Monday, July 29, 2019

Taxpayers who need to get a tax transcript should first visit IRS.gov

Taxpayers might need a tax transcript for many reasons, like applying for a mortgage or a student loan. The Let Us Help Youpage on IRS.gov will help taxpayers understand tax transcripts. This page has links to information that will help taxpayers learn about the different types of transcripts and the process of how to get one.

Order a tax transcript

  • From here, taxpayers can visit the pages where they can request a transcript, either online or by mail. Taxpayers can get different Form 1040-series transcript types from this page. 

Transcript types

  • Depending on why a taxpayer needs a transcript will determine which type they need. This page lists detailed information about what is included in the five different types of transcripts.

Frequently asked questions

  • Taxpayers can visit the Q&A page for specific questions about the Get Transcript Online service. They'll find FAQs about getting a transcript both online and by mail. 
However, taxpayers might not need a full transcript. If they only need to find out how much they owe or verify payments they made within the last 18 months, they can visit the view your tax account page.

Good tax planning includes good recordkeeping

Tax planning should happen all year long, not just when someone is filing their tax return.  An important part of tax planning is recordkeeping. Well-organized records make it easier for a taxpayer to prepare their tax return. It can also help provide answers if a taxpayer’s return is selected for examination or if the taxpayer receives an IRS notice.
This tip is one in a series about tax planning. These tips focus on steps taxpayers can take now to help them down the road.
Here are some suggestions to help taxpayers keep good records:
  • Taxpayers should develop a system that keeps all their important info together. They can use a software program for electronic recordkeeping. They could also store paper documents in labeled folders.
     
  • Throughout the year, they should add tax records to their files as they receive them. Having records readily at hand makes preparing a tax return easier.
     
  • It may also help them discover potentially overlooked deductions or credits. Taxpayers should notify the IRS if their address changes. They should also notify the Social Security Administration of a legal name change to avoid a delay in processing their tax return.
     
  • Records that taxpayers should keep include receipts, canceled checks, and other documents that support income, a deduction, or a credit on a tax return.
     
  • Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for computing gain or loss.
     
  • In general, the IRS suggests that taxpayers keep records for three years from the date they filed the return.
     
  • For business taxpayers, there's no particular method of bookkeeping they must use. However, taxpayers should find a method that clearly and accurately reflects their gross income and expenses. The records should confirm income and expenses. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.
The IRS has several online tools taxpayers can use to stay updated on important tax information that may help with tax planning. In addition to visiting IRS.gov, they can download the IRS2Go app, watch IRS YouTube videos, and follow the IRS on Twitter and Instagram.

Tax planning includes determining filing status

Single or married? Kids or no kids? These are just a couple of questions that will help someone determine their tax filing status. Taxpayers usually only think about their filing status when filing their returns. However, this is something to think about all year, especially if it changes.
This tip is one in a series about tax planning. These tips focus on steps taxpayers can take now to help them down the road.

Here are some things about filing status that taxpayers should consider now:

A taxpayer’s filing status is used to determine their:

  • Filing requirements
  • Standard deduction
  • Eligibility for certain credits
  • Correct amount of tax
If more than one filing status applies to someone, they can use the Interactive Tax Assistant to help them choose the one that will result in the lowest amount of tax.

Changes to family life may affect someone’s tax situation. These changes include:

  • Marriage
  • Divorce
  • Birth of a new baby
  • Adoption of a child
  • Death
Typically, a taxpayer’s status on December 31 applies to the entire year for tax purposes. For example, if someone gets married late in the year, for tax purposes they’re considered married for the entire year.
The IRS has several online tools taxpayers can use to stay updated on important tax information that may help with tax planning. In addition to visiting IRS.gov, they can download the IRS2Go app, watch IRS YouTube videos, and follow the IRS on Twitter and Instagram.

Year-round tax planning includes reviewing eligibility for credits and deductions

Tax credits and deductions can mean more money in a taxpayer’s pocket. Most people only think about this when they file their tax return. However, thinking about it now can help make filing easier next year.
This tip is one in a series about tax planning. These tips focus on steps taxpayers can take now to help them down the road.
Taxpayers should be prepared to claim tax credits and deductions. So, here are a few facts about credits and deductions that can help a taxpayer with their year-round tax planning:
  • Taxable income is what’s left over after someone subtracts any eligible deductions from their adjusted gross income. This includes the standard deduction. In fact, most individual taxpayers take the standard deduction. On the other hand, some taxpayers may choose to itemize their deductions because it could lower their AGI even more.
     
  • The Tax Cuts and Jobs Act made changes to itemized deductions. Many individuals who formerly itemized may find it more beneficial to take the standard deduction.
     
  • As a general rule, if a taxpayer’s itemized deductions are larger than their standard deduction, they should itemize. Also, in some cases, taxpayers may even be required to itemize.
     
  • Taxpayers can use the Interactive Tax Assistant to see what expenses they may be able to itemize.
     
  • Taxpayers can subtract tax credits from the total amount of tax they owe. To claim a credit, taxpayers should keep records that show their eligibility for it.
     
  • Here are a few examples of taxpayers who can benefit from certain credits:
  • Properly claiming these tax credits can reduce taxes owed and boost refunds. Taxpayers can check now see if they qualify to claim it next year on their tax return. Some tax credits, like the EITC, are even refundable, which means a taxpayer can get money refunded to them even if they don’t owe any taxes.
The IRS has several online tools taxpayers can use to stay updated on important tax information that may help with tax planning. In addition to visiting IRS.gov, they can download the IRS2Go app, watch IRS YouTube videos, and follow the IRS on Twitter and Instagram.

Here’s the 411 on who can deduct car expenses on their tax returns

Taxpayers who have deducted the business use of their car on past tax returns should review whether or not they can still claim this deduction. Some taxpayers can. Some cannot.
Here’s a breakdown of which taxpayers can claim this deduction when they file their tax returns.

Business owners and self-employed individuals

Individuals who own a business or are self-employed and use their vehicle for business may deduct car expenses on their tax return. If a taxpayer uses the car for both business and personal purposes, the expenses must be split. The deduction is based on the portion of mileage used for business.
There are two methods for figuring car expenses:
  1. Using actual expenses
    • These include:
      • Depreciation
      • Lease payments
      • Gas and oil
      • Tires
      • Repairs and tune-ups
      • Insurance
      • Registration fees
         
  2. Using the standard mileage rate
    • Taxpayers who want to use the standard mileage rate for a car they own must choose to use this method in the first year the car is available for use in their business.
    • Taxpayers who want to use the standard mileage rate for a car they lease must use it for the entire lease period. 
    • The standard mileage rate for 2018 is 54.5 cents per mile. For 2019, it‘s 58 cents.
There are recordkeeping requirements for both methods.

Employees

Employees who use their car for work can no longer take an employee business expense deduction as part of their miscellaneous itemized deductions reported on Schedule A.  Employees can’t deduct this cost even if their employer doesn’t reimburse the employee for using their own car. This is for tax years after December 2017. The Tax Cuts and Jobs Act suspended miscellaneous itemized deductions subject to the 2% floor.  
However, certain taxpayers may still deduct unreimbursed employee travel expenses, this includes Armed Forces reservists, qualified performing artists, and fee-basis state or local government officials.

Sunday, June 30, 2019

Taxpayers who still haven’t filed their 2018 tax return should do so ASAP

While the federal income tax-filing deadline has passed for most people, some taxpayers did not file an extension and still have not filed their tax returns. These taxpayers should file ASAP. They should do so even if they can’t pay to avoid potential penalties and interest, which can continue to add up quickly.

Here are some things taxpayers in this situation 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. If they cannot pay the full amount, they should learn about payment options. These can reduce possible penalties and interest added to the amount the taxpayer owes.
     
  • IRS Free File is available on IRS.gov through October 15.
     
  • Some taxpayers may have extra time to file their tax returns and pay any taxes due. These include:
  • If a return is filed more than 60 days after the April due date, the minimum penalty is either $210 or 100 percent of the unpaid tax, whichever is less. Therefore, if the tax due is $210 or less, the penalty is equal to the tax amount due. If the tax due is more than $210, the penalty is at least $210.
     
  • The IRS provided penalty relief for certain taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.
     
  • Other taxpayers filing after the deadline may also qualify for penalty relief. Those who are charged a penalty may contact the IRS and explain why they were unable to file and pay by the due date.
     
  • Taxpayers who have a history of filing and paying on time often qualify for first-time penalty abatement.
     
  • There is no penalty for filing late if a refund is due.

Tips for taxpayers who have tax issues after filing their taxes

While the federal income tax filing deadline has passed for most people, there are some taxpayers still facing tax-related issues. This includes taxpayers who haven’t paid their taxes and those who are waiting for their refund.
Here are some tips for taxpayers handling some of the most typical after-tax-day issues. Here’s how taxpayers can:

Check the status of a refund

Taxpayers can check on their refund using the “Where’s My Refund?” tool. It is available on IRS.gov and the IRS2Go app. Taxpayers without access to a computer can call 800-829-1954. To use this tool, taxpayers need the first Social Security number on the tax return, the filing status, and the expected refund amount. The tool updates once daily, so taxpayers do not need to check more often.

Do a Paycheck Checkup

The IRS urges all employees, including those with other sources of income, to perform a Paycheck Checkup now. Doing a checkup will help employees make sure their employers are withholding the right amount of tax from their paychecks. Doing so now will help avoid an unexpected year-end tax bill and possibly a penalty.
The easiest way to a Paycheck Checkup is to use the Withholding Calculator on IRS.gov. Taxpayers can use the results from the Calculator to help fill out the Form W-4 and adjust their income tax withholding with their employer.  Taxpayers who receive pension income can use the results from the calculator to complete a Form W-4P and give it to their payer.

Review payment options

Taxpayers who owe taxes can review their options online. Taxpayers can:
Before accessing their tax account online, users must authenticate their identity through the Secure Access process.

Find out if they need to amend a tax return

After filing their return, taxpayers may find they made an error or forgot to enter something on it. Taxpayers can use the Interactive Tax Assistant, Should I File an Amended Return? to help determine if they should correct an error or make other changes to the tax return they already filed.
Common errors that taxpayers should fix are those made about filing status, income, deductions and credits. Taxpayers usually do not need to file an amended return to fix a math error or if they forgot to attach a form or schedule. Normally the IRS will correct the math error and notify the taxpayer by mail. Similarly, the agency will send a letter requesting any missing forms or schedules.
Taxpayer must file Form 1040-X, Amended U.S. Individual Income Tax Return (PDF), on paper. Those expecting a refund from their original return, should not file an amended return before the original return has been processed.