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How an Underpayment Tax Penalty Can Be Waivered

How an Underpayment Tax Penalty Can Be Waivered

By on Mar 29, 2018 in IRS, Tax Penalties, Tax relief | 0 comments

How an Experienced Tax Professional Can Help Reduce Your DebtDo you pay estimated taxes? The Internal Revenue Service (IRS) actually requires that taxpayers pay estimated taxes on certain types of income that is not subject to withholdings, such as income from self-employment, dividends and interest, rent, alimony, and prizes or other winnings. What happens if your estimated taxes do not cover the amount that you actually owe the IRS in a given year? It is possible that you can actually be penalized by the IRS for underpayment of your taxes, causing another tax headache.

Penalties for Underpayment of Taxes

If you are concerned that you may be penalized for underpayment by the IRS, you should know that it is possible that you may qualify for this penalty to be waived.  The penalty for underpaying your taxes can change from year to year and in the vast majority of instances, the amount of penalty depends on your circumstances.  You should be aware that the penalty is calculated for each individual payment period for your estimated taxes. To make this calculation accurate, you should plan to submit the IRS Form 2210, which has two different methods for calculating your penalty.  The first step is always to determine the exact amount of taxes that you underpaid. The Form 2210 will also help you make the calculation for your potential penalty.

Criteria for Waiving Underpayment Penalty

This underpayment penalty can be waived if you meet the following criteria:

  • If you were unable to make your estimated payment because of disaster, death or other unusual situation;
  • If you retired after the age of 62
  • If you became disabled
  • If you had a reasonable cause for not making the payment AND,
  • You did not purposefully neglect to make the payment.

How to Request a Waiver

In order to request a waiver for your underpayment, you should do so by filing IRS Form 2210 and include a written statement detailing why you were unable to make the entire payment. This statement should also include a specific time period of which you are requesting the waiver.  You should also plan to include any supporting documentation (proof of disaster, death, retirement notice, disability date, etc.) that supports your position so that the IRS can review this information along with your request.

Tax Support When You Need It

Completing your taxes each year can be complicated and stressful, especially if your returns are unique for some reason.  If you pay estimated taxes, you may decide that you could use some tax support to ensure that you are paying enough, but not too much (or too little).  Success Tax Relief specializes in helping taxpayers navigate all types of tax issues, including estimated taxes, audits, applications for installment agreements and offers in compromise.  You do not have to navigate this process alone. Our team can provide sound tax advice and help you complete all necessary forms and documentation.  Call to speak to one of our tax relief specialists at 877-825-1179 for more information or to get tax help today! Contact us online for a free consultation today!

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