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85% underpayment waiver, first year (1st) of TCJA

Key tips and advice the working tax pro can use.
#1
makbo  
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Had my first return where this might apply. The phrase "85% waiver" is supposed to be printed on Form 2210 as part of the filing, but in my software (UT), it is nearly illegible, since it is over-printed on the pre-existing form text. For efile, I suppose it doesn't matter... sigh.
 

#2
WBR  
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It appears that the penalty is still calculated on 90% and not 85% of the underpayment amount.
 

#3
makbo  
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WBR wrote:It appears that the penalty is still calculated on 90% and not 85% of the underpayment amount.

Yes, that is correct, and was so stated when the announcement was made.

Now, what I find odd, is that for purposes of the 85% waiver, I thought they would just plug in 85% instead of 90% to calculate the required payment for each quarter. But no, even if you only made one estimated payment on Jan 15th, they still add that to withholding to see if you were at 85% or not. (At least according to UltraTax.) In other words, free ride on the "equal quarterly payments" requirement, for purposes of the waiver. Very generous.
 

#4
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Very generous.


Yeah, except they made the announcement on January 16, 2019.

Importantly, the 6654 penalty can’t be waived for reasonable cause (unless disabled or newly retired).

But more importantly, those at the IRS who process waivers might not know this. So file a waiver. Load it up with reasonable cause excuses, including, “Notice 2019-11, which was issued on January 16, 2019, provided certain relief from the estimated tax penalty if a certain amount of estimated tax payments had been made by January 15, 2019). Had the taxpayer known about the relief offered in Notice 2019-11 prior to January 15, 2019 – the due date of the taxpayer’s fourth quarter, 2018 estimated tax payment – he most certainly would have made an estimated tax payment to obtain such relief.”

Here's another one I’m throwing in there – “It was not until early 2019 that it became entirely clear that investment expenses (itemized deductions subject to the 2% of AGI floor) would not be allowed for Form 8960 purposes. This caused the taxpayer to fall short on his estimated tax obligations.”
 

#5
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Jeff-Ohio wrote:
Very generous.


Yeah, except they made the announcement on January 16, 2019.

Importantly, the 6654 penalty can’t be waived for reasonable cause (unless disabled or newly retired).

But more importantly, those at the IRS who process waivers might not know this. So file a waiver. Load it up with reasonable cause excuses, including, “Notice 2019-11, which was issued on January 16, 2019, provided certain relief from the estimated tax penalty if a certain amount of estimated tax payments had been made by January 15, 2019). Had the taxpayer known about the relief offered in Notice 2019-11 prior to January 15, 2019 – the due date of the taxpayer’s fourth quarter, 2018 estimated tax payment – he most certainly would have made an estimated tax payment to obtain such relief.”

Here's another one I’m throwing in there – “It was not until early 2019 that it became entirely clear that investment expenses (itemized deductions subject to the 2% of AGI floor) would not be allowed for Form 8960 purposes. This caused the taxpayer to fall short on his estimated tax obligations.”


I have stolen this and used it. A check is in the mail...
 

#6
Preppie  
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#7
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MA
Kirstin Gillibrand just released her 2018 tax returns. She came up just short for the 85% waiver but the new 80% waiver should do the the trick. If she comes to Massachusetts, I will mention it to her. That will be $86 less in the IRS pocket.
 


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