The IRS has announced that some taxpayers will have their underpayment penalties on 2018 taxes waived. The decision reflects that the tax cut implemented makes it hard for some taxpayers to figure the correct amount to have withheld from paychecks or included in quarterly estimated tax payments.
Among the changes that could affect dealers are these: (1) Taxpayers can now deduct no more than $10,000 for the sum of their state and local property taxes and income or sales taxes; and (2) the mortgage interest deduction is capped at debt of $750,000 ($1 million for debt incurred on or before Dec. 15, 2017).
The way the many changes in the tax law will affect individual taxpayers is not always clear. Those most likely to withhold too little include two-earner households and taxpayers with complex tax situations.
As a result, the IRS will waive underpayment penalties for taxpayers who pay at least 85 percent of the 2018 taxes they owe (normally, it’s 90 percent). To request the waiver, the taxpayer must file Form 2210 with the 2018 tax return.
Thanks to WANADA Kindred-Line member Councilor Buchanan & Mitchel, CPAs, for this information. For the full CBM memo, click here.Download Bulletin PDF