IRS.gov is a great place for taxpayers to visit when they have questions about the Tax Cuts and Jobs Act. The legislation, which was passed late last year, includes changes to many areas of the tax law. Here are some of the resources on IRS.gov that will help individual taxpayers, businesses and the tax community understand the law and its effect on their taxes:
Tax Reform Web Page. The Tax Reform page highlights what taxpayers need to know about the tax law changes and how these changes affect them. This page also links taxpayers and tax professionals to news releases, tax tips, publications, notices, and legal guidance related to the legislation.
Updated Withholding Calculator. The IRS encourages everyone to use the Withholding Calculator to perform a “Paycheck Checkup,” which is even more important this year because of the tax law changes. The calculator helps taxpayers determine if they’re having the right amount of tax withheld from their paychecks.
Updated Form W-4, Employee’s Withholding Allowance Certificate. Taxpayers who determine they need to make changes to their withholding can complete a Form W-4, which reflects the tax law changes. Employees will submit the completed Form W-4 to their employers.
The IRS released a new, expanded guide with critical steps that tax preparers can take to protect client data. This campaign is intended to provide tax professionals with the basic information they need to better protect taxpayer data and to help prevent the filing of fraudulent tax returns.
Here are some of the steps highlighted as part of Tax Security 101. Tax preparers should:
Learn to recognize phishing emails, especially those pretending to be from the IRS, a tax software provider, cloud storage provider or state tax agencies. Never open a link or any attachment from a suspicious email.
Review internal controls for their business. Preparers should:
Install anti-malware and anti-virus security software on all devices, such as laptops, desktops, routers, tablets and phones. Keep software set to automatically update.
Create passwords of at least eight characters; longer is better. Use different passwords for each account, use special and alphanumeric characters, use phrases, password protect wireless devices and consider a password manager program.
Encrypt all sensitive files and emails using strong password protections.
Back up sensitive data to a safe and secure external source not connected full time to a network.
Wipe clean or destroy old computer hard drives and printers that contain sensitive data.
Limit access of taxpayer data to individuals who need to know.
Check IRS e-Services account weekly for number of returns filed with EFIN.
Taxpayers who pay for higher education in 2018 can see tax savings when they file their tax returns. If taxpayers, their spouses or their dependents take post-high school coursework, they may be eligible for a tax benefit.
There are two credits available to help taxpayers offset the costs of higher education. The American opportunity credit and the lifetime learning credit may reduce the amount of income tax owed. Taxpayers use Form 8863, Education Credits, to claim the credits.
The American opportunity credit is:
Worth a maximum benefit up to $2,500 per eligible student
Only for the first four years at an eligible college or vocational school
For students pursuing a degree or other recognized education credential
Partially refundable. This means if the credit brings the amount of tax owed to zero, 40 percent of any remaining amount of the credit, up to $1,000, is refundable.
The lifetime learning credit is:
Worth a maximum benefit up to $2,000 per tax return, per year, no matter how many students qualify
Available for all years of postsecondary education and for courses to acquire or improve job skills
Available for an unlimited number of tax years
To be eligible to claim the American opportunity credit, or the lifetime learning credit, the law requires a taxpayer or a dependent to have received a Form 1098-T from an eligible educational institution.
Taxpayers who discover they made a mistake on their tax returns after filing can file an amended tax return to correct it. This includes things like changing the filing status, and correcting income, credits or deductions.
Here are some tips for taxpayers who need to amend a tax return.
Complete and mail the paper Form 1040X, Amended U.S. Individual Income Tax Return. Taxpayers must file an amended return on paper whether they filed the original return on paper or electronically. Filers should mail the Form 1040X to the address listed in the form’s instructions. However, taxpayers filing Form 1040X in response to a notice received from the IRS, should mail it to the address shown on the notice.
If taxpayers used other IRS forms or schedules to make changes, they should attach those schedules to their Form 1040X.
Taxpayers should not amend a tax return to correct math errors; the IRS will make the math corrections for the taxpayers.
Taxpayers should also not amend if they forgot to include a required form or schedule. The IRS will mail a request about the missing item.
Anyone amending tax returns for more than one year will need a separate 1040X for each tax year. They should mail each tax year’s Form 1040X in separate envelopes.
Taxpayers should wait for the refund from their original tax return before filing an amended return. They can cash the refund check from the original return before receiving any additional refund.
Taxpayers filing an amended return because they owe more tax should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.
Generally, to claim a refund, taxpayers must file a Form 1040X within three years from the date they timely filed their original tax return or within two years from the date the person pays the tax – usually April 15 – whichever is later.
Taxpayers can track the status of an amended return three weeks after mailing using “Where’s My Amended Return?” Processing can take up to 16 weeks.
The IRS reminds business owners with questions about the Tax Cuts and Jobs Act that there are several resources to help answer their questions. The legislation passed in December 2017 changes many areas of the tax law, including some that affect businesses. Here are some of the resources on IRS.gov that can help:
IRS.gov/taxreform. The IRS created the Tax Reform page to highlight what taxpayers need to know about the tax law changes and how they affect taxpayers. This page also links taxpayers, businesses and tax professionals to news releases, recently updated publications, notices, legal guidance, Tax Reform Tax Tips and other resources related to the legislation.
Fact sheets. IRS posts fact sheets on a wide range of topics, including tax reform. The depreciation fact sheet has information about new rules and limitations for depreciation and expensing under the new law.
Publications. To help business owners understand the new law, the IRS has updated several publications, including Publication 15, Circular E, Employer’s Tax Guide.
Frequently asked questions. To help employers and taxpayers, the IRS posted FAQs on these topics: