How about making April 30th Celebrating Taxpayers Day?
A few things lead me to suggest this. The reasons mostly tie to my recent research and writing on improving transparency of our tax systems.* I like all principles of good tax policy (I hope we all do). I think that two on the AICPA set of principles of good tax policy need more attention because doing so will help tax systems to better meet the other ten principles the AICPA promotes. These two principles:
Here are three recent events that lead me to suggest starting a Celebrating Taxpayers Day. 1. IRS Commissioner Rettig issued a message on April 12 thanking taxpayers. The first two paragraphs follow: "As the tax filing deadline approaches on April 15, I’d like to thank taxpayers for taking the time to file and pay their taxes. Our nation’s tax system is built around the concept of voluntary tax compliance, meaning citizens comply with their civic duty each year by preparing and filing their taxes – without direct government intervention.Why not make this "thank you" an annual event on a specified date with an explanation of why taxpayers should be thanked, the importance of voluntary compliance, and seize an opportunity to build and support positive tax morale. 2. In my research I came across a 2015 OECD report, Building Tax Culture, Compliance and citizenship: A Global Source Book on Taxpayer Education. It lists activities of 28 developing countries for promoting tax compliance. A few of them have celebration days. For example, Rwanda has an annual Taxpayers Day celebrating compliance and helping citizens understand and appreciate how taxes and the country's development are connected. The president officiates at the event and a report on tax revenue data and tax agency challenges is released. Bangladesh holds a National Income Tax Day 15 days before the tax due date. There are street processions, workshops, conferences and tax clinics. They also show documentaries and dramas on taxation. Celebrating Taxpayers Day in the U.S. could be educational and a reminder of the importance of taxes to our economy and society. It could also be a day where state and local governments help explain their taxes and budgets to their citizens, an opportunity for debates on current tax issues, and release of important government reports about our tax and budget systems. All levels of government release many tax and budget reports throughout the year, why not highlight some key ones on April 30 to draw greater attention to them? 3. Our tax gaps are growing - The IRS estimates the federal tax gap at $458 billion per year. This is more than we collect from the corporate income tax even before the corporate rate was lowered by the Tax Cuts and Jobs Act. A report from the Treasury Inspector General for Tax Administration (TIGTA), Expansion of the Gig Economy Warrants Focus on Improving Self-Employment Tax Compliance (2/14/19) reports some alarming data that indicates we need greater taxpayer education and to better support positive taxpayer morale. Among many findings was that 25% of individuals in a sample of 3.8 milion gig workers filed a 1040, but didn't report their gig income on either the other income line or Schedule C. And, 13% with self-employment tax income who received Form 1099-K did not include Schedule SE or pay their SE tax with their 1040. The IRS also found a 237% increase from 2012 to 2015 in discrepancies between Forms 1099-K filed and what was reported on Forms 1040. A 2018 report from the California Franchise Tax Board found that about 70% of gig economy service providers receive no tax reporting form, which increases non-compliance. With understanding of tax rules and recordkeeping low, compliance without reporting forms become a bigger challenge and frustration. A 2018 QuickBooks survey found that 32% of self-employed individuals admit they don't report all of their income. The above threee items indicate to me that a Celebrating Taxpayers Day would be a positive step in building respect for our tax systems, building a culture of filing and paying and being proud of that fact, and improving understanding of our tax systems. And, hopefully have some fun with it! Why April 30? Well, people are still busy on April 15 filing and sometimes due to weekends and Emancipation Day, filing day falls on April 16 or 17 or 18. April 16 is Emancipation Day (the day in 1862 when President Lincoln signed an emancipation decree for the District of Columbia). April 30 gives preparers time to recover, and individuals getting refunds to hopefully have them in time for the celebration. In history, April 30 is the day George Washington was inaugurated (1789), the U.S. Navy was formed (1798), San Jose State University formed** (1857), the ice cream cone was unveiled in the U.S. at the World's Fair in St. Louis (1904), and the World Wide Web emerged in the public domain by Tim Berners-Lee (1989) and its source code was released to the public in 1993. Yes, there is something called Tax Freedom Day® by the well-respected Tax Foundation. They describe this day as the one marking "how long Americans as a whole have to work in order to pay the nation’s tax burden." For 2019, it is April 16. It isn't a national celebration day though. Also, this information is useful, but I find it is easily misunderstood. Most people do not work until April 16 to pay their taxes but think they do when they hear this information, which harms understanding of our tax system. But it would be a good topic for discussion for April 30 Celebrate Taxpayers Day, to help improve tax literacy and transparency. So, Celebrating Taxpayers Day on April 30. What do you think? *See for example, Nellen, "'Oh, I See': Suggestions for Greater Tax Transparency," State Tax Notes, 11/20/17. Also, Nellen, Suggestions for Improved Transparency and Accountability of California Taxes and Related Information, 10/12/18. **I'm not suggesting April 30 for the SJSU connection. In fact, I wasn't focused on the exact date of the founding of Minns' Evening Normal School (how SJSU started in San Francisco); on campus, we all just say SJSU was founded in 1857 (btw, I'm one of SJSU's historians). from http://21stcenturytaxation.blogspot.com/2019/04/how-about-making-april-30-celebrating.html
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Feeling pretty good today, are you? You got your taxes done and to the Internal Revenue Service on Tax Day. Now you can shift from complaining about doing your taxes to complaining about how they are spent. Here, direct from the U.S. Treasury is a graphic look at where our tax dollars went in fiscal year 2018, which ended Sept. 30, 2018.
2019's accounts: OK, that was last fiscal year. What about the current one? Brian Riedl, senior fellow at the Manhattan Institute, a conservative nonprofit based in, where else, New York City, takes a more personal crack at those figures in an article for Economics 21. "This year, Washington will spend a staggering $35,148 per household," writes Riedl. His calculations show that the per household amounts this fiscal year will go toward: Based on national averages, the more than $35,000 per household in federal spending for 2019 includes:
Check out Riedl's piece for more on each of these federal expenditure areas. Not enough taxes: But wait, there's more. And it's not good. That per household spending by Uncle Sam isn't being covered by taxes. The federal government this fiscal year is only collecting $26,677 per household in taxes, which comes up $8,471 short per household when it comes to offsetting the more than $35 grand spent on each household. That, of course, is going to add to the national debt. Riedl's figures say it will come to $177,000 per household. Finally, the worse news. As you've likely figured out yourself by now, Riedl notes that, "Unless spending is reined in, tax increases must eventually result." Hmmm. Maybe our tax bills we settled up this week weren't so bad after all. You also might find these items of interest:
Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/where-do-your-taxes-go-fiscal-years-2018-2019.html There are some things more important than taxes on April 15, 2019. Too many folks in the southern half of the United States are dealing with the loss of family and friends after a deadly weather system moved across that region over the weekend. At least eight people were killed by the storms, which in addition to tornadoes, some as strong as EF3, also contained dangerous straight-line winds and large hail. State and local officials in many areas have declared states of emergency. Now we wait to see if the federal government does the same. If it does, it could make a difference for the taxes of those affected. When natural disasters are designated by the White House and Federal Emergency Management Agency (FEMA) as major, the Internal Revenue Service typically allows taxpayers more time to deal with their annual tax filing. Tax Day is 7/31 for some: That's what happened so far this year for flooded filers in Iowa and Nebraska, as well as Alabama residents who dealt with tornadoes back in March. Many of those states' taxpayers didn't have to file today. The IRS granted them until e July 31 to send in their individual income tax returns and any payments that normally would have been due April 15. This extended time also applies to the affected taxpayers making quarterly estimated income tax payments due today and June 17. Eligible taxpayers also have until July 31 to make 2018 IRA contributions. If this latest round of tornadoes and associated severe weather gets major disaster treatment (and I suspect it will, given its tragic results), folks in designated areas likely won't have to worry about finishing up their 1040s today. When that's announced, I'll let you know here on the ol' blog. You also can periodically check the FEMA's account on DisasterAssistance.gov, as well as the IRS' online disaster relief page. IRS disaster help automatic: Anyone who is in a declared major disaster area also might be able to claim some disaster losses. In fact, they are the only taxpayers who can do due to changes in casualty loss deductions under the Tax Cuts and Jobs Act (TCJA). While the new tax law provision, which will- be in effect through 2025 unless Congress changes or extends it, now limits who can take this tax break, it keeps the prior-law disaster rules in place. This means you can only claim losses for which you aren't reimbursed by insurance. Your adjusted gross income also will affect how much you can claim. And you still have the choice to claim eligible losses on either the return for the year the loss occurred (in this instance, the 2019 return normally filed next year), or the return for the prior year (2018). My earlier post, How to get tax help for your natural disaster losses, has more on the tax claim process. Taxes, tragedy and tax extensions: Now I'm not one to advocate people ignore the tax laws. But this time, for all those folks still stunned by what happened to their lives because of the weekend's horrible storms, if I were in your situation, I can guarantee I wouldn't be worrying about taxes today. I'd be focusing on getting my life back to normal as much as possible after such a tragedy before I turned to filing a tax return. To that end, I'd file an extension, which would get me past any storm-related future filing date — all the way to Oct. 15 — that the IRS might provide in the coming days. You can find more on how to get these six extra months to finish your taxes in my post on getting a tax-filing extension. As long as you get the extension request filed electronically or on its way if you snail mail it by today, you'll be fine. Then take care of yourself, your family, your friends, your neighbors and your community. We're all thinking of you, on Tax Day and beyond. You also might find these items of interest:
Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/deadly-storms-disrupt-tax-day-2019.html It's finally here! Tax Day 2019. Congratulations to all y'all who survived this first filing season under the new Tax Cuts and Jobs Act (TCJA) provisions. We all deserve a hearty pat on the back. A hug. A drink, potent as the Jeopardy category goes, or not. Some freebies. I'll take one of the massages, thank you. A Major League Baseball break. Patriots Day celebrants in Maine and Massachusetts get more tax-filing time so they can, among other things, enjoy today's Red Sox-Orioles game. Some sleep. And some tax talk. Wait, isn't talking taxes what we've been doing here on the ol' blog? Yes, but I also was thrilled to chat about taxes this weekend with NPR's Michelle Martin on All Things Considered Weekend. If you missed it, you can check out the audio (embedded below) and transcript. If you're still working on your taxes, either getting them into shape to send today to the Internal Revenue Service or getting an idea of how much you owe and must send along with your extension, when you take a break, give it a listen or scan the text. And you know you need to take a break. Step away from the forms for a minute. Take a quick walk, even if it's just around your house. Scream into a pillow. As I noted on the radio, taxes are nerve-racking. That's compounded by this year's tax law changes. Don't let it get to you. We're in the home stretch. Hang in there! These links could help you make it across the finish line:
Advertisements from https://www.dontmesswithtaxes.com/2019/04/tax-day-2019-radio-break.html Two American institutions that regularly catch a lot of flak find that they are good partners each April. I'm talking, of course, about the Internal Revenue Service and U.S. Postal Service. True, software-assisted return prep and e-filing by individual taxpayers or the tax preparers they hire now is the dominant way we get our 1040s to the IRS every year. Most of the 50 million yet-to-file taxpayers, who are this week's By the Numbers honorees, will use these electronic methods by the end of tomorrow. But until Uncle Sam forces all of us to e-file, some folks will still finish their taxes the old-fashioned way, even if they use software to fill out their forms, and wrap it all up by making a tax-filing trip to their local post office. In some cases, e-file-adverse taxpayers just don't trust the electronic delivery method even though you get an almost immediate acknowledgement after you hit send. Others shy away from sending so much personal and financial information over the Internet, fearing hackers and tax identity theft. And some owe the IRS and like the few days delay that it takes for the IRS to cash their snail mailed checks. Whatever the reason for sending your dead-tree tax documents via snail mail, here are 5 tips to ensure your return meets IRS and USPS requirements. 1. Make sure your post office is open. Such filing festivities, however, are history. That's why you need to check the U.S. Postal Service office locator for the nearest branch and then call it to find out its operating hours on April 15. Also note the time of the last outgoing batch of mail. You want to make sure that your envelope to the IRS bears an April 15 postmark. That will make it timely mailed in the IRS' eyes and protect you from any late-filing penalties and interest. 2. Mail your return first class. That timely postmark won't do you any good if your return can't be delivered because of insufficient postage. It will either be late in arriving at the IRS or, more likely, returned to you, meaning you'll face late-filing penalties. As added insurance against such a possibility, shell out a few more bucks to prove that you mailed your taxes on time. Send your taxes via certified mail, return receipt requested. 3. Put your return address on your envelope. Sure, a return-to-sender tax packet means your filling will be late. But better late than never applies here. If there's no return address (or one that can't be determined thanks to your unreadable scrawl), your 1040 could sit for months (or forever!) in a dead-letter pile, running up tax late charges you didn't even know were accumulating. 4. Send your return to the correct IRS office. Your tax return won't have to be shuffled around, meaning the IRS can do its primary filing season job of moving returns through the system. And if you're expecting a refund, and yes, some late-season filers do get money back, sending it to the correct office will help you get that tax cash sooner. So before you start addressing that envelope, check the IRS' interactive list of states to find where to send your 1040. 5. Be patient. Whatever the reason, if you have to wait to mail your taxes, take a deep breath and deal with it graciously. At least you're in the final stretch of filing your return. You also might find these items of interest:
Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/5-tax-tips-for-snail-mail-filers.html We're knee- or in some cases neck-deep into the final days of Tax Season 2019. How's it going for you? If you're among the more than 103 million U.S. taxpayers who have already filed their returns, you're probably feeling pretty good about things. So is Charles Rettig, who's overseeing his first federal filing season as commissioner of the Internal Revenue Service. "The filing season continues to go well in terms of tax return processing and the operation of our information technology systems," Rettig told Senate Finance Committee members on April 10. "During my first few months here, I have been extremely impressed by how hard IRS employees all across the agency have worked to make sure taxpayers have a smooth filing experience this year," said Rettig, as reported by Michael Cohn for Accounting Today. "This is especially impressive given the need to implement so many major changes made by the Tax Cuts and Jobs Act. With hundreds of provisions providing relief to American families and making America’s businesses more competitive, the TCJA required extensive work by the IRS to ensure taxpayers would be able to meet their filing obligations this filing season." Cohn's article with more on Rettig's take on this filing season and Senators' reactions gets this weekend's Saturday Shout Out. If you're done with your taxes, I recommend you read it. If, however, you're still working on your return and bounced over here looking for some last-minute filing tips, here are a dozen posts that should help keep this last tax weekend from turning into your return's Lost Weekend. OK, maybe that 1945 Ray Milland classic film isn't the best metaphor. Then again, after dealing with taxes as the deadline bears down, you might want a drink or two. But I digress. Here are the tips:
If you want even more tax tips, you can check out the monthly collections: January, February, March and — tah-dah! — April. Extend to avoid mistakes: At this late hour in the filing season, I want to emphasize #13. Yes, you still have the rest of the weekend and until midnight April 15 (or April 17 if you live in Maine or Massachusetts). That's plenty of time to finish the job, especially if you're already into filling out your forms. However, if you're just now looking for a tax software to use — I know you're not searching for a tax preparer, as most reputable ones are finalizing the forms for their current clients and aren't taking on any new customers — you might want to skip to the part of the computer program that lets you file for an extension. Unless your return is very simple, it's going to take you more time that you realize to finish. And you're likely to get frustrated and possibly take shortcuts just to be done with it all. That could mean you end up making a costly mistake or worse hear back from the IRS about your filing. Believe me, the IRS really doesn't want to have to question you either. Its workers have plenty of other things to do than track down relatively small filing discrepancies. So do yourself and the IRS a favor. Take all the time you need to submit a properly completed Form 1040, even if you do so a few weeks from now. And for all y'all putting on the final finishes on and double checking your 2018 tax returns, congrats! I'll let you get back to work so you can be done with taxes and enjoy the rest of your weekend. Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/13-tax-tips-for-the-2019-filing-seasons-last-weekend.html
The Tax Cuts and Jobs Act brought several improvements for small businesses, most notably, favorable accounting methods such as use of the cash method and not having to deal with the Unicap rules. The AICPA Tax Section recently posted a position paper noting 13 more changes that would further help modernize the Code to reflect how small businesses operate. Some of these would more completely simplify what Congress started with the TCJA.
For example, the TCJA increased the Section 179 expensing amount to $1 million, adjusted for inflation annually. But, despite the fact that intangibles are important to all sizes of businesses today (and for the past two decades), it only applies to tangible assets (and off-the-shelf software), not intangible assets, such as acquisition of a patent or domain name. The TCJA also allows for use of the cash method by businesses with average annual gross receipts in the prior 3-year period of $25 million or less ($26 million starting in 2019). Yet, despite the higher Section 179 amount and the use of the cash method, a small business might still be amortizing such items as acquired intangibles, start-up expenditures and organizational expenditures. Here is the list of the 13 items from the AICPA Tax Section:
For details, see the complete position paper here.
I think it's a great list of ideas (truth in writing - I proudly chair the AICPA Tax Executive Committee who assembled this list with help from other tax section volunteers and staff). Blog posts are my own.
What do you think?
from http://21stcenturytaxation.blogspot.com/2019/04/tax-reform-ideas-to-reflect-how-small.html The time left until Tax Day is tick, tick, ticking away. If you're feeling like silent movie legend Harold Lloyd (pictured above), hanging on by your fingernails as you try to get your tax filing act together, I have some good news and some bad news. The bad news is that there's no way to stop the tax deadline clock. The good news is you can get an extension to file your 1040. By filing for an extension, the Internal Revenue Service will give you six more months, up to Oct. 15, to submit your return. You still have to pay: It's not hard to get the added time. In fact, it's much easier to file for an extension than it is to fill out the new Form 1040 and any (or all) of its six related schedules. But note that an extension to file is precisely what its name says. It's an extension to file a tax return. It is not an extension to pay what you owe. You still must pay any tax due you owe by April 15 (or April 17 if you live in Maine or Massachusetts) when you make your extension request. If you don't, the IRS' penalty and interest calculator will start running on the unpaid amount. OK. Got it. Gotta pay, but do get more time to fill out the forms. That's at least something. So how do you ask for an extension? There are three ways to do so. 1. File Form 4868 electronically. Just check out your chosen tax software's options to e-file for an extension. It also will give you ways to e-pay, as noted above, any tax you think you'll owe when you do finish up your 1040. Be sure to have a copy of your 2017 tax return handy. You'll be asked to provide information from that return for taxpayer verification. If you are so far behind in filing that you've yet to get any tax software, don't despair. You can use Free File, the IRS-tax software companies' online tax filing option, to electronically get the extra filing time even if you don't qualify to use the free service because you made too much money. Nine companies offer free electronic extension and payment. And if you use a tax preparer, simply give him or her a call and have your extension request and payment sent electronically by that office. This is one call they'll be happy to get. 2. E-pay your guesstimated tax due. Just go directly to one of the IRS-approved e-pay options. They are:
More on each of these e-pay options can be found in my ways to pay taxes post and at IRS.gov's Paying Your Taxes page. You'll receive a confirmation number when you pay online or, if you prefer, by phone. Note that number and keep it for your records. If you're like me and like paper verification to back up your digital transactions, print out Form 4868 and enter your extension payment confirmation number on page 3 of that form. The neat thing about this e-pay extension option, if you can call paying the IRS neat, is that you don't have to send in a 4868 form. Your extension will be automatically processed when you pay part or all of your estimated income tax electronically. 3. File a paper Form 4868. Click image for full IRS Form 4868 As the form above shows, you'll have to enter:
Once that's filled out, send it via the United States Postal Service to the appropriate IRS processing center shown in the table below. Make sure you get to your local post office on time. Your envelope must be postmarked April 15 or the IRS will consider you a late filer and start the interest and penalty clock ticking. Sending it If you feel more comfortable sending your tax material via a private delivery service (PDS), the IRS accepts returns from these carriers, too. The approved PDS companies are:
If you do use a PDS, note that they can't deliver items to P.O. boxes, as shown in the USPS address table above. You must use the actual street address of the IRS campus to which your return should be sent. Those addresses for PDS delivery are: Austin Cincinnati Fresno Kansas City Ogden Also, be sure to get written proof from the PDS of the mailing date for your records. Better correct later than wrong in April: There you go. Those are your extension options. Take advantage of the extra time if you need it. Even the IRS says so, noting that tax haste can make tax waste when filers in a rush to meet the April deadline make costly mistakes (like these 10 common filing errors) on their returns. It's always better, for both you and the IRS, when you get an extension and then later file a correct, complete tax return instead of a faulty form just to meet the April deadline. Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/how-to-get-an-extension-to-file-your-tax-return.html The Internal Revenue Service (IRS) recently put out a news release dispelling 5 myths about tax refunds (and how to check on the status of tax refunds). Thanks to a new tax refund tracking tool that the IRS has developed, you can now check the status of your refund online or through their mobile app. With these tracking tools, taxpayers can:
However, even this new tracking tool has caused a few misconceptions that are persistently floating around social media. Check out this quick summary of what the IRS wants taxpayers to know about tax refunds and the best way to use their refund tracking tools. 1. You don’t have to adjust your paycheck withholding for 2019 if you got a refund for 2018. This is one of the most common myths about taxes, which is why we’re listing it first. Sure, some people may know to make adjustments once a big life event happens, such as getting a raise at work, having a baby, getting married, buying a house, etc. However, changes in the tax law can change withholding amounts without taxpayers doing anything – which is why everyone should check their withholding amounts and do at least some minimal amount of tax planning each year. (As a tax preparer, you definitely want to encourage this good habit with all your clients.) The IRS Withholding Calculator is a great place to start to see if your paycheck withholding is right for 2019. 2. Call the IRS or your tax professional to find out the real date of when you’re getting your refund. Sadly, this is not true – and it can be frustrating waiting on hold trying to speak to someone at the IRS. The truth is that the IRS agents have the same information available to them as what you do when you use their online “Where’s My Refund?” tool or when you use their IRS2Go mobile app. So, using these self-service tools is more likely to give you your refund information faster. 3. Order a tax transcript as a “secret way” to learn your refund date. Ordering a tax transcript is great if you need information to help you prepare your taxes, such as:
A tax transcript will NOT give you any additional or more accurate information about when to expect your refund or where your tax return and tax refund are in the process. 4. “Where’s My Refund?” and the app don’t have a date yet, so they must be wrong. A lot goes into processing tax returns and issuing refunds. While the IRS issues most tax refunds within 21 days, some refunds can take more or less time. In order to keep taxpayers up to date on where their returns stand, the IRS updates their refund tracking tools once every 24 hours, usually overnight. Therefore, you only need to check the tool once a day. If you don’t see a date one day, check the next day. And remember, if there is a problem processing your tax return and the IRS needs to talk to you, you’ll be contacted by mail. (Not by phone – not by email. If you ever get a phone call or an email from the IRS, it’s a phishing scam, and you should not respond. End of story.) 5. The tracking tools aren’t showing the right refund amount, so they must be wrong. Is “Where’s My Refund?” or the mobile app showing a different refund amount than what you expected? That doesn’t necessarily mean the tool is wrong. The IRS lists several reasons in this news release as to why a taxpayer could see a decrease in their refund amount, including:
When any of these situations happen, a letter of explanation will be sent about what adjustments were made from the IRS and/or the Department of Treasury’s Bureau of the Fiscal Service. How to know when there really is a problem The IRS advises taxpayers to contact the IRS tax help hotline if:
Share these myths and tips with clients, and don’t forget to encourage clients to get their taxes done by the 15th or file an extension with your help. from https://www.theincometaxschool.com/blog/5-myths-about-tax-refunds-and-how-to-check-on-the-status-tax-refunds/ Federal and most state, tax returns are due in few days. Don't panic! You still have time to finish your return (or get an extension). If you do decide to just be done with your Form 1040 — new, but not necessarily improved this year under Tax Cuts and Jobs Act (TCJA) changes — make sure you don't make any of these common filing errors in your rush to finish. For the most part, tax software has helped eliminate a lot of mistakes. Still, we're not yet at the total tax automation point yet. And that old garbage in, garbage out adage about computer data definitely applies to tax returns. In fact, it's more critical, since one wrong tax entry could be multiplied across several forms or schedules, producing a costly tax error. So that you won't end up in such a situation, check out these 10 common tax mistakes that millions of taxpayers make every year. Some are directly from the Internal Revenue Service. Others are based on my and other filers' experiences. 1. Missing or inaccurate Social Security numbers: This nine-digit number was not intended to be our universal identifier, but, for better and in this age of identity theft often for worse, that's what the Social Security number has become. There's been some talk about changing that for tax filing, but until that happens, you've got to include it on your annual return. The IRS won't process a 1040 without it. This identity number requirement extends to you as the primary filer, as well as the Social Security numbers for your spouse and any dependents. These numerals are crucial because so many tax-related transactions, from income statements to investment earnings to retirement plan contributions and distributions, are keyed to this number. A Social Security number also is critical when claiming several tax credits, such as the child tax and additional child tax credits, as well as ones for educational expenses and dependent care costs. When you run your final tax software check, it should point out any missing Social Security numbers. But what it won't know is whether the digits are correct. So double check. A wrong tax ID number, when checked by the IRS against other data it has on you, will at best slow down the processing of your return. At worst, it could cost you valuable tax breaks. 2. Misspelled or different names: Sure, the bulk of the information on your tax return is numerical, but words — specifically names — are important, too. Spell all names listed on a tax return exactly as listed on the taxpayers’ Social Security card. What's the big deal if you've gone by a middle or nickname all your life and enter that on your Form 1040? Plenty. When the names of a taxpayer, his or her spouse or their children don't match the tax identification number that the Social Security Administration has on record, the IRS processing machine likely will kick out or slow down the tax return. Name issues often are a problem for the newly married. Many folks still change their surnames when they marry, whether the "I do's" are exchanged by a bride and groom or spouses in same-sex marriages, which the IRS now recognizes. In these cases, if you didn't alert the Social Security Administration (SSA) of your name change after your wedding, your new name on your 1040 or other tax statements could cause a problem when you file your first joint tax return. Get in touch with the SSA ASAP to reconcile this. The same issue also arises when marital bliss doesn't last and ex-spouses change names after a divorce. Again, make sure Uncle Sam's appropriate agencies know that, too. 3. Improperly claiming a dependent: Sometimes determining just who is your tax dependent can be messy. There are lots of rules about relationships and support earned or provided and who lives for how long in your house. You also must have the Social Security number of the person (see #1), either a child or qualifying relative, you're listing as a dependent on your tax return. Sometimes the eligibility confusion leads to an innocent mistake as to who can be listed as your tax dependent. Other times, though, folks knowingly claim a person as dependent to get a tax break, such as the refundable Earned Income Tax Credit. Faking dependents is not a good idea. This is willful disregard of the tax laws and your responsibility to meet them. Such intentional tax violations could lead to tough penalties, sometimes of the criminal nature, on top of the unpaid tax and interest added to it that you thought you were escaping with your fake dependent ploy. Think the IRS might be too busy to catch your suddenly larger family? Think again. The IRS knows that filers sometimes add people, either real or imaginary or even pets, on their returns. That's why tax examiners look at who has and hasn't been listed before on your returns. 4. Using the wrong filing status: Some taxpayers unintentionally claim the wrong filing status. That innocent error could be costly, such as choosing single in the first tax-filing season since your divorce when you have primary custody of your children and really should be filing as the more tax-beneficial head of household. Filers have five filing status options, and each could make a difference in your ultimate tax bill. The IRS' online Interactive Tax Assistant can help you pick the proper filing status. E-file software also helps prevent mistakes here. 5. Using whole, rounded numbers: Yes, round numbers are easier to add and subtract. Yes, your tax software rounds entries. And yes, even the IRS says you can round your dollars and cents on your Form 1040 entries. But when it comes to deductions and business expenses, it tends to make the IRS think that you're, uh, making up amounts. OK, I tend to add tip amounts so that business meal checks come out to even numbers. But I have those receipts to support my OCD. Other financial transactions, however, rarely end in .00. At best, all those rounded numbers make it look like you didn't keep good records showing precise amounts. And that could encourage the IRS to take a closer look at all your entries. 6. Entering incorrect bank account numbers: You can have your tax refund directly depositing into a bank account or accounts or retirement plan. That's easy for you and the IRS. Unless you enter the wrong account number and accompanying routing number. The more numbers you enter on a tax form, the more chances you have to enter them incorrectly. And a wrong account or routing number could cause you to lose your refund entirely. You can divide your refund deposit into three accounts by filing Form 8888 along with your individual return. It's not a difficult document to complete, but if you put in wrong account numbers, your refund could end up in someone else's account or be sent back to the IRS. Incorrect account numbers aren't just a problem when a refund is split multiple ways. Even if your refund is going to just one account, make very sure you enter that account and bank routing numbers correctly. 7. Overlooking additional income: Did you have a side job this year? If so, as a contractor you probably received a Form 1099-MISC or maybe a 1099-K detailing the extra gig earnings. What about savings and investment accounts? For these, you should have received Form 1099-INT and Form 1099-DIV statements. In these 1099 situations, the IRS knows precisely how much extra money, either as wages or unearned investment income, you made because it got copies of those forms, too. If you forget to include any of these earnings on your return, IRS examiners will let you know you that it knows and that you owe taxes on that money, too. And depending on when your oversight is discovered, you also could owe penalties and interest on the unreported earnings. 8. Making credit or deduction mistakes: Here's a non-news flash. The tax code is complicated. In fact, many of the changes made by the TCJA have, say many tax professionals and filers, have made things worse in this regard instead of better. That means there are lots of opportunities to make mistakes as you look for tax-saving credits and deductions. Errors are frequently made by folks claiming two popular tax breaks, the additional child tax credit. Both of these credits are refundable, meaning they can get you a refund even if you don't owe any tax. That's part of the reason the IRS now must hold refunds related to these tax credits until mid-February. But the IRS also sees each year errors by filers figuring their child and dependent care credit and even in selecting their standard deduction amount. For example, a taxpayer who's 65 or older and/or blind, can claim a larger standard deduction. Follow the tax filing instructions carefully, either those in IRS publications and forms or as part of your tax software. Again, the IRS' online Interactive Tax Assistant also can help you determine if you're eligible for certain tax credits or deductions. 9. Math miscalculations: The IRS is all about the numbers. So it's no surprise that the most common error on tax returns, year after year, is bad math. Arithmetic errors range from simple addition and subtraction to more complex tax items, like those credits and deductions just mentioned in mistake #8. Figuring things like the EITC or the taxable portion of a retirement account distribution, for example, is more difficult and results in more math errors. The IRS' 207 Data Book, the latest available edition, shows that in processing 2016 tax returns, the agency caught more than 2.5 million math errors. Considering that most of us use tax software, in large part because it does the math for us, that's astounding. Source: IRS 2017 Data Book Again, the garbage in, garbage out factor comes into play here. The wrong number on one form's line produces a wrong calculation that gets transferred to another form, exponentially compounding the math error. So pay close attention when you enter your numerical data into your tax return. 10. Missing the deadline: Finally, don't make the biggest tax season mistake of all, missing the filing deadline. Millions of taxpayers put off filing until the very last minute. That's OK as long as your mailed paper return is postmarked by the April filing deadline or you hit "enter" to e-file your 1040 by midnight in your time zone on April 15. This year, some folks get a couple of extra days. Thanks to the convergence of the Patriots Day and Emancipation Day holidays, taxpayers in Maine and Massachusetts don't have to file their federal tax returns until April 17. Get an extension: But regardless of your filing due date, if you just can't finish your forms by the deadline, get an extension. Filing Form 4868 will give you six more months, until Oct. 15, to get all your tax return material filled out correctly and into the IRS. The extra filing time is granted as long as you get your request to the IRS, either by mailing the paper form or electronically asking for an extension by, for most of us, Monday, April 15. Remember, though, that this automatic extension applies only to filing your tax the forms. You still must send by your filing deadline any tax you owe with your extension request. If you don't, you could face late-filing or non-filing penalties. Nobody wants to pay Uncle Sam a penny more than necessary, so don't make the mistake of missing the filing deadline. Or any of the 9 other potentially costly tax filing errors. Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/10-tax-filing-mistakes.html |