Form 2210 – Waiver of penalty for 2018!!!

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  • #2081
    snargle
    Participant

    So, I read the article here in Fairmark.com, and I read IRS Notice 2019-11, and I thought I would know everything about Form 2210 for 2018, especially about the waiver offered to us if our payments satisfy an 85% threshold, but…

    I guess I didn’t read slowly or carefully enough.

    Is the waiver *all-or-nothing* for the penalty for the year, or would it – the waiver – apply separately, somehow, for each of the four “quarterly” installments?

    I thought I read the stuff pretty carefully, really I did, but I didn’t see this question offered up or answered…!

    #2085
    kaneohe
    Participant

    I haven’t read either the article or the notice but I guess I assumed that everywhere the 90% was before would be changed to 85%…….which would mean if you have lumpy payments, SchAI looks at each quarter separately based on the AI for that qtr.

    #2086
    Kaye Thomas
    Moderator

    It’s all or nothing. You need to have paid in a total of 85%. If you paid less than 85%, you can’t use this guidance to reduce or eliminate penalty for a quarter in which you were 85% paid. And if you satisfied the 85% total, your penalty for the year is waived, even if you fell short of 85% for some quarters. Quoting the notice, the penalty is waived:

    for any individual whose total withholding and estimated tax payments made on or before January 15, 2019, equal or exceed eighty-five percent of the tax shown on that individual’s return for the 2018 taxable year.

    This means someone who was way behind in estimated tax payments, incurring penalties for the first three quarters, could have retroactively eliminated those penalties with a large fourth-quarter estimated tax payment. I’m guessing this is why the IRS released this guidance just after January 15.

    • This reply was modified 2 years, 8 months ago by Kaye Thomas.
    • This reply was modified 2 years, 8 months ago by Kaye Thomas.
    #2090
    snargle
    Participant

    “I’m guessing this is why the IRS released this guidance just after January 15.” Kaye, you cynic!!

    Looks to me like a little bit of “withholding-with-hindsight” might be able to save the day here, and get the entire year’s penalty to evaporate. Whaddya think? When will it be it really, really, too late?

    #2093
    kaneohe
    Participant

    Penalty is waived……….but does that mean that the 2210Sch AI still has to be filed?

    #2094
    Kaye Thomas
    Moderator

    An explanation of how to obtain the waiver is in my article about this development: Estimated Tax Penalty Waiver for 2018. Sorry I forgot to put that in my earlier post.

    #2095
    kaneohe
    Participant

    Thanks for that link,Kaye……..very helpful……….as well as the post in #2086 so no need for Sch AI??……..just the gross test of ( amount paid by Jan 15)/ (total amount due for yr). Hopefully they will revise Pt I to reflect that……currently it excludes estimated payments.

    #2098
    Kaye Thomas
    Moderator

    I’ve revised that post to clarify that you need to fill out only Part I, plus the checkbox. They don’t need to revise Part I for this purpose because they already know the total of your withholding and estimated payments before you file this form. I don’t know why they don’t just grant the waiver automatically without the form, but perhaps there’s some legal impediment to granting a waiver that hasn’t been requested.

    #2137
    Kaye Thomas
    Moderator

    And I’ve revised the post again, now that the 2018 version of Form 2210 and instructions are available. I hope this version answers all the questions.

    Estimated Tax Penalty Waiver for 2018

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