This week, a lot of Americans received a gift from the Federal Government, as the IRS announced that it will waive the estimated tax penalties for those who underwithheld taxes in 2018. There are some limitations to this gift, but such a waiver could end up saving Americans a lot of money in additional tax penalties.

This extra flexibility was offered due to the complexity and uncertainty of the Tax Cuts and Jobs Act of 2017, and the fact that taxpayers and tax preparers alike were uncertain about the nuances of the new tax law changes until very late in the 2018 calendar year.

To be eligible for the penalty waiver, taxpayers will need to have paid at least 85% of their total 2018 tax liability through a combination of tax withholdings and estimated tax payments, instead of the usual 90%.

Don’t worry if you have no idea how to calculate this percentage. The IRS clarified that all commercially available software will have this one-time waiver updated into their programming for the current tax year.

Matt Crisafulli, EA, CFP® is a Partner at ACap Advisors & Accountants, as well as a UCLA Alumnus. He is a Fee-Only CERTIFIED FINANCIAL PLANNER™ practitioner and an Enrolled Agent licensed by the IRS.

ACap Advisors & Accountants is a “Fee-Only” wealth management and full-service accounting firm headquartered in Los Angeles, specializing in helping doctors and healthcare professionals make sound financial decisions.

Contact ACap at info@acapam.com or 818-272-8511.