Because of changes made by the Tax Cuts and Jobs Act, many taxpayers didn’t pay enough in income taxes through withholding and estimated tax payments to satisfy the safe harbors for avoiding estimated tax penalties. The IRS announced it would waive all estimated tax penalties for about 400,000 eligible taxpayers who already filed their 2018 returns and who paid at least of 80% of their total 2018 tax liability through withholding and estimated tax payments (IR-2019-144, 8/14/19).
Over the next few months, the IRS will mail copies of notices CP 21 granting this relief. Any eligible taxpayer who already paid the penalty will also receive a refund check about three weeks after their CP21 notice regardless if they requested penalty relief. The IRS emphasized that eligible taxpayers who have already filed a 2018 return do not need to request penalty relief, contact the IRS, or take any other action to receive this relief; the relief is automatic.
For taxpayers who have yet to file, the IRS urges them to claim the waiver on their return. This includes those with tax-filing extensions by October 15, 2019. The quickest and easiest way is to file electronically and take advantage of the waiver computation built into their tax software package. Those who file a paper return can fill out Form 2210 and attach it to the 2018 return.
Note: Similar relief likely won’t be extended for 2019 returns filed in 2020. The IRS has urged individuals to do a “Paycheck Checkup” to make sure their withholding is correct, and to use the IRS’s new Tax Withholding Estimator.
Source : JK Lasser Posts >> Tax News