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From IRS https://www.irs.gov/newsroom/irs-waives-penalty-for-many-whose-tax-withholding-and-estimated-tax-payments-fell-short-in-2018 “IR-2019-03, January 16, 2019 WASHINGTON — The Internal Revenue Service announced today that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year. The IRS is generally waiving the penalty for any taxpayer who paid at least 85 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two. The usual percentage threshold is 90 percent to avoid a penalty. The waiver computation announced today will be integrated into commercially-available tax software and reflected in the forthcoming revision of Form 2210 and instructions. This relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA), the far-reaching tax reform law enacted in December 2017. “We realize there were many changes that affected people last year, and this penalty waiver will help taxpayers who inadvertently didn’t have enough tax withheld,” said IRS Commissioner Chuck Rettig. “We urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.” The updated federal tax withholding tables, released in early 2018, largely reflected the lower tax rates and the increased standard deduction brought about by the new law. This generally meant taxpayers had less tax withheld in 2018 and saw more in their paychecks. However, the withholding tables couldn’t fully factor in other changes, such as the suspension of dependency exemptions and reduced itemized deductions. As a result, some taxpayers could have paid too little tax during the year, if they did not submit a properly-revised W-4 withholding form to their employer or increase their estimated tax payments. The IRS and partner groups conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do a “Paycheck Checkup” to avoid a situation where they had too much or too little tax withheld when they file their tax returns. Although most 2018 tax filers are still expected to get refunds, some taxpayers will unexpectedly owe additional tax when they file their returns.”
We finally received our 1099B for stocks so I finished my data entry for e-filing. So we owe Federal tax and get back money for State tax. The state tax refund is slightly more than the federal tax due (both are close to $3k). Since all the data entry has already been double checked to be correct, Iâ€™m assuming we didnâ€™t withhold enough for AMT. So how do you adjust the withholding so that we donâ€™t owe tax next year? We rather withhold more and get a refund, then need to pay up again next year. About half the annual income is in the form of restricted stocks options if it matters and 401k contribution is maxed out.
There is a big difference between the W2 wage and gross pay (take home + insurance premiums + 401k + SDI +...). We won't get the income tax form for vested shares until end February according to Morgan Stanley so I am impatiently curious whether all the sell to cover shares become taxable income even though we do not see a cent of it. No other shares were sold other than sell to cover. The difference is big enough to fund a year of college. Also if my husband has like 100 shares of company share on hand accumulated over the years, that is not taxable until sold as capital gains right? RSUs has always been my income tax filing pain in the neck. He is an employee, not self employed if that matters.
Every week, I receive an email newsletter from the man who writes about U.S. taxes for About.com He is very helpful. The newsletter that just came has a link to this article, which may be of interest to some of you. http://taxes.about.com/od/international/fl/accidental-americans.htm?utm_source=exp_nl&utm_medium=email&utm_term=list_taxes&utm_campaign=list_taxes&utm_content=20150616