IRS Waives Penalty for Underpayment of Estimated Tax and Withholding Shortfall for 2018

The IRS has announced that it is waiving the penalty for underpayment of estimated tax for taxpayers who paid at least 85 percent of their total tax liability during 2018 through withholding or quarterly estimated tax payments. The penalty is usually assessed if less than 90 percent of tax is paid during the year. However, if less than 85 percent of tax has been withheld or paid, the underpayment penalty will be calculated using the 90 percent threshold.