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Various Subjects

IRS Automatically Waives Estimated Tax Penalty For Eligible 2018 Tax Filers

The Internal Revenue Service is automatically waiving the estimated tax penalty for the more than 400,000 eligible taxpayers who already filed their 2018 federal income tax returns but did not claim the waiver. The IRS will apply this waiver to tax accounts of all eligible taxpayers, so there is no need to contact the IRS to apply for or request the waiver.

Earlier this year, the IRS lowered the usual 90% penalty threshold to 80% to help taxpayers whose withholding and estimated tax payments fell short of their total 2018 tax liability. The agency also removed the requirement that estimated tax payments be made in four equal installments, as long as they were all made by Jan. 15, 2019. The 90% threshold was initially lowered to 85% on January 16 and further lowered to 80% on March 22.

The automatic waiver applies to any individual taxpayer who paid at least 80% of their total tax liability through federal income tax withholding or quarterly estimated tax payments but did not claim the special waiver available to them when they filed their 2018 return earlier this year.

Here’s What Taxpayers Should Know About The New IRS Tax Withholding Estimator

Taxpayers who haven’t yet checked their withholding this year should do so ASAP. All taxpayers can do this by using the new mobile-friendly Tax Withholding Estimator. This new tool can be used by workers, as well as retirees, self-employed individuals and other taxpayers. It’s a user-friendly step-by-step tool to help taxpayers effectively adjust the amount of income tax they have withheld from wages and pension payments. This helps them make sure that they are paying the right amount of tax as they earn it throughout the year.

Rev. Rul. 2019-19 Failure To Cash a Distribution Check From a Qualified Retirement Plan

The IRS has ruled that an individual who receives a retirement distribution check from a retirement plan is taxed in the year of receipt even if the check is not cashed. In addition, the employer’s obligation to withhold tax and report the distribution is unaffected by whether the check is cashed. This rule applies whether or not the individual keeps the check, sends it back, destroys it or cashes it in a later tax year. The rule does not apply unless the recipient could cash the check in the year of receipt.

New, Taxpayer-Friendly Procedural Changes Go Into Effect On Friday, Aug. 16

On Friday, August 16, three provisions of the Taxpayer First Act that was signed into law on July 1, 2019 went into effect. The provisions provide additional limits on IRS summonses and require earlier notice to a taxpayer when IRS contacts a third party about the taxpayer's tax liability.

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