IRS Waives Penalty For Not Withholding Enough – Tax Planning

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The Tax Cuts and Jobs Act which was enacted in December 2017, brought about a host of changes for taxpayers. Among the changes was the amount of withholdings as calculated by revised tax tables.

The IRS announced that it is waiving the estimated tax penalty for various taxpayers whose 2018 federal income withholding and estimated tax payments fell short of total taxes owed.

The penalty will be waived for those taxpayers that have at least paid 85 percent of their total tax liability through withholdings and quarterly payments.

When the revised tax brackets were released under the new tax plan, many taxpayers calculated lower withholdings assuming less taxes owed. But the problem that arose was that other factors such as dependency exemptions and itemized deductions didn’t factor into the revised withholding tables.

Source: IRS; www.irs.gov/newsroom/

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