IRS just provided penalty relief for certain underpayment of 2018 individual taxes.

On January 16, 2019, the IRS announced that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.

The relief, announced in IR-2019-03, is prompted by changes in the Tax Cuts and Jobs Act. This waiver covers taxpayers whose total withholding and estimated tax payments are equal to or greater than 85 percent of their taxes owed.

For waiver purposes only, this new relief lowers the 90 percent threshold to 85 percent. This means that a taxpayer will not owe a penalty if they paid at least 85 percent of their total 2018 tax liability.

If the taxpayer paid less than 85 percent, then they are not eligible for the waiver and the penalty will be calculated as it normally would be using the 90 percent threshold.

With over 20 years of experience in public accounting, Amanda Bechen CPA owns Bechen & Company PC located in Wagner, SD, and can be contacted at 605-384-4200 or www.bechenco. com.