IRS Tax Penalty refund

IRS announced that in August 2019 they would be refunding any Form 2210 underpayment penalty that was assessed if the taxpayers’ estimated tax payments and withholding covered at least 80% of their 2018 tax liability. Generally, the penalty applies if a taxpayer paid in less than 90% of the current year tax.

IRS Tax Penalty RefundEarly in 2019, IRS reduced the percentage penalty threshold from 90% to 85% and in March, further reduced it from 85% to 80%, for 2018 only. This means a taxpayer will not owe a penalty if they paid at least 80% of their total 2018 tax liability. Tax software companies made the changes, but many taxpayers may have filed before the final guidance was issued.

The IRS has done a sort on all returns filed and is able to identify who is eligible for the refund.

It is important to do a paycheck review of your withholdings for 2019, particularly if you made adjustments in 2018 or had a major life change. This will help to avoid an unexpected tax bill and/or penalties when you file. To assist you, the IRS has provided an updated Withholding Calculator. We are always available to assist you. Please contact us with any questions at 401-831-0200.