Estimated Tax Penalties for Farmers and Fishermen Waived
Individuals, including farmers and fisherman, who chose not to make quarterly estimated tax payment this year were required to file their 1040’s for 2018, along with a payment for all taxes owed, by March 1st. Initially, taxpayers who fell under this category, but who failed to comply by the deadline were subject to a penalty. Recognizing that because of certain rule changes, many farmers and fishermen had difficulty determining their tax debt by this deadline, the IRS instituted a waiver of the estimated tax penalty for these individuals, as long as they file their federal income tax returns by the April 15th deadline. For help determining whether you qualify for this waiver, please contact a member of our dedicated tax return preparation legal team today.
Estimated Income Taxes
Under federal law, taxpayers are required to pay taxes on their income as they earn it, usually by having a certain percentage withheld from their paycheck. When these taxes are not withheld from a person’s wages, however, that individual is required to pay estimated income tax in four installments, each of which totals 25 percent of the necessary annual payment. Taxpayers who fail to comply with these rules are subject to an estimated income tax penalty in addition to any tax debt. Generally, farmers and fishermen are exempt from this requirement and as a result, are permitted to make only a single installment payment, which is usually due on January 15th, but this year was extended to March 1st. Fortunately, the IRS recently instituted a penalty waiver for qualifying fishermen and farmers who failed to meet this deadline.
Who Qualifies for the Waiver?
To qualify for this penalty waiver, taxpayers must satisfy the definition of a farmer or fishermen, which means that the income they obtained from these endeavors made up at least two-thirds of their total gross income, whether in the current or preceding tax year. The taxpayer in question must also file his or her tax return and pay any taxes owed by April 15th in order to avoid a hefty penalty. For individuals who reside in Massachusetts or Maine, however, this date will be pushed back to the 17th.
In addition to properly completing their federal income tax returns and submitting them by the deadline, taxpayers seeking a waiver of the estimated tax penalty must also complete and attach Form 2210-F, titled Underpayment of Estimated Tax by Farmers and Fishermen, to their tax return. This form only requires taxpayers to include their name and Social Security Number at the top of the form and then check the waiver box contained in Part I – Box A. The remainder of the form should be left blank and when finished, can be submitted either in paper form or electronically.
Contact Our Legal Team for a Free Case Evaluation
If you earned at least two-thirds of your income from farming or fishing last year and have not yet submitted your tax return for 2018, please contact dedicated Florida tax return preparation attorney Ronald Cutler, P.A. at 386-490-9949 today to learn more about qualifying for the IRS’ penalty waiver.