This is an update on an issue we brought to your attention on November 9 – “The IRS Tax Withholding Tables May be Inaccurate. Here’s What You Need to Know.”
We discussed the possibility that individual tax filers may have inadvertently underpaid their Federal tax withholdings due to erroneous withholding tables issued by the IRS last spring. The IRS recently issued Tax Notice 2019-11 which provides tax penalty relief for taxpayers who, due to the enactment of the Tax Cuts and Jobs Act, have been unable to accurately determine the appropriate amount of 2018 income tax withholding.
The IRS will waive the underpayment penalty for individuals whose total withholding and estimated tax payments are equal to or exceed 85% of the tax shown on their 2018 taxable year. Without this waiver, an individual would have had to pay in the lesser of 90% of the tax shown on their 2018 tax return or 100% of the tax shown on their 2017 tax return (110% if an individual’s adjusted gross income for 2017 exceeded $150,000).
Taxpayers wishing to request this waiver must file Form 2210 – Underpayment of Estimated Tax by Individuals, Estates and Trusts – with their 2018 income tax return. Check the waive box in Part II, Box A and include the statement “85% Waiver” with the tax return.