Question

How to avoid federal underpayment penalty in CA disaster area for 2023 tax filing?

Forum|Forum|3 years ago
March 29, 2023
1 reply
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I live in Santa Clara county, CA, which is a disaster area and federal tax filing date is 10/16, 2023. My 2022 income was much higher than 2021 since my company was acquired, and I had high capital gain in Q4, 2022. I had paid 110% of the tax I owed for the previous tax year (2021) by Jan 2023 as estimated tax. Seems I still own a lot of fed tax for 2022. If I file tax return and make tax payment by 10/16/2023, Will I j=have interest and underpayment penalty for big tax balance?

MichaelG81

No underpayment penalty or interest on 2022 taxes if paid in full by October 16, 2023, for certain disaster areas including Santa Clara County. According to the IRS:

Following the disaster declaration issued by the Federal Emergency Management Agency, individuals and households affected by severe winter storms, flooding, and mudslides that reside or have a business in Alameda, Colusa, Contra Costa, El Dorado, Fresno, Glenn, Humboldt, Kings, Lake, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Mono, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Tulare, Ventura, Yolo, and Yuba counties qualify for tax relief.

The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Jan. 8, 2023, and before Oct. 16, 2023, are granted additional time to file through Oct. 16, 2023. As a result, affected individuals and businesses will have until Oct. 16 to file returns and pay any taxes that were originally due during this period. This includes 2022 individual income tax returns due on April 18, as well as various 2022 business returns normally due on March 15 and April 18. Among other things, this means that eligible taxpayers will have until Oct. 16 to make 2022 contributions to their IRAs and health savings accounts.

@gcmsmith

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