Estimated Tax Penalty Waived Automatically by IRS For Eligible 2018 Tax Filers

NSTPInternal Revenue Service (IRS)

Estimated Tax Penalty Waived Automatically by IRSAutomatically

Estimated Tax Penalty Waived Automatically by IRS For Eligible 2018 Tax Filers The Internal Revenue Service is automatically waiving the estimated tax penalty for the more than 400,000 eligible taxpayers who already filed their 2018 federal income tax returns but did not claim the waiver. The IRS will apply this waiver to tax accounts of all eligible taxpayers, so there is no need to contact the IRS to apply for or request the waiver. Earlier this year, the IRS lowered the usual 90% penalty threshold to 80% to help taxpayers whose withholding and estimated tax payments fell short of their total 2018 tax liability. The agency also removed the requirement that estimated tax payments be made in four equal installments, as long as they were all made by Jan. 15, 2019. The 90% threshold was initially lowered to 85% on January 16 and further lowered to 80% on March 22. The automatic waiver applies to any individual taxpayer who paid at least 80% of their total tax liability through federal income tax withholding or quarterly estimated tax payments but did not claim the special waiver available to them when they filed their 2018 return earlier this year. “The IRS is taking … Read More

ASAP: Taxpayers should check withholding

NSTPInternal Revenue Service (IRS), Paycheck Checkup

ASAP: Taxpayers Should Check Withholding

ASAP: Taxpayers should check withholding All taxpayers should check their withholding – also known as doing a Paycheck Checkup – as soon as possible. They should do a checkup even if they did one last year. By checking their withholding, taxpayers can make sure enough is being taken out of their paychecks or other income to cover the tax owed. Here are some things taxpayers should know about withholding and why checking it is important: Taxpayers should check their withholding as early in the year as possible. If someone still has not done a Paycheck Checkup, there’s still time to get their withholding on track. They should do a checkup ASAP. Taxpayers should also check their withholding when life changes occur. These changes include things like: Marriage or divorce Birth or adoption of a child Purchase of a home Retirement Chapter 11 bankruptcy New job or loss of job Some taxable income is not subject to withholding. People with this income who also have income from a job may want to adjust the amount of tax their employer withholds from their paycheck. This includes income from things like: Interest Dividends Capital gains Self-employment and gig economy income IRA distributions, including … Read More

Get 2019 Withholding Right with Paycheck Checkup and 2018 Return

NSTPInternal Revenue Service (IRS), Underestimated Income Tax

USE 2018 Return and Paycheck Checkup to Get 2019 Withholding Right

The following was issued by the IRS to taxpayers in order to promote the Paycheck Checkup for 2019. The IRS continues to advocate that all employees verify their withholding to determine if they have sufficient taxes withheld. The Service is also in the process of redesigning the Form W4, which will be available as a pre-release in May for comments from the tax professional community. Millions of taxpayers filed a 2018 tax return in the last few weeks, making now a prime time for everyone to consider whether their tax situation came out as they expected. If it didn’t, they can use their recently finished 2018 return and the IRS Withholding Calculator to do a Paycheck Checkup and adjust their withholding. Checking and then adjusting their tax withholding can help make sure they don’t owe more tax than they are expecting. Usually they can also avoid a surprise tax bill and possibly a penalty when they file next year. At the same time, with the average refund more than $2,700, some taxpayers may choose to reduce their withholding to have a larger paycheck and smaller refund. Now is an ideal time to check withholding, since having a completed tax return … Read More

The Basics of Estimated Taxes for Individuals

NSTP2019 Tax Season

The Basics of Estimated Taxes for Individuals

The U.S. tax system operates on a pay-as-you-go basis. This means that taxpayers need to pay most of their tax during the year, as the income is earned or received. Taxpayers must generally pay at least 90 percent (however, see 2018 Penalty Relief, below) of their taxes throughout the year through withholding, estimated or additional tax payments or a combination of the two. If they don’t, they may owe an estimated tax penalty when they file. The IRS has seen an increasing number of taxpayers subject to estimated tax penalties, which apply when someone underpays their taxes. The number of people who paid this penalty jumped from 7.2 million in 2010 to 10 million in 2017, an increase of nearly 40 percent. The penalty amount varies but can be several hundred dollars. The Tax Cuts and Jobs Act, enacted in December 2017, changed the way tax is calculated for most taxpayers, including those with substantial income not subject to withholding. As a result, many taxpayers may need to adjust the amount of tax they pay each quarter through the estimated tax system. Here are some simple tips to help taxpayers: Who May Need to Pay Estimated Taxes: Individuals, including sole … Read More