Sunday, March 31, 2019

Taxpayers interacting with the IRS should know their rights

Every taxpayer has rights when dealing with the IRS. The Taxpayer Bill of Rights takes these rights from the tax code and groups them into 10 categories. To help taxpayers interacting with the IRS understand their rights, the agency outlines them in Publication 1, Your Rights as a Taxpayer.
Here are the first five rights along with more information about each one:
The Right to Finality. Taxpayers have the right to know the maximum amount of time allowed to challenge an IRS position. They also have the right to know the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS concludes an audit.
The Right to Privacy. Taxpayers have the right to expect that any IRS inquiry, examination or enforcement action will comply with the law and be no more intrusive than necessary. During these proceedings, the IRS will respect all due process rights, including search and seizure protections. When applicable, the IRS will provide a collection due process hearing.
The Right to Confidentiality. Taxpayers have the right to expect that their tax information will remain confidential. The IRS will not disclose information unless authorized by the taxpayers or by law. Taxpayers should expect the IRS to take appropriate action against IRS employees, return preparers and others who wrongfully disclose return information.
The Right to Retain Representation. Taxpayers have the right to retain an authorized representative of their choice for representation during dealings with the IRS. When a taxpayer cannot afford representation, they may seek assistance from a Low Income Taxpayer Clinic (PDF).
The Right to a Fair and Just Tax System. Taxpayers have the right to expect fairness from the tax system. The IRS must consider all facts and circumstances that might affect any liabilities, the ability to pay or the ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service. TAS can help taxpayers who are experiencing financial difficulty. They can also help when the IRS has not resolved tax issues properly and timely through normal channels.
The IRS will include Publication 1 when sending a notice to taxpayers on a variety of issues, such as an audit or collection matter. Publication 1 is available in English and Spanish. All IRS facilities publicly display the rights for taxpayers.

More Information:

Taxpayer Bill of Rights outlines rights for all taxpayers

This is the first tip in a two-part summary of the rights granted to all taxpayers.
Every taxpayer has rights when dealing with the IRS. The Taxpayer Bill of Rights takes these rights from the tax code and groups them into 10 categories. To help taxpayers interacting with the IRS understand their rights, the agency outlines them in Publication 1, Your Rights as a Taxpayer.
Here are the first five rights along with more information about each one:
The Right to Be Informed. Taxpayers have the right to know how to comply with tax laws. They are entitled to clear explanations of the laws and IRS procedures. Taxpayers have the right to know about IRS decisions affecting their accounts with clear explanations of the outcomes.
The Right to Quality Service. Taxpayers have the right to receive prompt, courteous and professional assistance when dealing with the IRS. They also have the right to speak with a supervisor about inadequate service. Communications from the IRS should be clear and easy to understand.
The Right to Pay No More Than the Correct Amount of Tax. Taxpayers must pay only the amount of tax legally due. This includes interest and penalties. The IRS must apply all tax payments properly.
The Right to Challenge the IRS’s Position and Be Heard. Taxpayers have the right to object to formal IRS actions or proposed actions. They can also provide justification with additional documentation. Taxpayers can expect the IRS to consider timely objections and documentation promptly and fairly. Taxpayers can expect a response when the IRS disagrees with the taxpayer’s position.
The Right to Appeal an IRS Decision in an Independent Forum. Taxpayers are entitled to a fair and impartial appeal of most IRS decisions. This includes appealing certain penalties. Taxpayers have the right to receive a written response from the IRS regarding a decision. Taxpayers generally have the right to take their case to court.
The IRS will include Publication 1 when sending a notice to taxpayers on a variety of issues, such as an audit or collection matter. Publication 1 is available in English and Spanish. All IRS facilities publicly display the rights for taxpayers.

More Information:

Spread the word about a tax credit that helps millions of Americans

All individual taxpayers and families should claim tax credits for which they are eligible. Tax credits can not only reduce the amount of taxes owed, but some can result in a tax refund. The earned income tax credit is such a credit. It benefits millions of taxpayers by putting more money in their pockets.
The IRS encourages taxpayers who have claimed the credit to help their friends, family members and neighbors find out about EITC. They can go to IRS.gov/eitc or use the EITC Assistant tool on IRS.gov, available in English and Spanish. Word of mouth is a great way to help people who may be eligible for this credit in 2019 for the first time. People often become eligible for the credit when their family or financial situation changed in the last year.
Based on income, family size and filing status, the maximum amount of EITC for Tax Year 2018 is:
  • $6,431 with three or more qualifying children
  • $5,716 with two qualifying children
  • $3,461 with one qualifying child
  • $519 with no qualifying children
Every year, millions of taxpayers don’t claim the EITC because they don’t know they’re eligible. Here are some groups the IRS finds often overlook this valuable credit:
  • American Tribal communities
  • People living in rural areas
  • Working grandparents raising grandchildren
  • Taxpayers with disabilities
  • Parents of children with disabilities
  • Active duty military and/or veterans
  • Healthcare and Hospitality workers

Free tax help from volunteers:

The IRS works with community organizations around the country to offer free tax preparation services. They train volunteers who prepare taxes for people with low and moderate income. These volunteers can help determine if a taxpayer is eligible to claim the EITC. There are two IRS-sponsored programs:
  • Volunteer Income Tax Assistance: This program, also known as VITA, offers free tax return preparation to eligible taxpayers who generally earn $55,000 or less.
  • Tax Counseling for the Elderly: TCE is mainly for people age 60 or older but offers service to all taxpayers. The program focuses on tax issues unique to seniors. AARP participates in the TCE program through AARP Tax-Aide.

All taxpayers will file using 2018 Form 1040; Forms 1040-A and 1040-EZ no longer available

As the April filing deadline approaches, IRS reminds taxpayers that Form 1040 has been redesigned for tax year 2018. The revised form consolidates Forms 1040, 1040-A and 1040-EZ into one form that all individual taxpayers will use to file their 2018 federal income tax return.
Forms 1040-A and 1040-EZ are no longer available to file 2018 taxes. Taxpayers who used one of these forms in the past will now file Form 1040. Some forms and publications released in 2017 or early 2018 may still have references to Form 1040A or Form 1040EZ. Taxpayers should disregard these references and refer to the Form 1040 instructions for more information.
The new form uses a building block approach that can be supplemented with additional schedules as needed. Taxpayers with straightforward tax situations will only need to file the Form 1040 with no additional schedules.
People who use tax software will still follow the steps they’re familiar with from previous years. Since nearly 90 percent of taxpayers now use tax software, the IRS expects the change to Form 1040 and its schedules to be seamless for those who file electronically.
Electronic filers may not notice any changes because the tax return preparation software will automatically use their answers to the tax questions to complete the Form 1040 and any needed schedules.
For taxpayers who filed paper returns in the past and are concerned about these changes, this year may be the year to consider the benefits of filing electronically. Using tax software is a convenient, safe and secure way to prepare and e-file an accurate tax return.

More information:

Tax reform brought significant changes to itemized deductions

Tax law changes in the Tax Cuts and Jobs Act affect almost everyone who itemized deductions on tax returns they filed in previous years..  One of these changes is that TCJA nearly doubled the standard deduction for most taxpayers. This means that many individuals may find it more beneficial to take the standard deduction. However, taxpayers may still consider itemizing if their total deductions exceed the standard deduction amounts
Here are some highlights taxpayers need to know if they plan to itemize deductions:

Medical and dental expenses

Taxpayers can deduct the part of their medical and dental expenses that’s more than 7.5 percent of their adjusted gross income.

State and local taxes

The law limits the deduction of state and local income, sales, and property taxes to a combined, total deduction of $10,000. The amount is $5,000 for married taxpayers filing separate returns. Taxpayers cannot deduct any state and local taxes paid above this amount. 

Miscellaneous deductions

The new law suspends the deduction for job-related expenses or other miscellaneous itemized deductions that exceed 2 percent of adjusted gross income. This includes unreimbursed employee expenses such as uniforms, union dues and the deduction for business-related meals, entertainment and travel. 

Home equity loan interest

Taxpayers can no longer deduct interest paid on most home equity loans unless they used the loan proceeds to buy, build or substantially improve their main home or second home.

More information:

Wednesday, February 27, 2019

Free tax preparation available for millions of families

Millions of individuals and families can have their tax returns filed free. The IRS sponsors two programs with thousands of sites across the country, available to people with lower and moderate incomes:
  • Volunteer Income Tax Assistance: The VITA program offers free tax return preparation for eligible taxpayers who generally earn $55,000 or less.
  • Tax Counseling for the Elderly: TCE is mainly for people age 60 or older but offers service to all taxpayers. The program focuses on tax issues unique to seniors. AARP participates in this program through AARP Tax-Aide.
The IRS works with local community groups to certify thousands of volunteers who are trained in the latest tax law. Eligible taxpayers should consider taking advantage of these free programs. This includes people with disabilities and people who speak limited English.
Here are some additional details about these two programs:
  • Free tax prep around the country. The IRS works with community organizations to offer free tax help at thousands of sites nationwide. Most of these sites are open now.
  • Free electronic filing. VITA and TCE provide free electronic filing. E-file is the safest, most accurate way to file a tax return. Taxpayers can combine e-file with direct deposit for quicker refunds.
  • Volunteer preparers trained to help find tax benefits. Certified volunteers help people get all the tax benefits for which they are eligible. These include the earned income tax creditAmerican opportunity tax creditcredit for the elderlychild tax credit and credit for other dependents.
  • Bilingual help. Some VITA and TCE sites provide bilingual assistance.
  • Help for military. Many military bases have VITA sites offering free tax assistance to members of the military and their families. Volunteers can help with military tax topics, which include special rules and tax benefits that apply to those serving in combat zones.
  • Self-preparation option. At many VITA sites, people who earn $66,000 or less may be able to prepare their own tax returns. They can do this by using free web-based software. This option is for those who do not have a home computer and do not need much help.
  • Site information available on IRS.gov. Taxpayers can find the nearest VITA site by using the VITA Locator on IRS.gov. Sites are currently open, but the IRS is still adding some to the locator. Taxpayers can also find sites by downloading the IRS2Go app or calling the IRS at 800-906-9887. Find more on AARP Tax-Aide locations by using the AARP Locator.

Here’s what taxpayers should do to protect private data

Taxpayers should protect their personal and financial data from criminals who continue to steal large amounts of information. Thieves use the data to file bogus tax returns and commit crimes while impersonating the victim.
All taxpayers should follow these steps to protect themselves and their data.

Keep a secure computer. Taxpayers should:

  • Use security software that updates automatically. Essential tools for keeping a secure computer include a firewall, virus and malware protection, and file encryption for sensitive data.
  • Treat personal information like cash; don’t leave it lying around.
  • Give personal information only over encrypted and trusted websites.
  • Use strong passwords and protect them.

Avoid Phishing and Malware. Taxpayers should:

  • Not respond to emails, texts or calls that appear to be from the IRS, tax companies and other well-known businesses. Instead, verify contact information about companies or agencies by going directly to their website.
  • Be cautious of email attachments. Think twice before opening them.
  • Turn off the option to automatically download attachments.
  • Download and install software only from known and trusted websites.

Protect personal information. Taxpayers should:

  • Not routinely carry a Social Security card or other documents showing a Social Security number.
  • Not overshare personal information on social media. This includes information about past addresses, a new car, a new home and children.
  • Keep old tax returns and tax records under lock and key.
  • Safeguard electronic files by encrypting and properly disposing them.
  • Shred tax documents before trashing.
Taxpayers should forward IRS-related scam emails to phishing@irs.gov. They can report IRS impersonation telephone calls at www.tigta.gov.

Here are five facts about the new Form 1040

There are several changes to the 2018 Form 1040. However, taxpayers who file electronically may not notice the changes as the tax return preparation software guides people through the filing process.
The IRS worked closely with its partners in the tax return preparation and tax software industries to prepare for tax reform and tax form changes affecting tax year 2018, including the Form 1040. This ongoing collaboration ensures that taxpayers can continue to rely on the IRS, tax professionals and tax software programs when it’s time to file their tax returns.
Here are five things taxpayers need to know about the 2018 Form 1040.
  • The 2018 Form 1040 replaces Forms 1040,1040A and 1040EZ with one 2018 Form 1040 that all taxpayers will file.
     
  • Forms 1040A and 1040EZ are no longer available. Taxpayers who used one of these forms in the past will now file Form 1040.
     
  • The 2018 Form 1040 uses a “building block” approach and allows taxpayers to add only the schedules they need to their 2018 tax return.
     
  • The most commonly used lines on the prior year form are still on the form. Other lines are moved to new schedules and are organized by category. These categories include income, adjustments to income, nonrefundable credits, taxes, payments, and refundable credits.
     
  • Many taxpayers will only need to file Form 1040 and no schedules. Those with more complicated tax returns will need to complete one or more of the 2018 Form 1040 Schedules along with their Form 1040. These taxpayers include people claiming certain deductions or credits, or owing additional taxes.
Electronic filers may not notice any changes because the tax return preparation software will automatically use their answers to the tax questions to complete the Form 1040 and any needed schedules.
For taxpayers who filed paper returns in the past and are concerned about these changes, this year may be the year to consider the benefits of filing electronically. Using tax software is convenient, safe and a secure way to prepare and e-file an accurate tax return.

There are six new schedules some taxpayers will file with the new Form 1040

The 2018 Form 1040 replaces prior year Forms 1040, 1040A and 1040EZ. The 2018 Form 1040 uses a building-block approach that allows individuals to file only the schedules they need with their federal tax return. Many people will only need to file Form 1040 and no schedules.
Electronic filers may not notice these changes as the tax software will automatically use their responses to complete the Form 1040 and any needed schedules. For taxpayers who filed paper returns in the past and are concerned about the 2018 changes, this may be the year to consider the benefits of filing electronically.
While commonly used lines on the prior year form are still on the 2018 Form 1040, other lines are now Schedules 1 through 6 and organized by category. The six new numbered schedules are in addition to the existing schedules, such as Schedule A, Itemized Deductions, or Schedule C, Profit or Loss from Business.

Here’s a guide to help taxpayers determine what schedules they may need to file with the 2018 Form 1040:

Schedule 1, Additional Taxes and Adjustments to Income

Taxpayers use this schedule to report income or adjustments to income that can’t be entered directly on Form 1040. This includes capital gains, unemployment pay, prize money, and gambling winnings. This also includes the student loan interest deduction, self-employment tax, or educator expenses.

Schedule 2, Additional Tax

This scheduled is used by taxpayers in specific situations. Those who owe alternative minimum tax or need to make an excess advance premium tax credit repayment will file this schedule.

Schedule 3, Nonrefundable Credits

Taxpayers use this schedule to report nonrefundable credits other than the child tax credit or the credit for other dependents. These include the foreign tax credit, education credits, and general business credit.

Schedule 4, Other Taxes

Taxpayers use this schedule to report certain taxes. These include self-employment tax, household employment taxes, tax-favored accounts, and additional tax on IRAs and other retirement plans.

Schedule 5, Other Payments and Refundable Credits

Taxpayers who claim specific refundable credits or have other payments withheld will file this schedule. These other payments include:
  • Payment made when the taxpayer requests an extension.
  • Payment of excess social security.

Schedule 6, Foreign Address and Third-Party Designee

Taxpayers use this schedule to enter a foreign address. Anyone who wants to allow someone other than their paid preparer to discuss their tax return with the IRS will also file Schedule 6.

Here’s how tax reform affects taxpayers who claim the child tax credit

Many people claim the child tax credit to help offset the cost of raising children. Tax reform legislation made changes to that credit for 2018 and later. Here are some important things for taxpayers to know.
Credit amount. The new law increases the child tax credit from $1,000 to $2,000. Eligibility factors for the credit have not changed. As in past years, a taxpayer can claim the credit if all of these apply:
  • the child was younger than 17 at the end of the tax year
  • the taxpayer claims the child as a dependent
  • the child lives with the taxpayer for at least six months of the year
Credit refunds. The credit is refundable, now up to $1,400. If a taxpayer doesn’t owe any tax before claiming the credit, they will receive up to $1,400 as part of their tax refund.
Earned income threshold. The income threshold to claim the credit has been lowered to $2,500 per family. This means a family must earn a minimum of $2,500 to claim the credit.
Phaseout. The income threshold at which the child tax credit begins to phase out is increased to $200,000, or $400,000 if married filing jointly. This means that more families with children younger than 17 qualify for the larger credit.
New credit for other dependents. Dependents who can’t be claimed for the child tax credit may still qualify for the new credit for other dependents.  This is a non-refundable credit of up to $500 per qualifying person. These dependents may also be dependent children who are age 17 or older at the end of the tax year. It also includes parents or other qualifying relatives supported by the taxpayer.

Sunday, January 20, 2019

Free Tax Return Preparation for Qualifying Taxpayers

The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $54,000 or less, persons with disabilities and limited English speaking taxpayers who need assistance in preparing their own tax returns. IRS-certified volunteers provide free basic income tax return preparation with electronic filing to qualified individuals.
In addition to VITA, the Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older, specializing in questions about pensions and retirement-related issues unique to seniors. The IRS-certified volunteers who provide tax counseling are often retired individuals associated with non-profit organizations that receive grants from the IRS.
Before going to a VITA or TCE site, see Publication 3676-B for services provided and check out the What to Bring page to ensure you have all the required documents and information our volunteers will need to help you. *Note: available services can vary at each site due to the availability of volunteers certified with the tax law expertise required for your return.
Some VITA sites offer CAA service to taxpayers along with their VITA program.

Find a VITA or TCE Site Near You

VITA and TCE sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations across the country. To locate the nearest VITA or TCE site near you, use the VITA Locator Tool or call 800-906-9887.
When looking for a TCE site keep in mind that a majority of the TCE sites are operated by the AARP Foundation’s Tax Aide program. To locate the nearest AARP TCE Tax-Aide site between January and April use the AARP Site Locator Tool or call 888-227-7669.
At select tax sites, taxpayers also have an option to prepare their own basic federal and state tax return for free using Web-based tax preparation software with an IRS-certified volunteer to help guide you through the process. This option is only available at locations that list “Self-Prep” in the site listing.

Get Ready for Taxes: Here’s how the new tax law revised family tax credits

WASHINGTON ― More families will be able to get more money under the newly-revised Child Tax Credit, according to the Internal Revenue Service.
This is the third in a series of reminders to help taxpayers get ready for the upcoming tax filing season. Additionally, the IRS has recently updated a special page on its website with steps to take now for the 2019 tax filing season.
The Tax Cuts and Jobs Act (TCJA), the tax reform legislation passed in December 2017, doubled the maximum Child Tax Credit, boosted income limits to be able to claim the credit, and revised the identification number requirement for 2018 and subsequent years. The new law also created a second smaller credit of up to $500 per dependent aimed at taxpayers supporting older children and other relatives who do not qualify for the Child Tax Credit.
“As we approach the 2019 tax-filing season, I want to remind taxpayers to take advantage of this valuable tax credit if they are eligible to claim it,” said IRS Commissioner Chuck Rettig. “Tax reform changed the tax code significantly and doubling the Child Tax Credit is an example of how the changes impact taxpayers.”

Here are some important things taxpayers need to know as they plan for the tax-filing season in early 2019: 

Child Tax Credit increased

Higher income limits mean more families are now eligible for the Child Tax Credit. The credit begins to phase out at $200,000 of modified adjusted gross income, or $400,000 for married couples filing jointly, which is up from the 2017 levels of $75,000 for single filers or $110,000 for married couples filing jointly.
Increased from $1,000 to $2,000 per qualifying child, the credit applies if the child is younger than 17 at the end of the tax year, the taxpayer claims the child as a dependent, and the child lives with the taxpayer for more than six months of the year. The qualifying child must also have a valid Social Security Number issued before the due date of the tax return, including extensions.
Up to $1,400 of the credit can be refundable for each qualifying child. This means an eligible taxpayer may get a refund even if they don’t owe any tax.
For more information, see Publication 972, Child Tax Credit, available soon on IRS.gov.

New Credit for Other Dependents

A new tax credit – Credit for Other Dependents — is available for dependents for whom taxpayers cannot claim the Child Tax Credit. These dependents may include dependent children who are age 17 or older at the end of 2018 or parents or other qualifying relatives supported by the taxpayer.
During the upcoming tax-filing season, the IRS urges taxpayers to use the agency’s Interactive Tax Assistant to see if they qualify for either of these credits. To find out more, visit IRS.gov.

Treasury, IRS issue final regulations, other guidance on new qualified business income deduction; Safe harbor enables many rental real estate owners to claim deduction

WASHINGTON — Today the Treasury Department and the Internal Revenue Service issued final regulations and three related pieces of guidance, implementing the new qualified business income (QBI) deduction (section 199A deduction).
The new QBI deduction, created by the 2017 Tax Cuts and Jobs Act (TCJA) allows many owners of sole proprietorships, partnerships, S corporations, trusts, or estates to deduct up to 20 percent of their qualified business income.  Eligible taxpayers can also deduct up to 20 percent of their qualified real estate investment trust (REIT) dividends and publicly traded partnership income.  
The QBI deduction is available in tax years beginning after Dec. 31, 2017, meaning eligible taxpayers will be able to claim it for the first time on their 2018 Form 1040.
The guidance, released today includes:
  • A set of regulations, finalizing proposed regulations issued last summer, A new set of proposed regulations providing guidance on several aspects of the QBI deduction, including qualified REIT dividends received by regulated investment companies
  • revenue procedure providing guidance on determining W-2 wages for QBI deduction purposes,
  • notice on a proposed revenue procedure providing a safe harbor for certain real estate enterprises that may be treated as a trade or business for purposes of the QBI deduction
The proposed revenue procedure, included in Notice 2019-07, allows individuals and entities who own rental real estate directly or through a disregarded entity to treat a rental real estate enterprise as a trade or business for purposes of the QBI deduction if certain requirements are met. Taxpayers can rely on this safe harbor until a final revenue procedure is issued. 
The QBI deduction is generally available to eligible taxpayers with 2018 taxable income at or below $315,000 for joint returns and $157,500 for other filers. Those with incomes above these levels, are still eligible for the deduction but are subject to limitations, such as the type of trade or business, the amount of W-2 wages paid in the trade or business and the unadjusted basis immediately after acquisition of qualified property. These limitations are fully described in the final regulations.
The QBI deduction is not available for wage income or for business income earned by a C corporation.
For details on this deduction, including answers to frequently-asked questions, as well as information on other TCJA provisions, visit IRS.gov/taxreform.

Changes strengthen program; Free File can also help navigate new tax law provisions

WASHINGTON — An improved version of IRS Free File begins its 17th filing season today as a dozen private-sector partners offer their brand-name products to help eligible taxpayers navigate the new tax reform law and electronically prepare their tax returns.
The free online software program, accessible only through IRS.gov, is available for taxpayers to use in advance of the start of the filing season on Jan. 28.
A number of changes were made to Free File this year, strengthening the program to make it even more taxpayer friendly. More than 53 million taxpayers have used Free File since the program’s inception. The public-private partnership between the Internal Revenue Service and the Free File Alliance provides free, brand-name tax software and free electronic filing to taxpayers who earned $66,000 or less last year. Some providers offer both free federal and free state tax preparation. Active duty military personnel with incomes of $66,000 or less may use any Free File software product offering a military option without regard to other criteria.
“Free File is an important tool that allows taxpayers free access to electronic filing of their tax returns,” said IRS Commissioner Chuck Rettig. “The program has been a great partnership with the private sector, and we’ve taken steps to improve Free File this year. With these changes to the Free File program as well as the new tax law, this is a great year for people to consider using this option for preparing their taxes.”
Starting today, taxpayers can go to www.irs.gov/freefile to find the Free File software product that matches their situation. Each partner sets its own eligibility standards, generally based on age, income or state residency. Taxpayers can do their taxes online from IRS.gov or they can use the IRS2Go mobile app to access Free File and do their taxes on their mobile phones, tablets or any app-enabled device. 
For taxpayers who earned more than $66,000, there is Free File Fillable Forms, the electronic version of IRS paper forms which will be available when the IRS begins the filing season on Jan. 28.

Who can use Free File

Any individual or family whose adjusted gross income for 2018 was $66,000 or less can find at least one Free File software product they can use. Often, taxpayers are eligible for multiple products. The income limitation means that 100 million taxpayers – 70 percent – are eligible to use Free File.
Workers, families with children, first-time filers and seniors who meet the income criteria are all eligible for Free File. The software supports all the new tax law changes as well as long-time benefits such as the Earned Income Tax Credit. While most products have a set of eligibility requirements, 10 Free File partners have a special offer for active duty military personnel by making their sole eligibility criteria an income of $66,000 or less.
IRS Free File is all that’s needed for residents of Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming where there is no state income tax. Some Free File partners offer free federal and free state return preparation. And some states have their own Free File program.

How to use Free File

Taxpayers can only access Free File from IRS.gov. To get started, simply go to IRS.gov/freefile. Use the “Help Me” tool to enter a bit of information such as age, income, and state residency. The tool will match the taxpayer with the software products. Generally, taxpayers will have several options from which to choose. Taxpayers also can review all the offers made by each of the 12 partners if they do not want to use the tool. Once taxpayers make their selection, they will be directed away from IRS.gov to the provider’s website to prepare their return.
Also, taxpayers can use the IRS2Go app to access Free File. Simply download the IRS2Go app onto any app-enabled device. From their phones or tablets, taxpayers can access the “Help Me” tool and go to the provider’s website to do their taxes.
Free File will be available to taxpayers from Jan. 11 through the mid-October deadline for extension filers. Taxpayers, regardless of income, also can use Free File to file an extension from the April 15 deadline.

New agreement offers new consumer protections

The IRS and the Free File Alliance, the consortium of the 12 partners, reached a new agreement recently to extend the Free File program through Oct. 31, 2021. This new memorandum of understanding also included several new consumer protections. These include:
  • Removing the “value-add” button from Free File partner landing pages. Free File members will remove any button or link on their Free File landing pages that would take taxpayers to non-Free File programs. The change is designed to improve the transparency of the program, and to make the navigation easier for taxpayers to use Free File.
  • Taxpayers can return to the IRS Free File page if they don’t qualify for an offer.  To use Free File, taxpayers must use IRS.gov to connect to a company offering Free File. If the taxpayer doesn’t qualify for a free filing option on a particular member site, the new agreement requires these companies to offer taxpayers the option to easily return to IRS.gov to see if they qualify for another Free File offer.
  • Returning taxpayers’ first option must be Free File. If a taxpayer returns to a Free File member’s website the following year after using the free program, the first option after logging into their account will be the Free File option — before receiving any other offers from the company.
  • Follow-up emails to taxpayers who used Free File the previous year will welcome them back to the Free File service.This change will strengthen rules for members sending follow up emails to prior year customers, reminding them of the availability of Free File. To help increase program participation, Free File members will email prior year participants welcoming them back to the Free File program. The email cannot contain information about any non-Free File service or product or any other marketing or soliciting, except for free or paid state tax preparation offers.
  • Emphasis on the in-place review process. Both the IRS and a third party already review each Free File option before filing season to ensure the program standards are being followed by Free File members. The new agreement now reinforces this longstanding requirement, which has always also included an unannounced review during filing season.

IRS waives penalty for many whose tax withholding and estimated tax payments fell short in 2018

WASHINGTON — The Internal Revenue Service announced today that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.
The IRS is generally waiving the penalty for any taxpayer who paid at least 85 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two. The usual percentage threshold is 90 percent to avoid a penalty.
The waiver computation announced today will be integrated into commercially-available tax software and reflected in the forthcoming revision of Form 2210 and instructions.
This relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA), the far-reaching tax reform law enacted in December 2017. 
“We realize there were many changes that affected people last year, and this penalty waiver will help taxpayers who inadvertently didn’t have enough tax withheld,” said IRS Commissioner Chuck Rettig. “We urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.”
The updated federal tax withholding tables, released in early 2018, largely reflected the lower tax rates and the increased standard deduction brought about by the new law. This generally meant taxpayers had less tax withheld in 2018 and saw more in their paychecks. 
However, the withholding tables couldn’t fully factor in other changes, such as the suspension of dependency exemptions and reduced itemized deductions. As a result, some taxpayers could have paid too little tax during the year, if they did not submit a properly-revised W-4 withholding form to their employer or increase their estimated tax payments. The IRS and partner groups conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do a “Paycheck Checkup” to avoid a situation where they had too much or too little tax withheld when they file their tax returns. 
Although most 2018 tax filers are still expected to get refunds, some taxpayers will unexpectedly owe additional tax when they file their returns.