated tax penalty” on Line 7. With any tax change, it’s smart for taxpayers conduct a Paycheck Checkup to make sure their withholding is correct.
Contact one of the tax planning specialists at Rea & Associates to find out if you qualify for this expanded relief and ensure your withholding is correct for 2019.
By Lisa Beamer, CPA (New Philadelphia office)