Taxpayers and tax professionals can act right now to avoid any tax-time surprises and ensure smooth processing of their 2019 federal income tax returns, with these handy reminders and suggestions from the Tax Problem Solver Team and the Internal Revenue Service.
Adjust withholding
Similarly, recipients of pension or annuity income can use the results from the estimator to complete a Form W-4P, Withholding Certificate for Pension or Annuity Payments, and give it to their payer.
Make estimated or additional tax payments
Clients with more complex tax situations will likely want to know about Publication 505, “Tax Withholding and Estimated Tax,” especially if they owe Alternative Minimum Tax or have long-term capital gains or qualified dividends.
Gather documents, organize tax records
Taxpayers and clients should also confirm that each employer, bank or other payer has a current mailing address or email address. Typically, year-end forms start arriving by mail – or are available online – in January. Review them carefully and, if any of the information shown is inaccurate, contact the payer right away for a correction.
To avoid refund delays, be sure to gather all year-end income documents before filing 2019 federal income tax returns. Filing too early, before receiving a key document, often means a taxpayer must file an amended return to report additional income or claim a refund. It can take up to 16 weeks to get an amended return refund.
Renew PTINs and ITINs
Clients with expiring ITINs can get the numbers renewed more quickly and avoid refund delays by submitting their renewal application soon. Any ITIN with middle digits 83, 84, 85, 86 or 87 expires at the end of this year. Any ITIN not used on a return in the past three years will expire. ITINs with middle digits 70 through 82 that expired in 2016, 2017 or 2018 can also be renewed. Use a W-7; it typically takes about seven weeks to receive an ITIN assignment letter from the IRS, but it can take up to 11 weeks if an applicant waits until peak season to submit the form.
Taxpayers who fail to renew an ITIN before filing a tax return next year could face a delayed refund and may be ineligible for certain tax credits. With nearly 2 million taxpayer households impacted, applying now will help avoid the rush as well as refund and processing delays in 2020. For more information, visit the ITIN information page on IRS.gov.
Update e-Services information
Update power of attorney/third-party authorization records
Review security safeguards
Now is also a good time for tax professionals to hire a cybersecurity expert to review office digital safeguards. At a minimum, tax pros should perform a deep scan for viruses on all digital devices.
Review Practitioner Priority Service options
Identify the local Stakeholder Liaison
Use e-file and direct deposit
Direct Deposit is easy to use. Taxpayers select it as their refund method through tax software or they should let their tax preparer know they want direct deposit. Taxpayers can even choose Direct Deposit on a paper return. Be sure to have bank account and routing numbers handy and double-check entries to avoid errors.
Direct Deposit also saves taxpayer dollars. It costs the nation's taxpayers more than $1 for every paper refund check issued but only a dime for each Direct Deposit.
Refund delays for EITC or ACTC claimants
By law, the IRS cannot issue refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund − even the portion not associated with EITC or ACTC. This law change, which took effect in 2017, helps ensure that taxpayers receive the refund they're due by giving the IRS more time to detect and prevent fraud.
The IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some 2019 federal income tax returns may require additional review and may take longer. For example, the IRS, along with its partners in the tax industry, continues to strengthen security reviews to help protect against identity theft and refund fraud.
The Tax Problem Solver Team is always here to help!
Remember, my Team and I are always here to help YOU! If you have any tax questions or issues for yourself or any clients, call me at 855-BEAT-IRS, or email me at larry@taxproblemsolver.com and we can discuss and get to the bottom of them.
