This report covers IRS Notice 2019-11 waives the penalty for failure to make estimated income tax payments in the U.S. for 2018.
On January 16, 2019, the U.S. Internal Revenue Service (IRS) published Notice 2019-11 (PDF 80.9 KB), which provides a waiver of the estimated tax penalty for certain individuals who were otherwise required to make tax year 2018 estimated income tax payments on or before January 15, 2019.
The U.S. tax law enacted on December 22, 2017, commonly referred to as the “Tax Cuts and Jobs Act,” made significant changes to tax rates and the way taxable income is calculated. Although the IRS released an updated “withholding calculator” and a new version of Form W-4 to help individual taxpayers determine the appropriate amount of withholding for the 2018 tax year, many assignees may not have been able to accurately calculate their 2018 federal income tax withholding and required estimated tax payments. This relief lessens the likelihood that those assignees will owe an underpayment penalty when they file their 2018 tax returns.
Normally, taxpayers are required to pay federal income taxes as they earn income, through withholding or estimated tax payments. Generally, a taxpayer will be subject to a penalty if the taxpayer fails to pay the lesser of the following amounts during the tax year:
Notice 2019-11 waives the penalty for failure to make estimated income tax payments for the 2018 tax year, otherwise required to be made on or before January 15, 2019, for any individual whose total withholding and estimated tax payments made on or before January 15, 2019, equal or exceed 85 percent of the tax shown on that individual’s return for the 2018 tax year. To request the estimated tax penalty waiver, individuals must file Form 2210 (PDF 211 KB), Underpayment of Estimated Tax by Individuals, Estates, and Trusts, with their 2018 income tax returns.
The form can be filed with a return that is either filed electronically or on paper. Taxpayers are directed to complete Part I of Form 2210 and the worksheet included in the form instructions to determine if the waiver applies. If the waiver applies, taxpayers are then directed to check the waiver box (Part II, Box A) and include a statement “85% Waiver” with the return. This waiver is in addition to any other exception that section 6654 provides to the underpayment of estimated income tax.
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
The information contained in this newsletter was submitted by the KPMG International member firm in United States.
© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.KPMG International Cooperative (“KPMG International”) is a Swiss entity.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.