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Report health care coverage on 2018 tax return

As taxpayers are completing their 2018 tax returns this year, they must complete the lines related to health care.

For tax year 2018, the IRS will not consider a return complete and accurate if individuals do not do one of the following on their return:

  • Report full-year health coverage
  • Claim a coverage exemption
  • Report and make a shared responsibility payment for everyone on the tax return

The law continues to require taxpayers who do not qualify for an exemption to maintain health care coverage in 2018 or make a shared responsibility payment when they file their tax return.

Most taxpayers have qualifying health coverage or a coverage exemption for all 12 months in the year and will check the box on the front of their tax return. Taxpayers who can check the box don’t have to file Form 8965, Health Coverage Exemptions, to claim any coverage exemptions. This includes the coverage exemption for household income below the filing threshold.

Taxpayers who did not have coverage for the entire year and therefore can’t check the box generally must report a shared responsibility payment when they file. They will report this payment for each month that anyone listed on the tax return didn’t have qualifying health care coverage or a coverage exemption.

Taxpayers can determine if they are eligible for a coverage exemption or are responsible for the individual shared responsibility payment by using the Interactive Tax Assistant on IRS.gov.

In addition, taxpayers may be eligible for the premium tax credit if they purchased health coverage through the Health Insurance Marketplace. Anyone who needs health coverage can visit HealthCare.gov to learn about health insurance options that are available for them and their family.

Under the Tax Cuts and Jobs Act, the shared responsibility payment is reduced to zero for tax year 2019 and all subsequent years. See Publication 5307, Tax Reform Basics for Individuals and Families, for information about the shared responsibility payment for tax year 2019.

How to know if you need to file taxes.

Here’s what taxpayers should consider when determining if they need to file

As people prepare to file their taxes, there are things to consider. They will want to determine if they need to file and the best way to do so.

For tax year 2018, all individual taxpayers will file using the new Form 1040. Forms 1040A and 1040EZ are no longer available.  Taxpayers who previously filed these forms will now file Form 1040. The new Form 1040 uses a “building block” approach allowing individuals to add only the schedules they need to their 2018 federal tax return. Taxpayers with more complicated returns will need to complete one or more of the new Form 1040 Schedules. This group of taxpayers includes those who claim certain deductions or credits, or who owe additional taxes.

Individuals who filed their federal tax return electronically last year may not notice any changes, as the tax return preparation software will automatically use their answers to the tax questions to complete the Form 1040 and any needed schedules.

Here are three more things for people to keep in mind as they prepare to file their taxes:

Who is required to file.  In most cases, income, filing status and age determine if a taxpayer must file a tax return. Other rules may apply if the taxpayer is self-employed or if they are a dependent of another person. For example, if a taxpayer is single and younger than age 65, they must file if their income was at least $12,000. There are other instances when a taxpayer must file. Taxpayers can visit IRS.gov/filing for more information.

Filing to get a refund. Even if a taxpayer doesn’t have to file, they should consider filing a tax return if they can get money back. If a taxpayer answers “yes” to any of these questions, they could be due a refund:

  • Did my employer withhold federal income tax from my pay?
  • Did I make estimated tax payments?
  • Did I overpay on my 2017 tax return and have it applied to 2018?
  • Am I eligible for certain refundable credits such as, the earned income tax credit

Taxpayers can also use the Interactive Tax Assistant tool on IRS.gov to answer many tax questions.. They should look for “Do I need to file a return?” under general topics.

All taxpayers should keep a copy of their tax return.

If you would like to set up an appointment please feel free to call us at 847-566-3010 or follow the link Appointments

Jan 31 filing deadline for wage statements, contractor forms

The Internal Revenue Service today reminds employers and other businesses of the Jan. 31 filing deadline that applies to filing wage statements and independent contractor forms with the government.

The Protecting Americans from Tax Hikes (PATH) Act requires employers to file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by Jan. 31. The Jan. 31 deadline also applies to certain Forms 1099-MISC, Miscellaneous Income, filed with the IRS to report non-employee compensation to independent contractors. Such payments are reported in box 7 of this form.

This deadline makes it easier for the IRS to verify income that individuals report on their tax returns and helps prevent fraud. Failure to file these forms correctly and timely may result in penalties. As always, the IRS urges employers and other businesses to take advantage of the accuracy, speed and convenience of filing these forms electronically.

An extension of time to file Forms W-2 is no longer automatic. The IRS will only grant extensions for specific reasons. Details can be found on the instructions for Form 8809, Application for Extension of Time to File Information Returns.

The IRS noted that some employers who ordered paper information and employer returns may not receive them in time to meet the Jan. 31 deadline and should consider an alternate source for these forms.

If you mailed documents to the IRS and they were returned, read on..

The Tax Court website indicates that mail sent to the court through the U.S.  Postal Service or through designated private delivery services may have been returned undelivered.  If a document you sent to the Tax Court was returned to you, as the Tax Court website indicates, re-mail or re-send the document to the Court with a copy of the envelope or container (with the postmark or proof of mailing date) in which it was first mailed or sent. In addition, please retain the original.

IRS confirms tax filing season to begin January 28

Despite the government shutdown, the Internal Revenue Service today confirmed that it will process tax returns beginning January 28, 2019 and provide refunds to taxpayers as scheduled.

“We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown. I appreciate the hard work of the employees and their commitment to the taxpayers during this period,” said IRS Commissioner Chuck Rettig.

Congress directed the payment of all tax refunds through a permanent, indefinite appropriation (31 U.S.C. 1324), and the IRS has consistently been of the view that it has authority to pay refunds despite a lapse in annual appropriations. Although in 2011 the Office of Management and Budget (OMB) directed the IRS not to pay refunds during a lapse, OMB has reviewed the relevant law at Treasury’s request and concluded that IRS may pay tax refunds during a lapse.

The IRS will be recalling a significant portion of its workforce, currently furloughed as part of the government shutdown, to work. Additional details for the IRS filing season will be included in an updated FY2019 Lapsed Appropriations Contingency Plan to be released publicly in the coming days.

“IRS employees have been hard at work over the past year to implement the biggest tax law changes the nation has seen in more than 30 years,” said Rettig.

As in past years, the IRS will begin accepting and processing individual tax returns once the filing season begins. For taxpayers who usually file early in the year and have all of the needed documentation, there is no need to wait to file. They should file when they are ready to submit a complete and accurate tax return.

The filing deadline to submit 2018 tax returns is Monday, April 15, 2019 for most taxpayers.  Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17, 2019 to file their returns.

Software companies and tax professionals will be accepting and preparing tax returns before Jan. 28 and then will submit the returns when the IRS systems open later this month. The IRS strongly encourages people to file their tax returns electronically to minimize errors and for faster refunds.

Here’s how the new tax law revised family tax credits

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.

Here are facts to help taxpayers understand different filing statuses

Taxpayers don’t typically think about their filing status until they file their taxes. However, a taxpayer’s status could change during the year, so it’s always a good time for a taxpayer to learn about the different filing statuses and which one they should use.

It’s important a taxpayer uses the right filing status because it can affect the amount of tax they owe for the year. It may even determine if they must file a tax return at all. Taxpayers should keep in mind that their marital status on Dec. 31 is their status for the whole year.

Sometimes more than one filing status may apply to taxpayers. When that happens, taxpayers should choose the one that allows them to pay the least amount of tax.

Here’s a list of the five filing statuses and a description of who claims them:

  • Single. Normally this status is for taxpayers who aren’t married, or who are divorced or legally separated under state law.
  • Married Filing Jointly. If taxpayers are married, they can file a joint tax return. When a spouse passes away, the widowed spouse can usually file a joint return for that year.
  • Married Filing Separately. A married couple can choose to file two separate tax returns. This may benefit them if it results in less tax owed than if they file a joint tax return. Taxpayers may want to prepare their taxes both ways before they choose. They can also use this status if each wants to be responsible only for their own tax.
  • Head of Household. In most cases, this status applies to a taxpayer who is not married, but there are some special rules. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person. Taxpayers should check all the rules and make sure they qualify to use this status.
  • Qualifying Widow(er) with Dependent Child. This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.

Signs you should look out for that a criminal stole information

Tax professionals should be alert to the subtle signs of data theft. The IRS and its Security Summit partners note that there are many cases where preparers are victims of theft and don’t even know it.

Cybercriminals often leave very few signs of their intrusion. A tax preparer might not even realize that the cybercriminal stole client data until a fraudulent tax return was filed with the information, and their client becomes an ID theft victim. This is one more reason tax professionals should use strong security protections to prevent data theft from occurring.

Here are some warning signs that a preparer’s office may have experienced a data theft:

  • Client e-filed returns that were filed electronically begin to be rejected by the IRS. The reason given is that someone already filed a tax return with the same Social Security number.
  • Clients who haven’t filed tax returns begin to receive taxpayer authentication letters from the IRS. These letters include the 5071C, 4883C and 5747C.
  • Clients who haven’t filed tax returns receive refunds.
  • Clients receive tax transcripts that they did not request.
  • Clients who created an IRS online services account receive an IRS notice that their account was accessed. They might also receive an IRS email saying their account has been disabled.
  • Clients unexpectedly receive an IRS notice that an online account was created in their names.
  • The number of returns filed with the tax professional’s Electronic Filing Identification Number exceeds their number of clients.
  • Tax professionals or clients are responding to emails that the firm did not send or does not remember sending.
  • Network computers are running slower than normal.
  • Computer cursors moving or changing numbers without someone touching the keyboard.
  • Network computers lock out employees.

The IRS and its partners in the Security Summit are alerting tax preparers about the signs of an ID theft as part of the Tax Security 101 awareness initiative. The goal is 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.

Combat-injured disabled veterans may be due a refund

The IRS is alerting certain veterans that they may be due a credit or refund. This is a result of the Combat-Injured Veterans Tax Fairness Act passed in 2016. It affects veterans who received disability severance payments after January 17, 1991, and included that payment as income.

Here is what these veterans should know:

  • Veterans who included their disability severance payments as income should file Form 1040X, Amended U.S. Individual Income Tax Return.
  • The veterans will file Form 1040X to claim a credit or refund of the overpayment attributable to the disability severance payment.
  • These veterans received a one-time, lump-sum disability severance payment when they separated from their military service.
  • Most of these veterans will have recently received a letter from the Department of Defense with information explaining how they should claim the related tax refunds.
  • Veterans can submit a claim based on the actual amount of their disability severance payment. However, there is a simplified method where veterans can instead choose to claim a standard refund amount. This amount is based on the calendar year in which they received the severance payment:

    – $1,750 for tax years 1991 – 2005
    – $2,400 for tax years 2006 – 2010
    – $3,200 for tax years 2011 – 2016

  • Claiming the standard refund amount is the easiest way for veterans to claim a refund, because they do not need to access the original tax return from the year of their lump-sum disability severance payment.
  • The veteran must mail the claim generally by the later of these dates:

    – One year from the date of the Department of Defense notice
    – Three years after the due date for filing the original return for the year the disability severance payment was made
    – Two years after tax was paid for the year the disability severance payment was made.

  • Veterans eligible for a refund who did not get a letter from DoD should visit the Defense Finance and Accounting Service and IRS’s Combat-injured disabled veterans page for more information on how to file a claim.

IRS warns of scams related to natural disasters

In the wake of Hurricane Florence, the Internal Revenue Service is reminding taxpayers that criminals and scammers try to take advantage of the generosity of taxpayers who want to help victims of major disasters.

Fraudulent schemes normally start with unsolicited contact by telephone, social media, e-mail or in-person using a variety of tactics.

  • Some impersonate charities to get money or private information from well-intentioned taxpayers.
  • Bogus websites use names similar to legitimate charities to trick people to send money or provide personal financial information.
  • They even claim to be working for or on behalf of the IRS to help victims file casualty loss claims and get tax refunds.
  • Others operate bogus charities and solicit money or financial information by telephone or email.

Help for disaster victims

Comprehensive information on disaster-related tax issues, including provisions for tax relief, can be found on the disaster relief page on IRS.gov. In the case of a federally declared disaster, affected taxpayers may also call the IRS Special Services Help Line, 866-562-5227, with disaster-related tax questions. Details on available relief can be found on the disaster relief page on IRS.gov.

Donate to real charities

To help taxpayers donate to legitimate charities, the IRS website, IRS.gov, has a search feature, Tax Exempt Organization Search, that helps users find or verify qualified charities. Donations to these charities may be tax-deductible.

  • Contribute by check or credit card. Never give or send cash.
  • Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution.

Taxpayers suspecting fraud by email should visit IRS.gov and search for the keywords “Report Phishing.” More information about tax scams and schemes may be found at IRS.gov using the keywords “scams and schemes.”