Even though we are out of the tax filing season (for those who filed by the deadline rather than extend their due date) and our conversation is filled more with tropical storms and "feels like temperatures", the IRS recently published tips for activities that commonly occur during summer but aren't at the forefront of thought. From weddings to house purchases, there are actions to take now to ensure a smoother tax season in 2019. Click here to see what the IRS is focused on right now.
On June 5, 2019 the IRS released it's latest update on scams with the warning that being alert for tax scams is a year round pursuit. The IRS identifies two new scams and gives basic pointers on methods that the service will/won't use to contact you. Click here to see the latest from the IRS on these topics.
The IRS recently released their inflation adjusted deduction limits for contributions for 2020. The limits are increased $50 for individuals and $100 for families. Click here for a detailed explanation from the Journal of Accountancy.
With all the questions, theories and prognostications heading into the tax season after the Tax Cuts and Jobs Act (TCJA) was implemented; it appears that the tax season itself was a nonevent. Although stories abound about smaller refunds and some people having to pay additional tax with their filing, the taxfoundation.org summarizes the recent tax season and the outcome may be surprising to many. Basically, most people paid fewer taxes for 2018 and the refunds were essentially the same to 2017. If your refund was smaller than usual or you ended up paying with your filing, you can adjust your withholding now by filing out a new W4 form and submitting it to your employer. Click here for the taxfoundation.org article.
In a news release from the IRS earlier this week, they announced that the 2018 Tax Filing Season will begin January 28 irregardless of the status of the government shutdown. Click here for the full release from the IRS.
Mileage rates for 2019 were recently released and received quite a bump from 2018. However, due to the Tax Cuts and Jobs Act (TCJA) the number of people who can take advantage of the increased mileage rates will be on the decline. Specifically those that claim unreimbursed employee business expenses under the miscellaneous itemized deduction will be affected since this deduction was eliminated with the passage of the TCJA. Click here to read more about the mileage rate and those affected.
As the year winds down to its final months, everyone is still grasping for an understanding on how the Tax Cuts and Jobs Act (TCJA) is going to affect them. With the new filing season just around the corner, something probably not on people's radar is the filing season being delayed. But that is the warning being issued by the Treasury Inspector General for Tax Administration (TIGTA) at this late stage of 2018. TIGTA says the IRS is facing multiple issues in preparing for the 2019 filing season mostly stemming from the TCJA changes. These issues include the tax forms being completely reformed, the changes to the tax code itself, lack of staff to implement the changes in the IRS IT environment and the additional money it takes to make the changes in addition to the annual updates that are required. We will keep you updated on the timing of the 2019 filing season but be aware that at this point it is not smooth sailing.
As the year progresses, the IRS has released "guidance" on the different areas affected by the Tax Cuts and Jobs Act (TCJA). Thomson Reuters has provided a summary of updated information from the IRS to employers and taxpayers who have reimbursed/paid for business expenses and how it may affect their tax returns for 2018. Click here to see how the changes may affect you.
With the passage of the Tax Cuts and Jobs Act (TCJA), most people have probably noticed that their paycheck is a little bit larger. While this a good thing, all things did not remain neutral. The reason their paycheck is larger is because the IRS adjusted the withholding tables to reflect the new lower tax brackets. As a result, the IRS recommends a "payroll checkup" now while you still have time to make changes to your withholdings so you're not faced with a surprise come next April. Also, fewer people will itemize deductions on their 2018 return and just take the standard deduction which will affect the amount that should be withheld from their paycheck. The IRS has updated their Withholding Calculator to help you determine if you need to make adjustments. Click here to view the IRS article about the changes and how to adjust your withholdings if needed.
The IRS recently released a revised Form 1040 in draft form for 2018 individual tax returns touting the simplification of the form resulting in a "postcard-sized" form. But the size reduction resulted in six new schedules. Is this really simpler? The jury is still out but there is a pretty steep learning curve for the upcoming filing season with both a new form and the new tax law being enacted. US News & World Report has an article summarizing the new form and the schedules that go along with it. If you are intimidated by change or think now is the time to get help with your tax preparation, contact us and let us do the worrying about the changes.
J. Alan Hayes