IRS NOTICE 2019-11 UNDERPAYMENT CHANGE

[Lee B]

"The IRS issued Notice 2019-11 on Wednesday, providing a waiver of the addition to tax under section 6654 of the tax code for the underpayment of estimated income tax for certain individuals who would otherwise be required to make tax year 2018 estimated income tax payments on or before Jan. 15, 2019. The waiver, though, is limited to individuals whose total withholding and estimated tax payments equal or exceed 85 percent of the tax shown on the return for the 2018 taxable year."

[SaraEA]

I got excited about that too when I read the click bate.  The current waiver applies when the taxpayer pays 90% of their tax bill, so this isn't a big deal (and if they don't pay 85% the penalty is still calculated on the basis of not paying 90%).  Upper income people who have to pay 110% to avoid penalty get no break.  Just another headline that makes it look like the IRS is being compassionate when it amounts to a hill of beans.

[John Dallas]

SaraEA - The IRS has since lowered the amount for the waiver to 80% and it is a bigger deal for several reasons.  The 80% applies to the total amount paid by January 15, 2019 so that if the entire amount is paid on that date there is no penalty for missing the prior quarters.  Upper income people have to pay the lower of 110% of the prior year [2017] or now 80% of the current year [2018] by January 15.  The old rules apply if less than 80% was paid by that date.  IRS will also will waive the estimated tax penalty for any qualifying farmer or fisherman who files their 2018 tax return and pays any tax due by April 15, 2019.