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IRS kicks off 2019 tax-filing season as tax agency reopens; Use IRS.gov to avoid phone delays

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IR-2019-07, January 28, 2019

WASHINGTON ― The Internal Revenue Service successfully opened the 2019 tax-filing season today as the agency started accepting and processing federal tax returns for tax year 2018. Despite the major tax law changes made by the Tax Cuts and Jobs Act, the IRS was able to open this year’s tax-filing season one day earlier than the 2018 tax-filing season.

More than 150 million individual tax returns for the 2018 tax year are expected to be filed, with the vast majority of those coming before the April tax deadline. Through mid-day Monday, the IRS had already received several million tax returns during the busy opening hours.

“I am extremely proud of the entire IRS workforce. The dedicated IRS employees have worked tirelessly to successfully implement the biggest tax law changes in 30 years and launch tax season for the nation,” said IRS Commissioner Chuck Rettig. “Although we face various near- and longer-term challenges, our employees are committed to doing everything we can to help taxpayers and get refunds out quickly.”

Following the government shutdown, the IRS is working to promptly resume normal operations.

“The IRS will be doing everything it can to have a smooth filing season,” Rettig said. “Taxpayers can minimize errors and speed refunds by using e-file and IRS Free File along with direct deposit.”

The IRS expects the first refunds to go out in the first week of February and many refunds to be paid by mid- to late February like previous years. The IRS reminds taxpayers to check “Where’s My Refund?” for updates. Demand on IRS phones during the early weeks of tax season is traditionally heavy, so taxpayers are encouraged to use IRS.gov to find answers before they call.

April deadline; help for taxpayers through e-file, Free File

The filing deadline to submit 2018 tax returns is Monday, April 15, 2019, for most taxpayers. Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17 to file their returns.
With major changes made by the Tax Cuts and Jobs Act, the IRS encouraged taxpayers seeking more information on tax reform to consult two online resources: Publication 5307, Tax Reform: Basics for Individuals and Families, and Publication 5318; Tax Reform What’s New for Your Business. For other tips and resources, visit IRS.gov/taxreform or check out the Get Ready page on IRS.gov.

The IRS expects about 90 percent of returns to be filed electronically. Choosing e-file and direct deposit remains the fastest and safest way to file an accurate income tax return and receive a refund.

The IRS Free File program, available at IRS.gov, gives eligible taxpayers a dozen options for filing and preparing their tax returns using brand-name products. IRS Free File is a partnership with commercial partners offering free brand-name software to about 100 million individuals and families with incomes of $66,000 or less. About 70 percent of the nation’s taxpayers are eligible for IRS Free File. People who earned more than $66,000 may use Free File Fillable Forms, the electronic version of IRS paper forms.

Most refunds sent in less than 21 days; EITC/ACTC refunds starting Feb. 27

The IRS expects to issue more than nine out of 10 refunds in less than 21 days. However, it’s possible a tax return may require additional review and take longer. “Where’s My Refund?” has the most up to date information available about refunds. The tool is updated only once a day, so taxpayers don’t need to check more often.
The IRS also notes that refunds, by law, cannot be issued before Feb. 15 for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit. This applies to the entire refund — even the portion not associated with the EITC and ACTC. While the IRS will process the EITC and ACTC returns when received, these refunds cannot be issued before Feb. 15. Similar to last year, the IRS expects the earliest EITC/ACTC related refunds to actually be available in taxpayer bank accounts or on debit cards starting on Feb. 27, 2019, if they chose direct deposit and there are no other issues with the tax return.

“Where’s My Refund?” ‎on IRS.gov and the IRS2Go mobile app remain the best way to check the status of a refund. “Where’s My Refund?” will be updated with projected deposit dates for most early EITC and ACTC refund filers on Feb. 23, so those filers will not see a refund date on “Where’s My Refund?” ‎or through their software packages until then. The IRS, tax preparers and tax software will not have additional information on refund dates, so these filers should not contact or call about refunds before the end of February.

This law was changed to give the IRS more time to detect and prevent fraud. Even with the EITC and ACTC refunds and the additional security safeguards, the IRS still expects to issue more than nine out of 10 refunds in less than 21 days. However, it’s possible a particular tax return may require additional review and a refund could take longer. Even so, taxpayers and tax return preparers should file when they’re ready. For those who usually file early in the year and are ready to file a complete and accurate return, there is no need to wait to file.

New Form 1040

Form 1040 has been redesigned for tax year 2018. The revised form consolidates Forms 1040, 1040A and 1040-EZ into one form that all individual taxpayers will use to file their 2018 federal income tax return.

The new form uses a “building block” approach that can be supplemented with additional schedules as needed. Taxpayers with straightforward tax situations will only need to file the Form 1040 with no additional schedules. People who use tax software will still follow the steps they’re familiar with from previous years. Since nearly 90 percent of taxpayers now use tax software, the IRS expects the change to Form 1040 and its schedules to be seamless for those who e-file.

Free tax help

Low- and moderate-income taxpayers can get help filing their tax returns for free. Tens of thousands of volunteers around the country can help people correctly complete their returns.

To get this help, taxpayers can visit one of the more than 12,000 community-based tax help sites that participate in the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. To find the nearest site, use the VITA/TCE Site Locator on IRS.gov or the IRS2Go mobile app.

Filing assistance

No matter who prepares a federal tax return, by signing the return, the taxpayer becomes legally responsible for the accuracy of all information included. IRS.gov offers a number of tips about selecting a preparer and information about national tax professional groups.

The IRS urges all taxpayers to make sure they have all their year-end statements in hand before filing. This includes Forms W-2 from employers and Forms 1099 from banks and other payers. Doing so will help avoid refund delays and the need to file an amended return.

Online tools

The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax returns on IRS.gov, the official IRS website. Taxpayers can find answers to their tax questions and resolve tax issues online. The Let Us Help You page helps answer most tax questions, and the IRS Services Guide links to these and other IRS services.

Taxpayers can go to View Your Account Information to securely access information about their federal tax account. They can view the amount they owe, pay online or set up an online payment agreement; access their tax records online; review the past 18 months of payment history; and view key tax return information for the current year as filed. Visit IRS.gov/secureaccess to review the required identity authentication process.

The IRS urges taxpayers to take advantage of the many tools and other resources available on IRS.gov.

The IRS continues to work with state tax agencies and the private-sector tax industry to address tax-related identity theft and refund fraud. As part of the Security Summit effort, stronger protections for taxpayers and the nation’s tax system are in effect for the 2019 tax filing season.

The new measures attack tax-related identity theft from multiple sides. Many changes will be invisible to taxpayers but will help the IRS, states and the tax industry provide additional protections, and tighter security requirements will better protect tax software accounts and personal information.

Renew ITIN to avoid refund delays

Many Individual Taxpayer Identification Numbers (ITINs) expired on Dec. 31, 2018. This includes any ITIN not used on a tax return at least once in the past three years. Also, any ITIN with middle digits of 73, 74, 75, 76, 77, 81 and 82 (Example: 9NN-73-NNNN) is now expired. ITINs that have middle digits 70, 71, 72 or 80 expired Dec. 31, 2017, but taxpayers can still renew them. Affected taxpayers should act soon to avoid refund delays and possible loss of eligibility for some key tax benefits until the ITIN is renewed. An ITIN is used by anyone who has tax-filing or payment obligations under U.S. tax law but is not eligible for a Social Security number.

It can take up to 11 weeks to process a complete and accurate ITIN renewal application. For that reason, the IRS urges anyone with an expired ITIN needing to file a tax return this tax season to submit their ITIN renewal application soon.

Sign and validate electronically filed tax returns

All taxpayers should keep a copy of their tax return. Some taxpayers using a tax filing software product for the first time may need their adjusted gross income (AGI) amount from their prior-year tax return to verify their identity.

Taxpayers using the same tax software they used last year will not need to enter their prior year information to electronically sign their 2017 tax return. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

The Tax Cuts & Jobs Act | Summary & Comments

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Yesterday, The Congress and Senate passed the historic Tax Cuts & Job Act of 2017.  Before the holiday “break” between Christmas and New Years, I wanted to provide you with a quick reference and summary of the major changes as well as a couple of examples of their impact.
First, you can view the summary of major changes provided by the National Association of Tax Professionals below:

Tax Cuts and Jobs Act 2017

In analyzing the final tax rates I used my personal tax return for 2016 to compare the changes.  While I lost $6,299 in total exemptions and itemized deductions, I actually would have received a tax break of $2,240.  I’m very happy that I can expect a similar result in 2018.  On the other hand, I took a return from a taxpayer with more income than me, a child and much higher mortgage interest and real estate taxes and the results weren’t as good.  For that household, their overall tax increased by $3,246.65 and they lost $22,206 of deductions with the updated tax rules.
At the end of the day, it does appear that the vast majority of middle America will benefit from the new act.
What this also says to me is that, the government has decided to curb the incentive to purchase homes through subsidies and itemized deductions.  Based on the pace of real estate appreciation, especially in major urban areas, there is some logic to this.  Chasing homes or any asset through tax subsidies inflates the value of the asset that an act of Congress can deflate.

Moral of the story? Those with little debt, living in affordable cities will emerge as huge winners.  

Is there such a thing as a “tax benefit”?  NO! Precisely for the reasons mentioned above.  I receive calls often to give advice on making purchases based on the “tax benefit.”

There is no such thing as a “tax benefit”, it is an oxymoron! 

You have to spend $1 today to defer $.25.  The real question should be one you can answer yourself:  Can I really afford this?  Whether it’s a home, car or anything, if you need to stretch your budget with a tax incentive, the answer is, you cannot afford it.  And, there is no guarantee any tax sweetener will last forever as we’re seeing now with the new Tax Cuts & Jobs Act of 2017 and if that incentive is wiped out by an act of Congress where will that leave you?
In any case, as you can see, I enjoy tax theory but there is always the practical minded client that will ask me and say, “okay Ted, what can I do right now to save a few dollars?”  So the answer to that, right now, is you can pre-pay your real estate taxes for 2018 if you think you will exceed the $10,000 in combined state, local and property tax deductions, which most homeowners in Illinois will be able to do.
The problem is that in Cook county, only 50% of the next years tax is allowed to be pre-paid and you have to file a special form to do that.  You have to check county by county for it’s specific rules and given they just jammed the legislation through at the end of the year, I’m not sure how easy or practical it will be to accomplish.
I do not advise doing this because you really don’t know what your income will look like for 2018 anyway.  You can assume but can never plan.
I welcome your questions.

2017 Tax Cuts & Jobs Act

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As the House and Senate debate the details of the proposed Tax Cuts & Jobs Act, I thought I would share some of the main proposals where there is some mutual agreement.

Here is a link to a summary of the proposals:
2017TaxCutsJobsAct-HouseVSenate

There is a lot of debate about who these changes will help the most and it’s very clear it will indeed help lower wage income earners who don’t itemize and some middle and upper income earners who will avoid AMT, however, if the SALT (state and local income tax) deductions are fully repealed it will penalize home owners who exceed the proposed new standard deduction.

Of other significance, the personal exemptions have been repealed and even with the more favorable rates and an increased standard deduction, families with children and income greater than $230,000 will begin lose the increased child tax credit thus negatively impacting their taxes.

Here is a link to a summary of the Tax Cuts & Jobs Act.
tax_cuts_and_jobs_act_section_by_section_hr1

Don’t hesitate to reach out to us and to see how this historic act will impact you.

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