IRS Makes 2018 Individual Estimated Tax Relief Automatic

| 8/22/2019
The IRS updated its estimated tax penalty relief for individuals for 2018 by providing that relief will be automatic for individuals who on or before Jan. 15, 2019, paid in at least 80% of the tax due for 2018 through withholding and estimated tax paid. Previously, the IRS required eligible individuals to file a Form 2210, “Underpayment of Estimated Tax by Individuals, Estates, and Trusts,” with the waiver box checked and attach a statement with the words “80% Waiver” with their return to get this relief. Though this updated estimated tax penalty relief is automatic, the IRS still encourages eligible individuals who are filing an extension to claim the waiver with their return.

In addition, the IRS said that it automatically will refund estimated tax penalties paid by individuals who qualified for relief from 2018 estimated tax penalties but who did not file a Form 2210 with their return requesting relief. However, if an individual has outstanding tax due, or if there is a federal nontax debt or state tax debt that is subject to refund offset, the refund might be diverted to satisfy that liability rather than being refunded.

Bottom line: Individuals who qualify for estimated tax penalty relief for 2018 do not have to file to request relief, and individuals who qualify for estimated tax penalty relief for 2018 but who paid an estimated tax penalty for that year do not have to file a request to obtain a refund. Over the next few months, the IRS will be sending notice CP21 granting automatic relief from 2018 individual estimated tax penalties to eligible individuals and automatically paying any refund of estimated tax penalties for 2018 to taxpayers entitled to a refund (subject to offset for tax and nontax debts).

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Rochelle Hodes
Rochelle Hodes
Principal, Washington National Tax