Submitted By: someone
Answered: April 6, 2021 11:38 pm

What is the safe harbor for avoiding estimated tax penalties for 2020 payments?

If the amount of the underpayment is more than $1,000, you can avoid penalties if you’ve paid at least 90% of the tax liability for the year or 100% of 2019’s tax liability (110% if your adjusted gross income in 2019 was over $150,000, or $75,000 if married filing separately). In 2019, the IRS lowered the 90% threshold to 80%, for 2018 estimates that fell short due to confusion about new income tax withholding rules, but there is no similar reduction for 2020 taxes (nor was there a reduction for 2019 taxes).

Tax Glossary

Cancellation of debt

Release of a debt without consideration by a creditor. Cancellations of debt are generally taxable.

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