The new tax law, the Tax Cut and Jobs Act, went into effect for 2018 and hit a number of taxpayers hard - especially if they live in California, New York, New Jersey and other states with high state tax.
Many taxpayers did not know these impact until filing time because of the limitations on deducting state and local taxes. That resulted in not enough taxes withheld or paid during the course of the year.
On March 22, 2019 the IRS issued Notice 2019-25. This notice gives taxpayers a little relief on their estimated tax underpayment penalties. It reduces from 85% to 80% the threshold amount of taxes that needed to be made by January 15. This change may save you hundreds or even thousands in penalties.
If you already filed your taxes, check and see if you are due an abatement on your under-withholding penalty. We can help make sure you get that money refunded to you.
In the event you haven't filed yet, please make note of this new notice for your preparer. Most preparers rely on their tax software to stay on top of these frequent changes. However, the software may not reflect this change yet.
Regardless, if you owe more than you can pay, it is important to file on time. You can work with your tax professional to request a payment plan. You should plan to pay as much as you can with your filing. The IRS is tough on non-filers and you will get caught.
As always, if you have any questions or need guidance, please reach out to us for your free consultation.