Summer Activities Can Affect Next Year’s Tax Return
- Report any name change to the Social Security Administration. Report and address change to the United States Postal Service, employers and IRS.
Sending Kids to Summer Day Camp:
- Unlike overnight camps, cost of summer day camp may count towards the child and dependent care credit.
- While summertime and part time workers may not earn enough to owe federal income tax, they should remember to file a return. They’ll need to file to get a refund for taxes withheld from their checks.
- Employees receive a Form W2 from their employer. They’ll use this to prepare their tax return. W-2’s should be received by January 31 next year. Employees will get a W2 even if they no longer work for the summertime employer.
- Summertime workers who work as independent contractors aren’t subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes.
Taxpayers can go to IRS.gov, they can login to the View Your Account Information page.
Taxpayers can view:
- Their payoff amount, which is updated for the current day
- Balance for each tax year for which they owe taxes
- Payment history
- Information from their most current tax return as originally filed.
Taxpayers should also allow 1 to 3 weeks for payments to show up in the payment history. To access their information online, taxpayers must register through Secure Access. This is a two-factor authentication process. Taxpayers can review the Secure Access page process prior to starting registration.
Millions of ITIN’s set to expire in 2019;
Renew early to prevent refund delays
Nearly 2 million Individual Taxpayer Identification Numbers (ITINs) are set to expire at the end of 2019. The IRS continues to urge affected taxpayers to submit their renewal applications early to avoid refund delays next year.
Renewing before the end of the year will avoid unnecessary delays related to their refunds. ITINs that have not been used on a federal tax return at least once in the last three years will expire on December 31, 2019. In addition, ITINs with middle digits 83, 84, 85, 86 or 87 that have not already been renewed will also expire at the end of the year. These affected taxpayers who expect to file a tax return in 2020 must submit a renewal application as soon as possible.
Family Option Remains Available
Taxpayers with an ITIN that has middle digits 83, 84, 85, 86 or 87, as well as all previously expired ITINs, have the option to renew ITINs for their entire family at the same time. Those who have received renewal letters from the IRS can choose to renew the family’s ITINs together, even if family members have an ITIN with middle digits that have not been identified for expiration. Family members include the tax filer, spouse, and any dependents claimed on the tax return.
Prevent Delays Next Year
Federal tax returns that are submitted in 2020 with an expired ITIN will be processed. HOWEVER, tax credits, any exemptions will be disallowed. Taxpayers will receive a notice in the mail advising them of the change to their tax return and their need to renew their ITIN. Once he ITIN is renewed, credit and exemptions will be restored and any refunds will be issued.
Taxpayers who still haven’t filed their 2018 tax return
Some things taxpayers should know:
- Penalties and interest are only added on unfiled returns if the taxpayer did not pay taxes by the April deadline. Taxpayers who did not file and owe tax should file a tax return and pay as much as they are able to now.
- Some taxpayers may have extra time to file their tax returns and pay any taxes due. These include:
- Some disaster victims
- Military service members
- S. citizens and resident aliens who live and work outside the U.S. and Puerto Rico.
- If a return is filed more than 60 days after the April due date, the minimum penalty is either $210 or 100% of the unpaid tax, whichever is less.
There is no penalty for filing late if a refund is due
Tax related identity theft occurs when a thief uses someone’s stolen Social Security number to file a tax return and claim a fraudulent refund.
Here are some things people should know about identity theft, including warning signs and steps to take after identity theft occurs.
Warning Signs: Taxpayers should be alert to tax related identity theft if they are contacted by the IRS or their tax preparer about:
- More than one tax return being filed
- Additional tax owed
- A refund offset
- Collection actions taken against the taxpayer for a year when they did not file a tax return
- IRS records indicating they received wages or other income from an employer for whom the taxpayer did not work.
Steps to take if someone becomes a victim:
- File a complaint with the FTC at identitytheft.gov
- Contact one of the three major credit bureaus to place a fraud alert on their credit records
- Contact their financial institutions to close any financial or credit accounts opened without permission or that were tampered with by identity thieves
- Respond immediately to any IRS notice and call the number provided in the letter
- Complete IRS Form 14039, Identity Theft Affidavit.
Tax-related identity theft remains serious enough to earn a spot on the agency’s 2019 “Dirty Dozen” list of tax scams. We encourage taxpayers to continue to be on the lookout for identity theft schemes, including email phising attempts. Many of these schemes peak during filing season.
Tax related identity theft occurs when someone uses a stolen Social Security number of Individual Taxpayer Identification Number (ITIN) to file a fraudulent tax return claiming a refund.
Taxpayers should remember that identity thieves constantly strive to find a scheme that works. Once their ruse begins to fail as taxpayers become aware of their ploys, they change tactics. Taxpayers must remain vigilant to the various scams and schemes used for data thefts.
Security tips for taxpayers. Taxpayers should:
- Always use security software with firewall and antivirus protections. Make sure security software is turned on and can automatically update. Use STRONG passwords!
- Learn to recognize and avoid phising emails and threatening phone calls and texts from thieves posing as legitimate organizations such as banks, credit card companies and government organizations, including the IRS. Do not click on links or download attachments from unknown or suspicious emails. Invest in good anti-spyware and anti-malware software protection.
- Protect personal data. Don’t routinely carry a Social Security card. Make sure tax records are secure.
Reversing the damage caused by identity theft is often a frustrating and complex process for victims.
The Internal Revenue Service issued Revenue Procedure 2019-08 today to provide guidance on deducting expenses under Section 179(a). These rules, as amended by the Tax Cuts and Jobs Act (TCJA) in December 2017, generally apply to tax years beginning after 2017.
Section 179 allows taxpayers to deduct the cost of certain property as an expense when the property is placed in service. For tax years beginning after 2017, the TCJA increased the maximum Section 179 expense deduction from $500,000 to $1 million. The phase-out limit increased from $2 million to $2.5 million. These amounts are indexed for inflation for tax years beginning after 2018.
The TCJA changed the ADS recovery period of residential rental property. For property placed in service after 2017, the recovery period is 30 years. It was formerly 40 years.
Proposed Revenue Procedure
Section 3 of this revenue procedure provides a safe harbor under which a rental real estate enterprise will be treated as a trade or business for purposes of section 199A of the Internal Revenue Code 1.199A-1 through 1.199A-6 of the Income Tax Regulations (26 CFR Part I). The safe harbor provided by this revenue procedure applies solely for purposes of section 199A. If an enterprise fails to satisfy the requirements of this safe harbor, the rental real estate enterprise may still be treated as a trade or business for purposes of section 199A if the enterprise otherwise meets the definition of trade or business in 1.199A-(b)(14).
“O mighty Internal Revenue,
Who turneth the labor of man to ashes,
We thank thee for the multitude of thy forms,
Which thou has set before us,
And for the infinite confusion of thy commandments,
Which multiplieth the fortunes of (enrolled agents) and accountants alike,
Grant that this sacrifice not be found insufficient unto they auditor.”
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.
Renew ITIN to avoid refund delays
- Many Individual Taxpayer Identification Numbers (ITINs) expired on December 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 is now expired.
- ITINs that have middle digits 70, 71, 72 or 80 expired December 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.
- It can take up to 11 weeks to process a complete and accurate ITIN renewal application.
The Internal Revenue Service successfully opened the 2019 tax-filing season! More than 150 million individual tax returns for the 2018 tax year are expected. The IRS worked to successfully implement the biggest tax law changes in 30 years.
Following the government shutdown, the IRS is working to promptly resume normal operations. “Taxpayers can minimize errors and speed refunds by using e-file.” The IRS expects many refunds to be paid by mid- to late February.
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. Choosing e-file and direct deposit remains the fastest and safest way to file an accurate income tax return and receive a refund.
Most refunds sent in less than 21 days;
EITC/ACTC refunds starting February 27
The IRS expects to issue more than nine out of ten refunds in less than 21 days. However, it’s possible a tax return may require additional review and take longer.
The IRS also notes that refunds, by law, cannot be issued before February 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 EITC and ACTC. The IRS expects the earliest EITC/ACTC related refunds to actually be available in taxpayer bank accounts or on debit cards starting on February 27, 2019, if they chose direct deposit and there are no other issues with the tax return.
The law was changed to give the IRS more time to detect and prevent fraud.