Do I have to pay a penalty for not withholding enough federal tax ?
I have a huge tax bill to pay - more than 10% of the total federal tax I owe. Which basically means that the total taxes withheld from my paychecks last year were less than 90% of the taxes I am supposed to pay. Do I need to pay a tax penalty in this case ? (Referring to Form 1040 line 23)
Maybe, maybe not. Depends on last year’s tax too. https://www.irs.gov/pub/irs-pdf/f2210.pdf
Never seek financial, medical, or legal advice on Blind. You’re going to have a bad time.
Thanks Looks like I do have to pay the penalty :(
Check our the forgiveness clause this year. IRS is offering a lowered penalty since so many people were surprised by the tax hike (err cut)
Did you forget to write off your private jet?
You can request waiver of penalty if got any letter. According to IRS website (conditions of penalty waiver): “The underpayment was due to an inability to accurately calculate your estimated income tax payment due to the breadth of changes enacted by the tax reform.”
Thanks for pointing that out! I had missed this one!
As I understand it, it means you can waive the underpayment penalty if you withheld 85% of your tax liability for the 2018 year (as opposed to the normal 90%). Most online tax sites should do this for you if it applies.
It’s possible to have to pay an underpayment penalty. If you paid at least 100% of the prior years tax liability (if your income increased, this is likely the case), or you owe less than $1000, there is no underpayment penalty.
110% for high earners*