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.
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.
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.
When filling out financial aid applications, students and families may need to get tax information to complete the Free Application for Federal Student Aid form. The IRS Data Retrieval Tool is available to use with the 2019‒2020 FAFSA Form. This tool is the fastest, most accurate way to input tax return information into the FAFSA form.
Educators may be able to deduct unreimbursed expenses on their tax return. This deduction can put money right back in the pockets of eligible teachers and other educators.
Here are some things to know about this deduction:
Educators can deduct up to $250 of trade or business expenses that were not reimbursed. As teachers prepare for the next school year, they should remember to keep receipts after making any purchase to support claiming this deduction.
The deduction is $500 if both taxpayers are eligible educators and file their return using the status married filing jointly. These taxpayers cannot deduct more than $250 each.
Qualified expenses are amounts the taxpayer paid themselves during the tax year.
Examples of expenses the educator can deduct include:
Professional development course fees
Computer equipment, including related software and services
Other equipment and materials used in the classroom
To be considered an eligible educator, the taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal or aide. They must also work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.
Tax issues can come up any time of the year for taxpayers. Maybe they have to file an amended tax return, or maybe they got a notice from the IRS. Taxpayers who decide they need to visit an IRS Taxpayer Assistance Center for in-person help with their tax issues should do a couple things first.
First things first, taxpayers will need to call 844-545-5640 to schedule an appointment. All TACs provide service by appointment. The Contact Your Local Office tool on IRS.gov helps taxpayers find the closest IRS TAC, the days and hours of operation, and a list of services the TAC provides.
Once they make an appointment, taxpayers will receive an automated email to the address they provide. The email will confirm the day and time of their appointment. Taxpayers should consider the self-service options on IRS.gov before calling for an appointment. Taxpayers can resolve many questions online without taxpayers having to travel to a Tax Assistance Center.
Organizations around the country continue to promote historic buildings and other important heritage sites as May is National Historic Preservation Month. As part of this month, anyone who owns a historic building should remember that the rehabilitation tax credit offers an incentive to renovate and restore old or historic buildings. Tax reform legislation passed in December 2017 changed when the credit is claimed and provides a transition rule.
Here are some things that building owners should know about this credit:
The credit is 20 percent of the taxpayer’s qualifying costs for rehabilitating a building.
The credit doesn’t apply to the money spent on buying the structure.
The legislation now requires taxpayers take the 20 percent credit spread out over five years beginning in the year they placed the building into service.
The law eliminates the 10 percent rehabilitation credit for pre-1936 buildings.
A transition rule provides relief to owners of either a certified historic structure or a pre-1936 building by allowing owners to use the prior law if the project meets these conditions:
The taxpayer owned or leased the building on January 1, 2018, and the taxpayer continues to own or lease the building after that date.
IRS offers taxpayers convenient, secure ways to pay their taxes throughout the year. Taxpayers can pay:
With their mobile device using the IRS2Go app
Additionally, some taxpayers must make quarterly estimated tax payments throughout the year. These taxpayers may include sole proprietors, partners, and S-corporation shareholders who expect to owe $1,000 or more when they file. Individuals who participate in the sharing economy might also have to make estimated payments.
There are several options for taxpayers who need to pay their taxes. They can:
Use IRS Direct Pay to pay their taxes, including estimated taxes. Direct Pay allows taxpayers to pay electronically directly from their checking or savings account for free. Taxpayers can also choose to receive email notifications about their payments. Taxpayers should remember to watch out for email scams. IRS Direct Pay sends emails only to users who requested the service.
Make a cash payment at a participating 7-Eleven store. Taxpayers can do this at more than 7,000 store locations nationwide. To pay with cash, taxpayers can visit IRS.gov/paywithcash and follow the instructions.
Spread out their payments over time by applying for an online payment agreement. Once the IRS accepts an agreement, the taxpayers can make their payment in monthly installments.
Small business owners may qualify for a home office deduction that will help them save money on their taxes, and benefit their bottom line. Taxpayers can take this deduction if they use a portion of their home exclusively, and on a regular basis, for any of the following:
As the taxpayer’s main place of business.
As a place of business where the taxpayer meets patients, clients or customers. The taxpayer must meet these people in the normal course of business.
If it is a separate structure that is not attached to the taxpayer’s home. The taxpayer must use this structure in connection with their business
A place where the taxpayer stores inventory or samples. This place must be the sole, fixed location of their business.
Under certain circumstances, the structure where the taxpayer provides day care services.
Deductible expenses for business use of a home include:
Real estate taxes
Repairs and Maintenance
Certain expenses are limited to the net income of the business. These are known as allocable expenses. They include things such as utilities, insurance, and depreciation. While allocable expenses cannot create a business loss, they can be carried forward to the next year. If the taxpayer carries them forward, the expenses are subject to the same limitation rules.
There are two options for figuring and claiming the home office deduction.
This method requires dividing the above expenses of operating the home between personal and business use. Self-employed taxpayers file Form 1040, Schedule C, and compute this deduction on Form 8829.
The simplified method reduces the paperwork and recordkeeping for small businesses. The simplified method has a set rate of $5 a square foot for business use of the home. The maximum deduction allowed is based on up to 300 square feet.
There are special rules for certain business owners:
Daycare providers complete a special worksheet, which is found in Publication 587.
Floods, wildfires, hurricanes, tornados and other natural disasters happen quickly and often with little warning. No one can prevent these disasters from happening, but people can prepare for them.
Here are some things taxpayers can do to help protect their financial safety should a disaster occur. Taxpayers should:
Update emergency plans. A disaster can strike any time. Personal and business situations are constantly evolving, so taxpayers should review their emergency plans annually.
Create electronic copies of documents. Taxpayers should keep documents in a safe place. This includes bank statements, tax returns and insurance policies. This is especially easy now since many financial institutions provide statements and documents electronically. If original documents are available only on paper, taxpayers should scan them. They should save them on a DVD or CD, or store them in the cloud.
Document valuables. It’s a good idea to photograph or videotape the contents of any home. This is especially true when it comes to items of value. Documenting these items ahead of time makes it easier to claim insurance and tax benefits if a disaster strikes. The IRS has a disaster loss workbook. Using this can help taxpayers compile a room-by-room list of belongings.
Remember the IRS is ready to help. In the case of a federally declared disaster, affected taxpayers can call the IRS at 866-562-5227. The taxpayer can speak with an IRS specialist trained to handle disaster-related issues. Taxpayers can request copies of previously filed tax returns and attachments by filing Form 4506. They can also order transcripts showing most line items through Get Transcript on IRS.gov. They can also call 800-908-9946 for transcripts.
Know what tax relief is available in disaster situations
Taxpayers should be aware that the Tax Cuts and Jobs Act modified the itemized deduction for casualty and theft losses. After Dec. 31, 2017, net personal casualty and theft losses are deductible only to the extent they’re attributable to a federally declared disaster. Claims must include the FEMA code assigned to the disaster.
Couples getting married this year know there are a lot of details in planning a wedding. Along with the cake and gift registry, their first tax return as a married couple should be on their checklist. The IRS has tips and tools to help newlyweds consider how marriage may affect their taxes.
Here are five simple steps that can make filing their first tax return as newlyweds less stressful.
Step 1: Taxpayers should check their withholding at the beginning of each year, or when their personal circumstances change — like after getting married. Using the IRS Withholding Calculator is a good way for taxpayers to check their withholding. Taxpayers who need to change their withholding should complete and submit a new Form W-4, Employee's Withholding Allowance Certificate to their employer.
Step 2: Marriage may mean a change in name. If either – or both – of the newlyweds legally change their name, it’s important to report that change to the Social Security Administration. The names on the taxpayers’ tax return must match the names on file at the SSA. If it doesn’t, it could delay any refund.
Step 3: If a marriage means a change in address, the IRS and the U.S. Postal Service need to know. Newlyweds can file Form 8822, Change of Address, to update their mailing address with the IRS. They should notify the postal service to forward their mail by going online at USPS.com or by visiting their local post office.
Step 4: Taxpayers who receive advance payments of the premium tax credit should report changes in circumstances to their Health Insurance Marketplace as they happen. Certain changes to household, income or family size may affect the amount of the premium tax credit. This can affect a tax refund or the amount of tax owed. Taxpayers should also notify the Marketplace when they move out of the area covered by their current Marketplace plan.
Step 5: Newlyweds should consider their filing status. A taxpayer’s marital status on December 31 determines whether they’re considered married for that full year. Generally, the tax law allows married couples to file their federal income tax return either jointly or separately in any given year. Taxpayers can use the Interactive Tax Assistant to determine which status is best for them.
Taxpayers who received an extension to file their 2018 tax return might have questions. They should remember that help is just a few clicks away on IRS.gov. Here are some of the tools and resources they may find useful.
Using IRS Free File to file tax returns through October 15
IRS Free File can be used to prepare and e-file taxes online for free through the October 15 deadline. Taxpayers who earned less than $66,000 in 2018 can use free tax preparation software online. All taxpayers, regardless of income, can use free file fillable forms.
Checking on the status of a refund
After filing their 2018 tax return, taxpayers can easily find the most up-to-date information about their tax refund using "Where’s My Refund?" tool on IRS.gov. Where’s My Refund is also available on the IRS2Go app. It’s updated once every 24 hours, usually overnight. So, there’s no need for a taxpayer to check the status of their refund more often.
A person can file Form 8300 electronically using the Financial Crimes Enforcement Network’s BSA E-Filing System. E-filing is free, quick and secure. Filers will receive an electronic acknowledgement of each form they file. Those who prefer to mail Form 8300 can send it to the IRS at the address listed on the form.
Cash includes coins and currency of the United States or any foreign country. For some transactions (PDF), it’s also a cashier’s check, bank draft, traveler’s check or money order with a face amount of $10,000 or less.
A person must report cash of more than $10,000 they received:
In one lump sum
In two or more related payments within 24 hours
As part of a single transaction within 12 months
As part of two or more related transactions within 12 months
When to file
A person must file Form 8300 within 15 days after the date they received the cash. If they receive payments toward a single transaction or two or more related transactions, they file when the total amount paid exceeds $10,000.
This is the second tip of two tips recapping the list of the IRS’s annual “Dirty Dozen” list of top 12 tax scams. Thieves work throughout the year – often aggressively – to scam taxpayers.
The schemes run the gamut from simple refund inflation scams to complex tax shelter deals. A common theme throughout all: scams put taxpayers at risk.
Here is a recap of the final six scams in this year's Dirty Dozen. Each one includes a link where taxpayers can go to learn more about that scam.
Falsely Padding Deductions on Returns:Taxpayers – especially those filing this summer after getting a filing extension – should avoid the temptation to falsely inflate deductions or expenses on their tax returns to pay less than what they owe or potentially receive larger refunds.
Fake Charities:Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Donors should be wary of charities with names similar to familiar or nationally-known organizations. Contributors should take a few extra minutes to make sure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations.
Excessive Claims for Business Credits: Business owners should avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities or satisfy the requirements related to qualified research expenses.
Offshore Tax Avoidance: Successful enforcement actions against offshore cheating show it’s a bad bet to hide money and income offshore. People involved in offshore tax avoidance are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities.
Frivolous Tax Arguments: Frivolous tax arguments may be used to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying taxes despite being repeatedly thrown out in court. The penalty for filing a frivolous tax return is $5,000.
Abusive Tax Shelters:Abusive tax structures – including trusts and syndicated conservation easements – are sometimes used to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered.
The tax filing deadline has come and gone, but tax scammers continue to work. Again this year, the IRS highlights the twelve top scams in its "Dirty Dozen" list. These scams are often aggressive and happen throughout the year.
The schemes run the gamut from simple refund inflation scams to complex tax shelter deals. A common theme throughout all: scams put taxpayers at risk.
Here is a recap of the first six scams in this year's Dirty Dozen. Each one includes a link where taxpayers can go to learn more about that scam. This is the first tip of two tips recapping the list of all 12 scams.
Phishing: Taxpayers should be alert to potential fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers by email about a bill or tax refund. Don’t click on one claiming to be from the IRS.
Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with things like police arrest, deportation, and license revocation.
Identity Theft: Taxpayers should be alert all year long to tactics aimed at stealing their identities. The IRS, working in conjunction with the Security Summit partnership of state tax agencies and the tax industry, has made major improvements in detecting tax return related identity theft during the last several years. The agency reminds taxpayers that they can help in preventing this crime. The IRS continues to aggressively pursue criminals that file fraudulent tax returns using someone else’s Social Security number.
Return Preparer Fraud: Taxpayers should be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. However, there are some dishonest preparers who operate to scam clients. These unscrupulous preparers perpetuate refund fraud, identity theft, and other scams that hurt taxpayers.
Inflated Refund Claims:Taxpayers should take note of anyone promising inflated tax refunds. Those preparers who ask clients to sign a blank return, promise a big refund before looking at taxpayer records or charge fees based on a percentage of the refund are probably up to no good. To find victims, fraudsters may use flyers, phony storefronts or word of mouth through community groups where trust is high.
Falsifying Income to Claim Credits: Con artists may convince unsuspecting taxpayers to invent income to erroneously qualify for tax credits, such as the earned income tax credit. This is important now for taxpayers who filed an extension of more time to file their taxes. No matter what time of the year, taxpayers should file the most accurate tax return possible because they are legally responsible for what is on their return. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties.
From renting spare rooms and vacation homes to car rides or using a bike…name a service and it’s probably available through the sharing economy. Taxpayers who participate in the sharing economy can find helpful resources in the IRS Sharing Economy Tax Center on IRS.gov. It helps taxpayers understand how this activity affects their taxes. It also gives these taxpayers information to help them meet their tax obligations.
Here are six things taxpayers should know about how the sharing economy might affect their taxes:
1. The activity is taxable.
Sharing economy activity is generally taxable. It is taxable even when:
The activity is only part time
The activity is something the taxpayer does on the side
Payments are in cash
The taxpayer receives an information return – like a Form 1099 or Form W2
2. Some expenses are deductible.
Taxpayers who participate in the sharing economy may be able to deduct certain expenses. For example, a taxpayer who uses their car for business may qualify to claim the standard mileage rate, which is 58 cents per mile for 2019.
4. Participants may need to make estimated tax payments.
The U.S. tax system is pay-as-you-go. This means that taxpayers involved in the sharing economy often need to make estimated tax payments during the year. These payments are due on April 15, June 15, Sept. 15 and Jan. 15. Taxpayers use Form 1040-ESto figure these payments.
Taxpayers involved in the sharing economy who are employees at another job can often avoid making estimated tax payments by having more tax withheld from their paychecks. These taxpayers can use the Withholding Calculator on IRS.gov to determine how much tax their employer should withhold. After determining the amount of their withholding, the taxpayer will file Form W-4 with their employer to request the additional withholding.