Form 2210 – Threshold Lowered to 80%
Some taxpayers’ 2018 estimated tax payments or withholding amounts did not cover their full tax liability, due in part to tax reform changes.
To help taxpayers in this situation, the IRS has taken action to help ease the additional burden of underpayment penalties.
Per the IRS news release IR-2019-55:
The IRS is lowering to 80 percent the threshold required to qualify for this relief. Under the relief originally announced Jan. 16, the threshold was 85 percent. The usual percentage threshold is 90 percent to avoid a penalty.
This means that the IRS is now waiving the estimated tax penalty for any taxpayer who paid at least 80 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two.
Taxpayers who have already filed for tax year 2018 but qualify for this expanded relief may claim a refund by filing Form 843, Claim for Refund and Request for Abatement and include the statement “80% Waiver of estimated tax penalty” on Line 7. This form cannot be filed electronically.
As of version 1.08, TaxAct has been updated and now includes the 80% threshold calculation.
If you filed your 2018 return with any TaxAct Online Edition prior to March 30, 2019 at approximately 10:00 a.m. (CST), (or any Desktop/Download Edition version 1.07 or below), you will need to file Form 843, Claim for Refund and Request for Abatement and include the statement “80% Waiver of estimated tax penalty” on Line 7.
To submit this form, print from the IRS website. Detailed directions for completing the form, as well as the mailing address to use, can be found in the form instructions. This form cannot be filed electronically and is not available in TaxAct.
Once you mail Form 843, you don’t need to take further action or amend your tax return.