If you received a penalty fee by surprise for underpaying your 2018 taxes, you may be in luck.
Last week, the IRS announced it would waive the tax underpayment penalty for taxpayers who already submitted their 2018 federal tax returns but didn’t claim a special penalty waiver when they filed. The waiver, which only waives the penalty, not your unpaid taxes, will be automatically given to over 400,000 taxpayers.
Under normal circumstances, taxpayers are required to pay at least 90% of the income taxes owed for a given year, or 100% of the tax liability from the prior year, before filing a return. However, due to the changes made by the TCJA, many taxpayers failed to properly withhold taxes from their paychecks in 2018.
To help filers transition to the new tax rules, the IRS lowered its 90% threshold down to 80% for the 2018 tax year. This new waiver will be automatically applied to taxpayers who paid at least 80% of their total tax liability for 2018 and failed to claim a special waiver when they originally submitted their return.
“This waiver is designed to provide relief to any person who filed too early to take advantage of the waiver or was unaware of it when they filed,” said IRS commissioner Charles Rettig.
If you’re one of the taxpayers eligible to receive the waiver, the IRS will send a notice by mail. If you’ve already paid the $180 penalty, you will receive a refund check roughly 3 weeks after you receive the notice.
Be Prepared For Next Year
This waiver is only for the 2018 tax year, so don’t rely on getting a break next year. Want to avoid the underpayment fee next tax season? Get your tax withholdings checked by a professional CPA! Contact us online or call us at (586) 468-0200 to learn more.