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Prior year income test to avoid underpayment penalty

Level 2

A client is filing MFS in 2020 but filed MFJ in 2019.  How do I calculate the income to be inputted to help avoid some or all of the underpayment penalty?

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Level 9
Level 9

I usually recalculate the 2019 return as if he'd been MFS.

Level 5

Under the Treasury Regulations, calculating the safe harbor for a taxpayer filing a separate return who filed a joint tax return for the preceding taxable year is a 2-step process:

Step 1: For each spouse compute the 2019 tax liability on a separate basis.

Step 2: