2210 Update

Tax Reform Waiver – Form 2210.

Under pressure from members of Congress, the IRS agreed to provide relief from underpayment penalties due to the changes brought about by TCJA and concerns taxpayers may be under withheld. The IRS indicated they would include an 85% safe harbor. Quite frankly I and others believed that meant replacing the “90%” in normal 90% of the current year’s tax liability safe harbor with “85%”. 

The IRS just released the 2018 Form 2210 and the 90% still appears on the form, but the Form 2210 instructions provide special instructions and a worksheet for what is termed a the “tax reform waiver.”  Unlike the other safe harbor payments, the 85% amount paid does have to be paid evenly over the four quarters. The taxpayer need only have paid in 85% of their tax liability during the year. That being the case your tax software should be able to apply that exception automatically without any additional input on your part. However, you should check with your software provider to ensure they do that.