Message Font: Serif | Sans-Serif
 
No. of Recommendations: 3
IRS has reduced the amount of tax you had to withold to avoid a penalty for 2018.
Normally it was 90% you had to have witheld to avoid penalty. In january, the IRS said it would be reduced to 85% for 2018.
Now, after some hearings with munchkin, witholding amount is REDUCED TO 80%. If you already paid a penalty, the article says you can file form 843 for a refund. It also says commercial tax prep software should be updated in a week.


Thanks for the heads up. I did a return about 3 weeks ago for someone who had a $60 underpayment penalty. I will check to see if it can be waived now.

It also says.."taxpayers are also exempt from penalties if they had paid an amount equal to 100% of the previous year's taxes.""

That's the same as it's been, although if your AGI is over $150k ($75k if MFS), you have pay 110% of the prior year taxes to meet this safe harbor.

( I don't like the way the article is written. It refers to witholdings as tax payments. I don't like that because one could get all of that witholding money back. It's not really a tax payment. But since I've dealt with many contracts which require Advance Deposits, maybe its just me)

Withholdings are tax payments, as are quarterly estimated tax payments. If you pay in more than you end up owing, you get a refund of the excess payment.

AJ
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.