If we pay more in tax withholding than last year, is there any way we can be subject to a estimated tax withholding penalty?

[69VanNuys]

Under what circumstances can a penalty be assessed if a couple filing jointly withholds more in 2020 then the tax paid in 2019?

https://www.irs.gov/taxtopics/tc306

In the IRS reference document above, it says "Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller. "

The word "Generally" creates a question.  Under what circumstances can a penalty be assessed if a couple filing jointly withholds more in 2020 then the tax paid in 2019?

[Anonymous_ · Accepted solution]

I believe the "generally" caveat is making reference to the very next line in your link:

"There are special rules for farmers and fishermen, certain household employers and certain higher income taxpayers."

Particularly, the "higher income taxpayers" where the withholding and estimated tax payments must be at least 110% of the tax shown on the return for the prior year.

See https://www.irs.gov/instructions/i2210#idm140641571407168

[69VanNuys]

Great answer.   https://www.irs.gov/pub/irs-pdf/p505.pdf

on page 22 shows the information for 2020.  Thanks for solving this question Champ tagteam!