Nesteggg Accounting

Archives for November 2019

Corporate Minutes and Bylaws

Corporate Minutes and Bylaws

All the documents you’ll need to operate your corporation.

Forming a corporation provides many benefits for your business, but managing a corporation requires some additional corporate formalities that can be confusing and time consuming if you don’t know how to properly utilize them. Our customized minutes & bylaws package includes a variety of common corporate documents drafted by our filing experts that make meeting these requirements fast and easy.

What are the benefits of the corporate minutes
and bylaws package?

Manage how your corporation is run

These critical documents outline in writing the details at the core of your business. For bylaws, this may include how directors are elected while minutes keep a concise record of meetings that have taken place.

Organize and document business meetings

Corporate minutes and bylaws are a requirement for any corporation, and documents that are critical to the decisions and actions of a business.

Summarize duties and outline roles

Formerly define the foundation of your corporation including the duties and powers of the directors and officers of the corporation

We make it easy

Our package includes the internal documents you need to operate your business after incorporating, including your Corporate Bylaws and customized corporate minutes.

Why choose NestEggg Accounting & Tax to create/maintain my minutes and bylaws?

Our customized Minutes and Bylaws Package provides you with the internal documents required to fulfil your corporate formalities and properly operate your business after incorporating. You will receive digital versions that can be edited or customized if needed.

What are Corporate Minutes?

Minutes are noted recorded by an allocated individual to summarize what has been discussed at a meeting. When taken properly, they will highlight the meeting chronologically and succinctly and cover important information like event dates, who said what, budget concerns, and suggestions. They’re extremely valuable for employees unable to attend these meetings and for staying on track with certain projects to avoid failure.

What are the bylaws of the corporation?

Corporate bylaws are the detailed set of rules agreed upon and adopted by the board of directors after a corporation is formed that specify the internal management structure of the corporation. They are typically drafted by the corporation’s founder or directors. They cover how directors are elected, meetings are organized, and officer roster and summary of duties. In addition to management, they also specify details about ownership rights, annual meetings and the addition or removal of officers and directors. They may contain information about how the business conducts its affairs as well as the individual duties of its directors, officers and employees. Bylaws help a business maintain consistency in the way the business operates, as well as communicate organizational rules to help avoid conflicts and disputes.

Are you ready to get started? Get our professional corporate minutes and bylaws package containing all the documents you need to meet your corporate formalities for only $99.

Our minutes and bylaws package includes:

  • Customized Corporate Minutes
  • Corporate Bylaws
  • Waiver of Notice of First Meeting of Board of Directors
  • Minutes of Regular Meeting of Board of Directors
  • Waiver of Notice of First Meeting of Shareholders
  • Notice of Annual Meeting of Shareholders
  • Minutes of Annual Meeting of Shareholders
  • Stock Transfer Ledger

For More information and or to hire NestEggg Accounting & Tax to maintain records and or form a new Corporation/LLC, click here

Get Ready for Taxes: Important things to know about tax credits

With the tax filing season quickly approaching, the Internal Revenue Service recommends taxpayers take time now to determine if they are eligible for important tax credits.

This is the second in a series of reminders to help taxpayers Get Ready for the upcoming tax filing season. The IRS recently updated its Get Ready page with steps to take now for the 2020 filing season.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a refundable federal income tax credit for working people with low to moderate incomes who meet certain eligibility requirements. Because it’s a refundable credit, those who qualify and claim EITC pay less federal tax, pay no tax or may even get a tax refund. EITC can mean a credit of up to $6,557 for working families with three or more qualifying children. Workers without a qualifying child may be eligible for a credit up to $529.

To get the credit, people must have earned income and file a federal tax return — even if they don’t owe any tax or aren’t otherwise required to file.

Taxpayers can use the EITC Assistant to find out if they are eligible for EITC, determine if their child or children meet the tests for a qualifying child and estimate the amount of their credit.

Child Tax Credit

Taxpayers can claim the Child Tax Credit if they have a qualifying child under the age of 17 and meet other qualifications. The maximum amount per qualifying child is $2,000. Up to $1,400 of that amount can be refundable for each qualifying child. So, like the EITC, the Child Tax Credit can give a taxpayer a refund even if they owe no tax.

The qualifying child must have a valid Social Security number issued before the due date of the tax return, including extensions. For tax year 2019, this means April 15, 2020, or if a taxpayer gets a tax-filing extension, Oct. 15, 2020.

The amount of the Child Tax Credit begins to reduce or phase out at $200,000 of modified adjusted gross income, or $400,000 for married couples filing jointly.

Credit for Other Dependents

This credit is available to taxpayers with dependents for whom they cannot claim the Child Tax Credit. These include dependent children who are age 17 or older at the end of 2019 or parents or other qualifying individuals supported by the taxpayer.

Publication 972, Child Tax Credit, available now on IRS.gov, has further details and will soon be updated for tax year 2019.

Education Credits

Two credits can help taxpayers paying higher education costs for themselves, a spouse or dependent. The American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) are claimed on Form 8863, Education Credits. The AOTC is partly refundable.

To get either credit, the taxpayer or student usually must receive Form 1098-T, Tuition Statement, from the school attended. Some exceptions apply. See the instructions to Form 8863 for details.

Interactive Tax Assistant

The IRS urges taxpayers to use the agency’s Interactive Tax Assistant (ITA) to help determine if they can claim any of these credits. The ITA also provides answers to general questions on filing status, claiming dependents, filing requirements and other topics.

Start with IRS.gov for help that includes tools, filing options and other services and resources. Taxpayers increasingly use IRS.gov as their first resource for tax matters. Information in languages other than English is available under the language tab on IRS.gov. 

Filing electronically is easy, safe and the most accurate way to file your tax return. There are a variety of free electronic filing options for most taxpayers including using IRS Free File for taxpayers with income below $66,000, or Fillable Forms for taxpayers who earn more. Taxpayers who generally earn $56,000 or less can have their return prepared at a Volunteer Income Tax Assistance site. Tax Counseling for the Elderly sites offer free tax help for all taxpayers, particularly those who are 60 years of age and older.

What Can You Be Doing Now?

NOW, TOMORROW & YESTERDAY

Of course, it feels as if there is too much shopping and visiting and eating to be done this time of year to do anything extra.  But be kind to your future January-self and do these things now.  A little 4th Quarter maintenance now will go a long way toward a relaxing new year!

Worker Maintenance

If you employ workers and/or independent contractors do this now so in January all you have to do is process and mail, because deadline for W-2s and 1099s is January 31, 2020

  • Verify current mailing address for all your employees both current and former
  • Make sure you have a W-9 on file for all your independent contractors

Clean Books = Happy Owner

Get your business’ books up to date now for this year.  Nothing worse than racing the clock in the beginning of the year to clean up from the year passed! 

  • Reconcile all your bank and credit card accounts
  • Make sure all income and expenses are input correctly
  • Review reports to date to check for errors or omissions

Dream Big

What do you want your next business year to look like?  Are you hoping to invest in new equipment, a new product line, hire more employees?  If you know what you want to accomplish in 2020 then plan now.

  • Tax planning – do you need to show more income in 2019 or possibly less income, or use some carryover from a previous year?  Now is the time to decide so that when filings are due you are not scrambling.
  • What are your goals for your company? What needs to change in the new year to meet those goals?  New product, increased prices, raises for staff?
  • When planning the benefits for your employees and the goals for your company don’t forget yourself!  The years keep swinging by apace, are your retirement savings keeping up? Maybe the new year means time to start or increase an automatic deposit into a retirement account.

Don’t just plan in your head, write it down!  Something happens when you commit your ideas to paper.  You are much more likely to follow a plan you have written down and perhaps shared with key employees or someone close who can check in with your progress throughout the year.  The most important thing is do what you can now to prepare for the next year.

HIRE INDEPENDENT CONTRACTORS, NOT EMPLOYEES?

1099 or Employee

Many corporations, large and small, use independent contractors rather than employees for some jobs. They can provide flexibility, cut costs and reduce paperwork. However, if you’re not careful how you use independent contractors, you may have a tax problem with the IRS or State unemployment authorities and other potential problems with the Department of Labor, Wage and Hour Division or State Workers Compensation officials.

Independent contractors may not have to be included in fringe benefit coverage, including vacations, holidays, sick days, 401(k) plans, funeral leave or retirement plans. But the big advantage in using them is in the area of payroll taxes. For employees, you must withhold part of each paycheck, match the withheld portion and send both sides to the IRS. There’s also the accounting time and costs involved.

For independent contractors, compensation is simpler: You send checks to the workers. At the end of each year, you send information reports (Form 1099) to the contract workers and to the IRS.

The IRS, however, prefers that you classify workers as employees rather than independent contractors because it likes to have payroll taxes come in automatically and on time. Therefore, if there’s any doubt at all, the IRS will likely re-classify independent contractors as employees.

Misclassification of an employee as independent contractor can be costly.
If your corporation has been paying workers as independent contractors, but the IRS or State unemployment compensation officials claim that they’re really employees, you’ll owe back taxes, interest and penalties and also face possible tax liens.

How can you tell the difference between an employee and an independent contractor?
First, use a written Independent Contractors Agreement and be sure your independent contractor and your corporation sign the agreement. Next, the most important factor is control. If you have the right to control how and when a person works, that person is most likely an employee.

Another important factor is a worker’s risk of loss. A person who pays none of his or her own business expenses and is guaranteed regular compensation is likely to be considered an employee, but one who pays some expenses, with uncertain earnings prospects, may be an independent contractor.

Independent contractor agreements let companies fill necessary yet temporary positions without having to hire a full or part-time employee while avoiding the need to provide training or supplies. Independent contractors typically have more urgency and reason (as entrepreneurs) to provide a higher quality of service to warrant earning continued business. A well-written agreement will protect both companies and independent contractors from liabilities and lawsuits by clearly specifying respective roles, duties, payments, deadlines, and dispute resolution, among other procedures relative to the project and working relationship.

ick here to get a quote to prepare or review your independent contractor agreement.

401(k) contribution limit increases to $19,500 for 2020; catch-up limit rises to $6,500

401(k) contribution limits

The Internal Revenue Service today announced that employees in 401(k) plans will be able to contribute up to $19,500 next year.

The IRS announced this and other changes in Notice 2019-59, posted today on IRS.gov. This guidance provides cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2020.

Highlights of changes for 2020

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $19,000 to $19,500.

The catch-up contribution limit for employees aged 50 and over who participate in these plans is increased from $6,000 to $6,500.

The limitation regarding SIMPLE retirement accounts for 2020 is increased to $13,500, up from $13,000 for 2019.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2020.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or his or her spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor his or her spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2020:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $65,000 to $75,000, up from $64,000 to $74,000.
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $104,000 to $124,000, up from $103,000 to $123,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $196,000 and $206,000, up from $193,000 and $203,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is $124,000 to $139,000 for singles and heads of household, up from $122,000 to $137,000. For married couples filing jointly, the income phase-out range is $196,000 to $206,000, up from $193,000 to $203,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $65,000 for married couples filing jointly, up from $64,000; $48,750 for heads of household, up from $48,000; and $32,500 for singles and married individuals filing separately, up from $32,000.

Key limit remains unchanged

The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

Details on these and other retirement-related cost-of-living adjustments for 2020 are in Notice 2019-59, available on IRS.gov.

Hobby or Business – How Do I Know?

Hobby or Job

Many of us engage in pursuits outside of our “regular job” and sometimes that means making some money from those pursuits.

But when is it a hobby and when is it a business?  Well, that sort of depends on your objective.  Say, you are a big knitter.  You just can’t stop knitting and when it gets cold all of your friends ask you where you got those great hot pink mittens, you tell them and they want you to make them a pair but insist on paying you.

Now, if you can knit a pair of mittens for $8 and you sell them to your friend for $20, you have just made $12 and yes, you are supposed to report that income on your taxes.  But you can also deduct the cost of the yarn and needles to make them.

If you think to yourself, “That was nice, now I just have to make John and Emily their mittens and then I’m done. Phew!”  Just as above, if you earn income you must report it, but it is still firmly in the hobby column.  If, however, you think to yourself, “Wow, that was fun! I’m going to start an Etsy page and see if I can sell these to the public” then you have just started yourself a small business.

On The Right Track

There are some things that make it a business rather than a hobby outside the Etsy page though.  The IRS lists nine things that make it a business.  You should make sure you meet the criteria before you file the income and expenses from your knitting as a business on your taxes. 

First is, do you keep proper books for your knitting?  If you estimated that $8 cost and you spend your own money then you’re still in hobby zone.  If you know it takes exactly three and a half skeins of yarn to make those fabulous mittens in wild colors and you have a separate bank account for or keep careful track of those expenses then you are properly accounting for your expenses and you may have yourself a business.

Another important distinction is how you treat the time you spend pursuing the endeavor.  If you have scheduled yourself to knit evenings from 6-8 and Saturdays from 8-4 and you consistently show up and do the work then you are treating it like a business.  Also, do you market your product or service?  Do you have ads or place business cards in your local craft shop offering your services?  Then you are in business.

Work Work Work

The most important thing is consistency and how you are managing your work and your business.  It doesn’t matter so much that you make a profit, the IRS understands that starting a business is difficult and not always profitable within the first few years, but that you are trying to make a profit, that you are relying on that income to pay your expenses and that you are properly accounting for all your income and expenses and reporting those on your taxes.

And just as you learn more and more about your hobby and how to master it, so should you learn and grow in how you conduct business.  The more you understand about how to properly run a business the more time you can spend knitting!

Cathedral City: Cannabis Industry Employee Identification Card Program

Cathedral City Cannabis ID

Effective November 1, 2019 the CCPD will institute a Cannabis Industry Employee Identification Card Program. This change in process will affect anyone currently employed or seeking employment in the cannabis industry in Cathedral City. The following summarizes changes made to Cannabis Business Operational Requirements, Cathedral City Municipal Code Sections 5.88.065(D)-(E).

Employee Requirements:
• Must be 21 years of age
• Provide a valid form of identification
• Complete a Live Scan Application
• Complete a Cannabis Industry Employee Identification Card Application
• Submit fee payment (see fee schedule below)
• Submit to a photograph
• Return to CCPD for Cannabis Industry ID Card upon approval
• Card valid for 2 years from date of application
• Not required to be employed in the industry to obtain an ID card

ID Card Fees:
• Initial Card: $105.00*
• Renewal: $105.00*
• Replacement Card: $55.00
• Initial Card w/o Live Scan @ CCPD: $63.00**
*Live Scan Completed by CCPD
**Live Scan completed by private vendor if employee chooses

Employer Requirements:
• Worker Registry – Cannabis businesses must maintain a complete register of all persons who work at the licensed premises and/or have access to cannabis or cannabis products, whether as an employee, independent contractor, or volunteer. This register must include:
o The individual’s complete name, address, and last known telephone number;
o The individual’s hire date and, if applicable, date of termination;
o A copy of the individual’s City-issued cannabis industry worker identification card;
• Always require employee(s) to display a valid cannabis industry worker identification card at, or above, the waist with the photo visible while actively working at cannabis business.

Existing Employees:
To have current employees in compliance to the ordinance change by January 1, 2020, the following accommodations will be made.
• All employees who have successfully completed the Live Scan process between July 1, 2019 and October 31, 2019 will be required to complete the following process at Cathedral City Police Department:
o Provide a valid form of identification
o Provide proof of completed Live Scan from CCPD or private vendor (i.e… Live Scan Request Form)
o Complete a Cannabis Industry Employee Identification Card Application
o Submit Fee Payment of $63.00
o Submit to a photograph
o Return to CCPD for Cannabis Industry Employee ID Card
All current cannabis employees who completed the Live Scan process prior to July 1, 2019 will be treated as renewals. These cannabis employees shall follow the process for “Employee Requirements”.

Any questions or concerns please contact: Commander Julio Luna
Cathedral City Police Department
68700 Ave. Lalo Guerrero
Cathedral City Ca 92234
(760)770-0315

Small business owners should find out if they can benefit from claiming this deduction

Small Business

The home office deduction can help small business owners save money on their taxes. Taxpayers can take this deduction when they file their taxes 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
  • Mortgage interest
  • Rent
  • Casualty losses
  • Utilities
  • Insurance
  • Depreciation
  • 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.

  • Regular method: 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.
  • Simplified method: The simplified method reduces the paperwork and recordkeeping for small businesses. The simplified method has a set rate that is capped at $1,500 per year, based on $5 a square foot for up to 300 square feet.

There are special rules for certain business owners:

IRS.gov resources help small businesses have big success

National Veterans Small Business Week is the perfect time for veterans who are business owners to check out the IRS’s online resources. Here are a few of the webpages that can help small businesses understand their tax responsibilities.

Self-Employed Individuals Tax Center
This a great resource for sole proprietors and others who are in business for themselves. This site has many handy tips and references to tax rules a self-employed person may need to know. Self-employed taxpayers will find info on topics including how to make quarterly payments and self-employed tax obligations.
 
Small Business and Self-Employed Tax Center
This page features links to useful tools and common IRS forms with instructions. Taxpayers can find help on everything from how to get an employer identification number online to how to engage with the IRS during an audit. A link to the IRS Tax Calendar for Businesses and Self-Employed also provides at-a-glance key tax dates for businesses.
 
Sharing Economy Tax Center
It provides fast answers to tax questions and links to forms and resources related to the sharing economy. People who are involved in the sharing economy are those who use online platforms to engage in businesses, such as renting a spare bedroom, providing car rides and providing other goods and services. Share this tip on social media — #IRSTaxTip: IRS.gov resources help small businesses have big success. https://go.usa.gov/xpgFV

Get Ready for Taxes: Get ready today to file 2019 federal income tax returns

Tax Filing 2019

WASHINGTON – The Internal Revenue Service today urged taxpayers to act now to avoid a tax-time surprise and ensure smooth processing of their 2019 federal tax return.

This is the first in a series of reminders to help taxpayers get ready for the upcoming tax filing season.  To that end, a special page, newly updated and available on IRS.gov, outlines things taxpayers can do now to prepare for the 2020 tax season ahead.

Adjust withholding; Make estimated or additional tax payments

The IRS urges everyone to use the Tax Withholding Estimator to perform a  paycheck or pension income checkup. This is even more important for those who received a smaller refund than expected or owed an unexpected tax bill last year.

It’s also a good idea for anyone who had a key life event, such as getting married, getting divorced, having or adopting a child, retiring, buying a home or starting college.

If the Tax Withholding Estimator recommends a change, an employee can then submit a new Form W-4, Employee’s Withholding Allowance Certificate, to their employer. Don’t send this form to the IRS.

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.

Taxpayers who receive a substantial amount of non-wage income should make quarterly estimated tax payments. This can include self-employment income, investment income (including gain from the sale, exchange or other disposition of virtual currency), taxable Social Security benefits and in some instances, pension and annuity income. Making estimated tax payments can also help a wage-earner cover an unexpected withholding shortfall.

Estimated tax payments are due quarterly, with the last payment for 2019 due on Jan. 15, 2020. Form 1040-ES, Estimated Tax for Individuals, has a worksheet to help figure these payments. Payment options can be found at IRS.gov/payments.

Workers and retirees who receive self-employment income or income from the gig economy, including payments in the form of virtual currency, should make sure to take these amounts into account when they fill out the Tax Withholding Estimator. Payments received in virtual currency by independent contractors and other service providers are taxable, and self-employment tax rules generally apply. Normally, payers must issue Form 1099-MISC. Similarly, wages paid using virtual currency are taxable to the employee, subject to withholding, and must be reported by the employer on a Form W-2.

People with more complex tax situations should use the instructions in Publication 505, Tax Withholding and Estimated Tax. This includes those who owe alternative minimum tax or various other taxes, and people with long-term capital gains or qualified dividends.

Gather documents and organize tax records

The IRS urges all taxpayers to develop a recordkeeping system − electronic or paper − that keeps important information in one place. Keep copies of filed tax returns and all supporting documents for at least three years. This includes year-end Forms W-2 from employers, Forms 1099 from banks and other payers, other income documents, records documenting all virtual currency transactions, and Forms 1095-A for those claiming the Premium Tax Credit. Add tax records to the files as they are received. Having complete and timely records can help any taxpayer file a complete and accurate return.

Taxpayers should 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 a 2019 return. 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.

Anyone using a software product for the first time may need the Adjusted Gross Income (AGI) amount shown on Line 7 of their 2018 return to file their 2019 return electronically. Consult the taxpayer’s copy of last year’s return, or alternatively, visit the View Your Tax Account link on IRS.gov. Learn more about verifying identity and electronically signing a return at Validating Your Electronically Filed Tax Return.

Notify the IRS of address changes and notify the Social Security Administration of a legal name change to avoid refund delays.

Renew expiring tax ID numbers

Taxpayers with expiring Individual Taxpayer Identification Numbers can get their ITINs renewed more quickly and avoid refund delays next year by submitting their renewal application soon.

An ITIN is a tax ID number used by any taxpayer who doesn’t qualify to get a Social Security number. Any ITIN with middle digits 83, 84, 85, 86 or 87 will expire at the end of this year. In addition, any ITIN not used on a tax 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.

The IRS urges anyone affected to file a complete renewal application, Form W-7, Application for IRS Individual Taxpayer Identification Number, as soon as possible. Be sure to include all required ID and residency documents. Failure to do so will delay processing until the IRS receives these documents.

Once a completed form is filed, it typically takes about seven weeks to receive an ITIN assignment letter from the IRS. But it can take longer — nine to 11 weeks — if an applicant waits until the peak of the filing season to submit this form or sends it from overseas.

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.

Be prepared to file electronically; Use Direct Deposit for refunds

Filing electronically is easy, safe and the most accurate way to file taxes. There are a variety of free electronic filing options for most taxpayers including using IRS Free File for taxpayers with income below $66,000, or Fillable Forms for taxpayers who earn more. Taxpayers who generally earn $56,000 or less can have their return prepared at a Volunteer Income Tax Assistance site. Tax Counseling for the Elderly sites offer free tax help for all taxpayers, particularly those who are 60 years of age and older.

Combining Direct Deposit with electronic filing is the fastest way to get a  refund. With Direct Deposit, a refund goes directly into the taxpayer’s bank account. No need to worry about a lost, stolen or undeliverable refund check. This is the same electronic transfer system used to deposit nearly 98% of all Social Security and Veterans Affairs benefits. Nearly four out of five federal tax refunds are deposited directly.

Direct Deposit is easy to use. Taxpayers select it as their refund method through tax software or 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.

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 returns may require additional review and may take longer. For example, the IRS, along with its partners in the tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud.

Start with IRS.gov for help that includes tools, filing options and other services and resources. Taxpayers increasingly use IRS.gov as their first resource for tax matters. Information in languages other than English is available under the “Language” tab on IRS.gov. 

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