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Underpaid taxes? IRS is waiving some penalties

Economic impact of government shutdown

If you underpaid your taxes last year, you can breathe (a little) easier. The IRS said it would penalize fewer people, as long as they paid most of the taxes they should have.

The U.S.' tax collector said on Wednesday it would waive penalties for some taxpayers who owe taxes for the 2018 filing year. Anyone who paid at least 85 percent of the tax they owe will not pay a penalty, the IRS said. The typical threshold is 90 percent.

Only about one-fifth of tax filers owe in any given year, according to IRS data. But that's likely to be higher this year thanks in part to the tax cuts that started in 2018. The IRS warned in December that the number of taxpayers "who owe tax, and in some cases a penalty, is likely to be larger than in recent years, and many of them are likely to be people who have always gotten refunds."

Following the tax cuts, many businesses adjusted the amount of tax they withheld from workers' paychecks. So people who may have been expecting a big check come tax time may find out they've already received their tax cut, in the form of a slightly higher take-home number on their paychecks.

Though the federal government is entering its fourth week of a partial shutdown, tax filing season is set to open Jan. 28, the IRS has said. About 46,000 IRS employees were called back to work on Tuesday, without pay.

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