The Covid-19 pandemic has thrown a wrench into the lives of many individuals and businesses worldwide. With the government’s unprecedented stimulus package, taxpayers have been provided with multiple forms of financial relief throughout 2020 and 2021, and the IRS is no exception.
If you’ve faced a tax penalty during the pandemic, you may be able to take advantage of a new break from the IRS. The agency recently announced a new Tax Relief Initiative which allows certain taxpayers to avoid being hit with a tax penalty for underpayment of estimated tax payments made in 2020 due to the covid-19 crisis.
Under the new relief, taxpayers will be able to request to waive the usual 20% penalty and interest that would otherwise be due, and any other penalties or interest that may be due on estimated tax payments not made in 2020. To be eligible, taxpayers must meet the following conditions:
1. The individual must be able to demonstrate that their estimated 2020 tax payments were reduced due to the pandemic.
2. The estimated tax payments must have been paid on or before January 15, 2021.
3. The taxpayer’s total payments were equal to at least 85% of the liability they would have otherwise been required to pay based on their 2019 tax return.
The IRS has also stated that taxpayers who meet these requirements may be able to take advantage of an extension to February 28, 2021 if necessary.
For some, this could be a helpful break, but for others, the process may still be intimidating. Taxpayers should be aware that the IRS’s Tax Relief Initiative does not change or waive any applicable taxes, and it is important to remember that the tax agency may still request additional documentation when assessing the situation.
If you find yourself needing guidance or advice regarding this new tax relief initiative, a tax professional may be your best bet. A professional will be able to provide personalized assistance based on your individual circumstances and ensure that you are in compliance with all applicable regulations.
Overall, the IRS’s new Tax Relief Initiative is a window of opportunity for certain taxpayers who have been hit with a tax penalty during these unprecedented times. It is important, however, to ensure that you meet all the requirements in order to take advantage of the full benefit and stay compliant with applicable laws.
The Covid-19 pandemic has thrown a wrench into the lives of many individuals and businesses worldwide. With the government’s unprecedented stimulus package, taxpayers have been provided with multiple forms of financial relief throughout 2020 and 2021, and the IRS is no exception.
If you’ve faced a tax penalty during the pandemic, you may be able to take advantage of a new break from the IRS. The agency recently announced a new Tax Relief Initiative which allows certain taxpayers to avoid being hit with a tax penalty for underpayment of estimated tax payments made in 2020 due to the covid-19 crisis.
Under the new relief, taxpayers will be able to request to waive the usual 20% penalty and interest that would otherwise be due, and any other penalties or interest that may be due on estimated tax payments not made in 2020. To be eligible, taxpayers must meet the following conditions:
1. The individual must be able to demonstrate that their estimated 2020 tax payments were reduced due to the pandemic.
2. The estimated tax payments must have been paid on or before January 15, 2021.
3. The taxpayer’s total payments were equal to at least 85% of the liability they would have otherwise been required to pay based on their 2019 tax return.
The IRS has also stated that taxpayers who meet these requirements may be able to take advantage of an extension to February 28, 2021 if necessary.
For some, this could be a helpful break, but for others, the process may still be intimidating. Taxpayers should be aware that the IRS’s Tax Relief Initiative does not change or waive any applicable taxes, and it is important to remember that the tax agency may still request additional documentation when assessing the situation.
If you find yourself needing guidance or advice regarding this new tax relief initiative, a tax professional may be your best bet. A professional will be able to provide personalized assistance based on your individual circumstances and ensure that you are in compliance with all applicable regulations.
Overall, the IRS’s new Tax Relief Initiative is a window of opportunity for certain taxpayers who have been hit with a tax penalty during these unprecedented times. It is important, however, to ensure that you meet all the requirements in order to take advantage of the full benefit and stay compliant with applicable laws.
