What is your thoughts on the under estimated tax penalty?

[TiredFarmer]

Let me rephrase....Do you think the under estimated tax penalty still applies for 2019 under the CARE Act?  I had someone hold for hours to talk to a real person at the IRS and they got 2 different answers.

[Just-Lisa-Now- · Accepted solution]

Im guessing they will use July 15th as the "due date" for computing the penalty, rather than April 15th.

The current state of things really isnt an excuse for not paying estimated payments last year.

[itonewbie]

The IRS clearly stated in Notice 2020-18, Section III, that "Federal estimated income tax payments (including payments of 3tax on self-employment income) due on April 15, 2020" are within scope and that "the period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure... to pay the Federal income taxes postponed by this notice."

This means Q1 ES-tax underpayment penalty will not kick in until Jul 16 although the penalty for Q2 will start on Jun 16 as usual.  Just imagine (1) treating Q2 as if it were Q1 (and vice versa), (2) changing the trigger date for Q1 penalty from April 16 to Jun 16, and (3) replacing the trigger date of Jun 16 for Q2 with Jul 16.

[sjrcpa]

The underpayment still applies for 2019. 2019 estimated tax payments were supposed to be made prior to this crisis. Nothing has eliminated the penalty for 2019.

[itonewbie]

Agree with Susan.  2019 ES-tax payments are not within scope and the IRS has reiterated in the Notice 2020-18 Q&A, if I recall, that the penalty will apply.

[qbteachmt]

Remember that 4th quarter 2019 was due in Jan, which was before any crisis was declared.

Any I never found evidence that my State changed the estimated payment due dates.