TAS Tax Tip: Updates to Estimated Tax Penalty Waiver

April 23, 2019

The April 15th tax deadline has passed, however the IRS announced on March 22, 2019 that it is expanding the waiver of the Estimated Tax Penalty to include relief for taxpayers whose total withholding and estimated tax payments equal or exceed 80 percent of the tax shown on the return for the 2018 taxable year. This threshold was reduced from the 85 percent threshold in Notice 2019-11, Relief from Addition to Tax for Underpayment of Estimated Income Tax by an Individual. The waiver is in addition to any other exception to underpayment of estimated income tax provided in IRC § 6654.

If You Have Not Filed Yet, Complete Form 2210 With Form 1040

To request relief under the expanded Estimated Tax Penalty waiver, taxpayers who haven’t yet filed their 2018 federal income tax return must attach a completed Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to their tax return upon filing. The form can be filed with a return electronically or via paper. These taxpayers should include the statement “80% Waiver” next to Box A of the Form 2210, as instructed in Notice 2019-25, Relief from Addition to Tax for Underpayment of Estimated Income Tax by an Individual.
 

If You Have Already Filed Your Tax Return and Paid the Penalty But You Would Not Be Subject to a Penalty Under the 80 Percent Threshold, File Form 843 to Claim a Refund

Taxpayers who have already filed their 2018 federal income tax returns and paid an Estimated Tax Penalty because their withholding and estimated tax payments fell below the 85 percent threshold provided in Notice 2019-11, but who now qualify for the expanded Estimated Tax Penalty waiver, should file Form 843, Claim for Refund and Request for Abatement. These taxpayers should include the statement “80% Waiver of estimated tax penalty” on Line 7 of Form 843, as instructed in Notice 2019-25.

If You Have Already Filed and Were Subject to the Penalty, but You Did Not Claim a Waiver on the Form 2210, You Can Call the IRS

Taxpayers who didn’t request a penalty waiver when filing Form 2210 or didn’t file Form 2210 with their original 2018 federal income tax return can request the penalty to be waived by calling the IRS. These taxpayers can call the toll-free number, (800) 829-1040, and request relief from the penalty.  

The IRS urges everyone to review their withholding for 2019 so as to not face unexpected tax bills when filing their returns next year. See Notice 2019-25 and Form 2210 Instructions for more details.

Other Taxpayer Advocate Service Resources: