If you owed (or will owe) on your 2018 individual return, good news: The Internal Revenue Service (IRS) is automatically waiving estimated tax penalties for hundreds of thousands of filers thanks to a change in how your tax liability is determined.
In March of this year, the IRS lowered the 90% penalty threshold to 80% to help taxpayers whose withholding or estimated tax payments fell short of their tax liability. If this new percentage meant that a person’s 2018 taxes were no longer underpaid (or were underpaid by less), the penalty previously assessed would be partially or completely waived.
However, previously eligible taxpayers had to apply for this waiver—a long and complicated process that often wasn’t worth the amount refunded. With this new announcement, the IRS will now apply the waiver automatically for all eligible taxpayers and will be sending refunds as they are processed.
What should I do?
If you have already filed your 2018 individual return and owed money, there is no need to contact the agency to request this waiver. The recalculation of your tax liability will automatically be done and, if applicable, a refund (partial or total) will be sent to you.
If you filed for an extension and have not yet submitted your 2018 return, contact your tax CPA as soon as possible to ask about this important development.
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