Author: Leon Clinton

Tax Filing Season Begins

January 27, 2020, marked the start of this year’s tax filing season. Complicating matters is a newly revised Form 1040, U.S. Individual Income Tax Return. With more than 150 million individual tax returns expected to be filed for the 2019 tax year, here’s what individual taxpayers can expect:

Another New Design for Form 1040

The new 2019 Form 1040, which was redesigned last year to be “postcard-sized” has been revised yet again. As with last year’s design, the form gathers information about the taxpayer(s) and dependents and is also the form you need to sign and date when filing your return. As such, it can be filed by itself. For taxpayers aged 65 and older there is a separate tax form called Form 1040-SR (see below).

More complex tax situations will generally require using one or more of the supplemental schedules that were also new for 2018, but which for 2019, have been consolidated into three schedules (Schedules 1, 2, and 3). Of note, is that the 2018 Schedule 6, Foreign Address and Third Party Designee, has been incorporated into the Form 1040.

As in 2018, Forms 1040A and 1040EZ no longer exist. Instead, taxpayers should use Form 1040 or Form 1040-SR.

Virtual Currency Questions

For the 2019 tax year, taxpayers who engaged in a transaction that involved virtual currency (e.g., Bitcoin, Ether, Roblox, and V-bucks) will need to file Schedule 1, Additional Income and Adjustments To Income. Taxpayers are reminded to maintain records that support any information provided on their tax returns such as records documenting receipts, sales, exchanges or other dispositions of virtual currency and the fair market value of the virtual currency.

Refunds

While more than nine out of 10 refunds are issued in less than 21 days, some tax returns require additional review and take longer to process than others. This may be necessary when a return has errors, is incomplete or is affected by identity theft or fraud.

Furthermore, tax law requires that the IRS hold refunds on tax returns claiming the Additional Child Tax Credit (ACTC) or Earned Income Tax Credit (EITC) until mid-February – even the portion not associated with the EITC or ACTC. Even so, most of these types of refunds are expected to be available in taxpayer bank accounts or on debit cards by the first week of March as long as the taxpayer chose direct deposit and there are no other issues with the tax return.

As a reminder, once refunds are issued by the IRS there may be additional time for processing by financial institutions, which must accept and deposit the refunds to bank accounts and products. Typically, refunds and payments are not processed on weekends or holidays, which can affect when refunds reach taxpayers. Refund information will generally be available within 24 hours after the IRS acknowledges receipt of an electronically filed return on the Where’s My Refund? ‎tool on IRS.gov and the IRS2Go phone app.

Tax Filing Deadline

For most taxpayers the filing deadline to submit 2019 tax returns is Wednesday, April 15, 2020, and there’s no better time than right now to begin gathering information needed to prepare your tax return.

Questions?

Help is just a phone call away. Don’t hesitate to contact the office if you have any questions about the new tax forms or need assistance preparing and filing your tax return.

• By Leon Clinton
• February 4, 2020

Watch Out for Gift Card Scams

There’s never an off-season when it comes to scammers and thieves who want to trick people to scam them out of money, steal their personal information, or talk them into engaging in questionable behavior with their taxes. While scam attempts typically peak during tax season, taxpayers need to remain vigilant all year long. For example, gift card scams are currently on the rise and there are many reports of taxpayers being asked to pay a fake tax bill through the purchase of gift cards.

Here’s a typical scenario:

• Someone posing as an IRS agent calls the taxpayer and informs them their identity has been stolen.
• The fake agent says the taxpayer’s identify was used to open fake bank accounts.
• The caller tells the taxpayer to buy gift cards from various stores and await further instructions.
• The scammer then contacts the taxpayer again telling them to provide the gift cards’ access numbers.

Scammers are continuously perfecting their tricks and sometimes it is difficult to determine if it is really the IRS calling. Keeping this in mind, taxpayers should be reminded that the IRS will never do the following:

Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. Demand that taxpayers pay taxes without the opportunity to question or appeal the amount they owe. All taxpayers should be aware of their rights. Threaten to bring in local police, immigration officers or other law-enforcement to have the taxpayer arrested for not paying. Revoke the taxpayer’s driver’s license, business licenses, or immigration status.

People who believe they’ve been targeted by a scammer should contact the Treasury Inspector General for Tax Administration to report a phone scam. Use their IRS Impersonation Scam Reporting web page or call 800-366-4484. Phone scams should also be reported to the Federal Trade Commission. Use the FTC Complaint Assistant on FTC.gov and make sure to add “IRS Telephone Scam” in the notes. Unsolicited email claiming to be from the IRS, or an IRS-related component like the Electronic Federal Tax Payment System, should be reported to the IRS at phishing@irs.gov and be sure to add “IRS Phone Scam” to the subject line.

• By Leon Clinton
• February 3, 2020

Tax Due Dates for February 2020

February 10

Employees – who work for tips. If you received $20 or more in tips during January, report them to your employer. You can use Form 4070.

Employers – Social Security, Medicare, and withheld income tax. File Form 941 for the fourth quarter of 2019. This due date applies only if you deposited the tax for the quarter in full and on time.

Farm Employers – File Form 943 to report Social Security and Medicare taxes and withheld income tax for 2019. This due date applies only if you deposited the tax for the year in full and on time.

Certain Small Employers – File Form 944 to report Social Security and Medicare taxes and withheld income tax for 2019. This tax due date applies only if you deposited the tax for the year in full and on time.

Employers – Nonpayroll taxes. File Form 945 to report income tax withheld for 2019 on all nonpayroll items. This due date applies only if you deposited the tax for the year in full and on time.

Employers – Federal unemployment tax. File Form 940 for 2019. This due date applies only if you deposited the tax for the year in full and on time.

February 18

Employers – Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in January.

Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in January.

All businesses. Give annual information statements to recipients of certain payments made during 2019. You can use the appropriate version of Form 1099 or other information return. This due date applies only to payments reported on Form 1099-B, Form 1099-S, and substitute payments reported in Box 8 or gross proceeds paid to an attorney reported in Box 14, respectively.

Individuals – If you claimed exemption from income tax witholding last year on the Form W-4 you gave your employer, you must file a new Form W-4 by this date to continue your exemption for another year.

February 19

Employers – Begin withholding income tax from the pay of any employee who claimed exemption from withholding in 2019, but did not give you a new Form W-4 to continue the exemption this year.

February 28

Businesses – File information returns (for example, certain Forms 1099) for certain payments you made during 2019. However, Form 1099-MISC reporting nonemployee compensation must be filed by January 31. There are different forms for different types of payments. Use a separate Form 1096 to summarize and transmit the forms for each type of payment. See the General Instructions for Certain Information Returns for information on what payments are covered, how much the payment must be before a return is required, what form to use, and extensions of time to file.

If you file Forms 1097, 1098, 1099 (except a Form 1099-MISC reporting nonemployee compensation), 3921, 3922 or W-2G electronically, your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms generally remains January 31.

Payers of Gambling Winnings – File Form 1096, Annual Summary and Transmittal of U.S. Information Returns, along with Copy A of all the Forms W-2G you issued for 2019. If you file Forms W-2G electronically, your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms remains January 31.

Health Coverage Reporting – If you are an Applicable Large Employer, file paper Forms 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and 1095-C with the IRS. For all other providers of minimum essential coverage, file paper Forms 1094-B, Transmittal of Health Coverage Information Returns, and 1095-B with the IRS. If you are filing any of these forms with the IRS electronically, your due date for filing them will be extended to March 31.

March 2

Large Food and Beverage Establishment Employers – with employees who work for tips. File Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips. Use Form 8027-T, Transmittal of Employer’s Annual Information Return of Tip Income and Allocated Tips, to summarize and transmit Forms 8027 if you have more than one establishment. If you file Forms 8027 electronically, your due date for filing them with the IRS will be extended to April 2.

Health Coverage Reporting – If you are an Applicable Large Employer, provide Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to full-time employees. For all other providers of minimum essential coverage, provide Form 1095-B, Health Coverage, to responsible individuals.

Farmers and Fishermen – File your 2019 income tax return (Form 1040) and pay any tax due. However, you have until April 15 to file if you paid your 2019 estimated tax by January 15, 2020.

• By Leon Clinton
• February 2, 2020