Think about this before Filing your taxes during the shutdown

Read this before filing your taxes during a government shutdown

The IRS has just announced it will recall 46,000 furloughed workers to do their duty of processing tax returns and issuing refunds. An agency-wide furlough began on December 22, 2018.

The return of the employees, who will work without pay until the partial government shutdown ends, means you can expect to get your refund in a timely manner this year — despite some back-and-forth speculation.

Now, the IRS has new advice to guide you through the process of filing this year. It outlines what to do, what not to do and what to expect as millions of Americans get ready to file their taxes at this unprecedented time in our nation’s history.

The IRS highly recommends that you e-file
Paper returns will be accepted, but the IRS is definitely doing everything it can to steer people toward e-filing because of the unusual circumstances surrounding this year’s tax season.

“The IRS strongly encourages people to file their tax returns electronically to minimize errors and for faster refunds,” the agency notes.

Think twice before picking up the phone and trying to call
In the coming days, the IRS will allocate a certain portion of those 46,000 returning furloughed workers to the phone banks. However, there’s no live telephone customer service assistance just yet.

If you do call, make sure you have plenty of patience and keep your expectations in check.

“Due to the heavier call volume, taxpayers should be prepared for longer wait times,” the IRS notes.

The preferred alternative is to use IRS.gov to address any questions you may have this year.

Non-return mail won’t be dealt with until the shutdown is over
Have to correspond with the IRS beyond just sending in a paper tax return? You should also be prepared for a long wait. The agency says it won’t get to that mail until after the shutdown ends.

“Taxpayers who mail in correspondence to the IRS during this period should expect a lengthy delay for a response after the IRS reopens due to a growing correspondence backlog,” the IRS notes.

In-person service won’t be available
The IRS walk-in taxpayer assistance centers you may be familiar with are closed until further notice.

That means the offices won’t be open to accept large cash payments. No in-person assistance for taxpayers facing a hardship will be available. And there won’t be any help for those who need to establish their identity by visiting an IRS office following an identity theft.

All of that will have to wait until the government showdown is resolved.

In light of that, why not just do a free credit freeze and limit the ability of criminals to steal your identity? We’ve got details on how you can do it here.

The IRS is cancelling all taxpayer appointments
Assume any meetings you have scheduled with the IRS related to “examinations (audits), collection, Appeals or Taxpayer Advocate cases” are cancelled for now.

You’ll hear from IRS personnel when they return to the job to reschedule for a future date after the government reopens.

Tax-exempt status applications are on hold
Seeking tax-exempt status for your organization? The IRS says it won’t accept new applications at this time. Nor will it make determinations about existing applications until the government reopens.

The IRS won’t conduct any audits during the shutdown
The tax laws of our nation still apply during the partial government shutdown. Criminal investigation work and basic enforcement activity like examining returns for fraud and identity theft will continue unabated.

However, the IRS will cut back in some other areas.

“During this period, the IRS will not be conducting audits, but automated initial contact letters will continue to be mailed,” the IRS writes. “No collection activity will generally occur except for automated collection activity.”

Passport certification will not take place
This is a very difficult time to get a passport if you have international travel on the horizon!

“The IRS will not be certifying for the State Department any individuals for passport eligibility,” the agency notes.

The best way to check your refund status remains the same
As in years past, the IRS says the best way to determine the status of your refund is to use the “Where’s My Refund?” tool or to download the IRS2Go mobile app.

All automated apps from the IRS like these two remain up and running during the shutdown.

Special Thanks to Theo Thimou with Clark Financial for “original” content/data share

2017 Federal IRS Tax Calendar & Due Dates

2019 Federal Tax Calendar

This is the IRS general tax calendar, which includes the 2019 deadlines that most taxpayers will need to know.

IRS Tax Due Dates for the 2019 Calendar Year

Note that if you file your taxes based on the fiscal year (instead of the calendar year), some of these dates will be different. For more information, see the section below titled, “Fiscal Year Taxpayers.”

1st Quarter (January – March 2019): Tax Due Dates

January 10

Employees Who Work for Tips: If you received $20 or more in tips during the month of December, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

January 15

Individuals: If you did not pay your 2018 income tax through withholding (or you didn’t pay enough tax that way), you must make an estimated tax payment for 2018. You can use IRS Form 1040-ES (Estimated Tax for Individuals). This is the final installment date for 2018 estimated tax payments. Note that you don’t have to make this particular payment if you file your 2018 income tax return (Form 1040) and pay any tax due by January 31, 2019.

Farmers & Fishermen: Make your 2018 estimated tax payment with IRS Form 1040-ES (Estimated Tax for Individuals). You have until April 15, 2019 (or April 17, 2019 if you live in Maine or Massachusetts) to file your 2018 tax return (Form 1040). If you do not make your estimated tax payment by this date (January 15), you must file your 2018 tax return and pay any tax due by March 1, 2019 to avoid an estimated tax penalty.

January 31

Individuals Who Must Make Estimated Tax Payments: If you did not pay your final estimated tax installment by January 15, you may elect to file your 2018 income tax return (Form 1040) by January 31. Filing your return and paying any tax due by this date will prevent penalties for late payment of the last installment. However, if you cannot file and pay your taxes by January 31, you should file and pay your tax by April 15 (or April 17 if you live in Maine or Massachusetts).

All Businesses: Provide annual information statements to the recipients of certain payments that you made in 2018. You should use the appropriate version of Form 1099 or other information return. Form 1099 may be issued electronically with the recipient’s consent. This due date applies to these types of payments: cash payments for fish purchased from someone engaged in the trade/business of catching fish, compensation for workers who aren’t considered employees, dividends and other corporate distributions, interest, rent, royalties, payments of Indian gambling profits to tribal members, profit-sharing distributions, retirement plan distributions, original issue discount, prizes and awards, medical and health care payments, debt cancellation, and cash payments over $10,000.

Payers of Nonemployee Compensation: File IRS Form 1099-MISC (Miscellaneous Income) for nonemployee compensation that you paid in 2018.

February 11

Employees Who Work for Tips: If you received $20 or more in tips during the month of January, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

February 15

Individuals: If you claimed an exemption from federal income tax withholding last year on the IRS Form W-4 (Employee’s Withholding Allowance Certificate) you gave your employer, you will need to file a new Form W-4 by this date if you want to continue your exemption for another year.

All Businesses: Provide annual information statements to the recipients of certain payments that you made in 2018. You should use the appropriate version of Form 1099 or other information return. Form 1099 may be issued electronically with the recipient’s consent. This due date applies only to these types of payments: all payments reported on IRS Form 1099-B (Proceeds From Broker and Barter Exchange Transactions), all payments reported on IRS Form 1099-S (Proceeds From Real Estate Transactions), and substitute payments reported in Box 8 or gross proceeds paid to an attorney reported in Box 14 of IRS Form 1099-MISC (Miscellaneous Income).

February 28

All Businesses: File information returns (e.g., Forms 1099) for certain payments you made in 2018. These payments are described under the January 31 due date. Note that there are different forms for different types of payments. You should use a separate IRS Form 1096 (Annual Summary and Transmittal of U.S. Information Returns) to summarize and transmit the forms for each type of payment. For more information, see the General Instructions for Certain Information Returns. If you file Forms 1097, 1099 (except a Form 1099-MISC reporting nonemployee compensation), 3921, 3922, or W-2G electronically, your due date for submitting them to the IRS will be extended to April 1. However, the deadline for providing the recipient with these forms generally remains January 31.

March 1

Farmers & Fishermen: This is the due date to file your 2018 income tax return (Form 1040) and pay any tax due. But note that if you paid your 2018 estimated tax by January 15, 2019, you will have until April 15 (or April 17 if you live in Maine or Massachusetts) to file your return.

March 11

Employees Who Work for Tips: If you received $20 or more in tips during the month of February, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

March 15

Partnerships: This is the deadline to file your 2018 tax return (Form 1065). Provide each partner with a copy of their Schedule K-1 (Form 1065) (Partner’s Share of Income, Deductions, Credits, etc.) or substitute Schedule K-1. If you need more time to file, you can request a tax extension using IRS Form 7004 (Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns). If you obtain an extension, you can file the return and provide each partner with a copy of their Schedule K-1 by September 16, 2019.

S Corporations: This is the deadline to file your 2018 tax return (Form 1120S) and pay any tax due. Provide each partner with a copy of their Schedule K-1 (Form 1120S) (Shareholder’s Share of Income, Deductions, Credits, etc.) or substitute Schedule K-1. If you need more time to file, you can request a tax extension and pay what you estimate you owe in tax. If you obtain an extension, you can file the return, pay any additional tax/penalties due, and provide each partner with a copy of their final Schedule K-1 by September 16, 2019.

S Corporation Election: File IRS Form 2553 (Election by a Small Business Corporation) to elect to be treated as an S corporation starting with calendar year 2019. Note that if you file Form 2553 late, your S corporation treatment will not begin until calendar year 2020.

2nd Quarter (April – June 2019): Tax Due Dates

April 1

Electronic Filings of Forms 1097, 1098, 1099, 3921, 3922, and W-2G: File these forms with the IRS by this date. Note that this deadline only applies if you file electronically. Otherwise, see February 28. The due date for providing the recipient with these forms generally remains January 31. For more information, see IRS Publication 1220.

April 10

Employees Who Work for Tips: If you received $20 or more in tips during the month of March, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

April 15

Individuals: File your 2018 income tax return and pay any tax due. (If you live in Maine or Massachusetts, your deadline is April 17, 2019.) If you need more time to file your return, you can request a tax extension with IRS Form 4868 (Application for Automatic Extension of Time To File U.S. Individual Income Tax Return). Note that an extension only gives you extra time to file, so you should pay what you estimate you owe in tax by the original April deadline to avoid penalties. If you obtain a tax extension, you will have until October 15, 2019 to file your tax return.

Individuals: If you are not paying your 2019 income tax through withholding (or you will not pay enough tax during the year that way), you should make the first installment payment for your 2019 estimated tax. You can use IRS Form 1040-ES (Estimated Tax for Individuals). For more information, see IRS Publication 505 (Tax Withholding and Estimated Tax).

Household Employers: If you paid cash wages of $2,100 or more to a household employee during 2018, you must file IRS Schedule H (Form 1040)(Household Employment Taxes). If you are required to file an annual income tax return (IRS Form 1040), you should include Schedule H with your return and report any household employment taxes. If you paid total cash wages of $1,000 or more in any calendar quarter of 2017 or 2018 to household employees, you should report any federal unemployment (FUTA) on Schedule H. Additionally, make sure to report any income tax you withheld for your household employees. For more information, see IRS Publication 926 (Household Employer’s Tax Guide).

Corporations: File a 2019 income tax return, IRS Form 1120 (U.S. Corporation Income Tax Return), and pay any tax due. If you need more time to file, you can request a tax extension with IRS Form 7004. Make sure you file your extension and pay what you estimate you owe in taxes by this date to avoid penalties.

Corporations: Make the first installment payment for 2019 estimated income tax. You can use the worksheet, IRS Form 1120-W (Estimated Tax for Corporations), to help you calculate your estimated tax for the year.

May 10

Employees Who Work for Tips: If you received $20 or more in tips during the month of April, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

June 10

Employees Who Work for Tips: If you received $20 or more in tips during the month of May, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

June 17

Individuals: If you are a U.S. citizen or resident alien living and working (or on military duty) outside the United States and Puerto Rico, your federal income tax return is due on this date. File IRS Form 1040 and pay any tax due. Otherwise, see April 15. If you need more time to file your tax return, you can use IRS Form 4868 to get a 4-month extension. However, you should still pay what you estimate you owe by this date to avoid penalties. If you obtain an extension, you will have until October 15, 2019 to file your tax return. Note that members of the military who are stationed in a combat zone may be allowed an additional filing extension. For more information, see IRS Publication 3 (Armed Forces’ Tax Guide).

Individuals: If you are not paying your 2019 income tax through withholding (or you will not pay enough tax during the year that way), pay the second installment of your 2019 estimated tax by this date. You can use IRS Form 1040-ES (Estimated Tax for Individuals). For more information, see IRS Publication 505 (Tax Withholding and Estimated Tax).

Corporations: Make the second installment payment for 2019 estimated income tax. You can use the worksheet, IRS Form 1120-W (Estimated Tax for Corporations), to help you calculate your estimated tax for the year.

3rd Quarter (July – September 2019): Tax Due Dates

July 10

Employees Who Work for Tips: If you received $20 or more in tips during the month of June, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

August 12

Employees Who Work for Tips: If you received $20 or more in tips during the month of July, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

September 10

Employees Who Work for Tips: If you received $20 or more in tips during the month of August, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

September 16

Individuals: If you are not paying your 2019 income tax through withholding (or you will not pay enough tax during the year that way), pay the third installment of your 2019 estimated tax by this date. You can use IRS Form 1040-ES (Estimated Tax for Individuals). For more information, see IRS Publication 505 (Tax Withholding and Estimated Tax).

Partnerships: If you obtained a 6-month tax extension, your 2018 tax return (IRS Form 1065) is due by this date. Otherwise, see March 15. You must also provide each partner with a copy of their final/amended Schedule K-1 (Form 1065) or substitute Schedule K-1.

S Corporations: If you obtained a 6-month tax extension, your 2018 tax return is due by this date. File IRS Form 1120S and pay any tax, interest, and penalties due. Otherwise, see March 15. You must also provide each shareholder with a copy of their final/amended Schedule K-1 (Form 1120S) or substitute Schedule K-1.

Corporations: Make the third installment payment for 2019 estimated income tax. You can use the worksheet, IRS Form 1120-W (Estimated Tax for Corporations), to help you calculate your estimated tax for the year.

4th Quarter (October – December 2018): Tax Due Dates

October 10

Employees Who Work for Tips: If you received $20 or more in tips during the month of September, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

October 15

Individuals: If you obtained a 6-month tax extension, your 2018 tax return is due by this date. File IRS Form 1040 and pay any tax, interest, and penalties due.

Corporations: If you obtained a 6-month tax extension, your 2018 tax return is due by this date. File IRS Form 1120 and pay any tax, interest, and penalties due. Otherwise, see April 15.

November 12

Employees Who Work for Tips: If you received $20 or more in tips during the month of October, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

December 10

Employees Who Work for Tips: If you received $20 or more in tips during the month of November, you are supposed to report them to your employer. You can report your tips with IRS Form 4070 (Employee’s Report of Tips to Employer).

December 16

Corporations: Make the fourth installment payment for 2019 estimated income tax. You can use the worksheet, IRS Form 1120-W (Estimated Tax for Corporations), to help you calculate your estimated tax for the year.

Fiscal Year Taxpayers: 2019 Due Dates

Individuals

IRS Form 1040: This is the individual income tax return, which is due on the 15th day of the 4th month after the end of your tax year. (For example, if your tax year ends on December 31, 2018, your 1040 return is due by April 15, 2019.) If you need more time to file your return, you can request a tax extension by submitting IRS Form 4868 by your original filing deadline.

Estimated Tax Payments (IRS Form 1040-ES): There are four installment payments for estimated tax. The payments are due on the 15th day of the 4th, 6th, and 9th months of your tax year. The fourth/final payment is due on the 15th day of the 1st month after your tax year ends. (For example, if your tax year ends on December 31, 2018, your final installment payment is due by January 15, 2019.)

Partnerships

IRS Form 1065: This is the annual income tax return for Partnerships. It is due on the 15th day of the 3rd month after the end of the partnership’s tax year. (For example, if your tax year ends on December 31, 2018, your 1065 return is due by March 15, 2019.) You must also provide each partner with a copy of their Schedule K-1 (Form 1065) or substitute Schedule K-1 by the 15th day of the 3rd month after the end of the partnership’s tax year. If you need more time to file Form 1065, you can request a 6-month extension by submitting IRS Form 7004 by your original filing deadline.

Corporations & S Corporations

IRS Form 1120: This is the annual income tax return for Corporations. It is due on the 15th day of the 4th month after the end of the corporation’s tax year. (For example, if your tax year ends on December 31, 2018, your 1120 return is due by April 15, 2019.) However, note that a corporation with a fiscal tax year ending on June 30 must file Form 1120 by the 15th day of the 3rd month after the end of its tax year. A corporation with a short tax year ending anytime in June will be treated as if the short year ended on June 30, and must file Form 1120 by the 15th day of the 3rd month after the end of its tax year.

IRS Form 1120S: This is the annual income tax return for S Corporations. It is due on the 15th day of the 3rd month after the end of the corporation’s tax year. (For example, if your tax year ends on December 31, 2018, your 1120S return is due by March 15, 2019.) You must also provide each shareholder with a copy of their Schedule K-1 (Form 1120S) or substitute Schedule K-1 by the 15th day of the 3rd month after the end of the corporation’s tax year.

IRS Form 7004: This form is used to request a 6-month tax extension for Form 1120 (Corporations) or Form 1120S (S Corporations). However, corporations with a fiscal year ending on June 30 (or a short tax year treated as if the short year ended on June 30) will use Form 7004 to request a 7-month extension of time to file Form 1120. Keep in mind that Form 7004 must be submitted by the original filing deadline in order to be approved by the IRS.

Estimated Tax Payments: There are four installment payments for estimated tax. The payments are due on the 15th day of the 4th, 6th, 9^th, and 12th months of the corporation’s tax year

IRS Form 2553: This form is used to choose S Corporation treatment. It is due no more than 2 months and 15 days after the beginning of the tax year that the election is to take effect, or at any time during the preceding year.

Legal Holidays

These are the legal holidays for 2019:

January 1 – New Year’s Day
January 21 – Martin Luther King, Jr.’s Birthday
February 18 – Washington’s Birthday
April 16 – Emancipation Day (District of Columbia)
May 27 – Memorial Day
July 4 – Independence Day
September 2 – Labor Day
October 14 – Columbus Day
November 11 – Veterans Day
November 28 – Thanksgiving Day
December 25 – Christmas Day

IRS Tax Tip: Taxpayers can now get tax tips and helpful news from the IRS on Instagram.

IRS Tax Tip: Taxpayers can now get tax tips and helpful news from the IRS on Instagram.

The agency just debuted it’s official Instagram account, IRSNews, which users can access at www.instagram.com/irsnews or on their smartphone using the Instagram app.

The IRS will use its new Instagram account it to:

Provide the latest tax scam information to help taxpayers keep their personal data secure.
Better serve young adults, the majority of whom use Instagram.
Share information in Spanish and other languages.
Reinforce messages the IRS promotes on its other social accounts.

The IRS will use Instagram along with several other social media tools to communicate with taxpayers:

YouTube: The IRS offers video tax tips in English, Spanish and American Sign Language.
Twitter: Taxpayers can follow @IRSnews for tax-related announcements and tips. @IRStaxpros tweets news and guidance for tax professionals. Tweets from @IRSenEspanol have and the latest tax information in Spanish. @IRSTaxSecurity tweets tax scam alerts.
Facebook. News and information for taxpayers and tax return preparers.
LinkedIn. The IRS shares agency updates and job opportunities.

The IRS also has their own app, IRS2Go. Taxpayers can use this free mobile app to check their refund status, pay taxes, find free tax help, watch IRS YouTube videos and get IRS Tax Tips by email. Like Instagram, the IRS2Go app is available from the Google Play Store for Android devices, or from the Apple App Store for Apple devices. IRS2Go is available in both English and Spanish.

IRS reminder: Second estimated tax payment due June 15

IRS reminder: Second estimated tax payment due June 15; form, publication can help people pay the right amount following law changes

With tax reform bringing major changes for the year ahead, the Internal Revenue Service today reminded self-employed individuals, retirees, investors and others who need to pay their taxes quarterly that the second estimated tax payment for 2018 is due on Friday, June 15, 2018.

The Tax Cuts and Jobs Act, enacted in December 2017, changed the way tax is calculated for most taxpayers, including those with substantial income not subject to withholding. Among other reforms, the new law changed the tax rates and brackets, revised business expense deductions, increased the standard deduction, removed personal exemptions, increased the child tax credit and limited or discontinued certain deductions. As a result, many taxpayers may need to raise or lower the amount of tax they pay each quarter through the estimated tax system.

Form 1040-ES, available on IRS.gov, is designed to help taxpayers figure these payments simply and accurately. The estimated tax package includes a quick rundown of key tax changes, income tax rate schedules for 2018 and a useful worksheet for figuring the right amount to pay. The IRS also mailed 1 million Form 1040-ES vouchers with instructions in late March to taxpayers who used this form last year.

A companion publication, Publication 505, Tax Withholding and Estimated Tax, has additional details, including worksheets and examples, which can help taxpayers determine whether they should pay estimated tax, such as those who have dividend or capital gain income, owe alternative minimum tax or have other special situations.

Who needs to pay quarterly?

Most often, self-employed people, including individuals involved in the sharing economy, need to pay quarterly installments of estimated tax. Similarly, investors, retirees and others – a substantial portion of whose income is not subject to withholding – often need to make these payments as well. Other income generally not subject to withholding includes interest, dividends, capital gains, alimony and rental income.

Because the U.S. tax system operates on a pay-as-you-go basis, taxpayers are required, by law, to pay most of their tax liability during the year. For 2018, this means that an estimated tax penalty will normally apply to any party that pays too little tax, usually less than 90 percent, during the year through withholding, estimated tax payments or a combination of the two.

Exceptions to the penalty and special rules apply to some groups of taxpayers, such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees, and those who receive income unevenly during the year. In addition, there is an exception to the penalty for those who base their payments of estimated tax on last year’s tax. Generally, taxpayers will not have an estimated tax penalty if they make payments equal to the lesser of 90 percent of the tax to be shown on their 2018 return or 100 percent of the tax shown on their 2017 return (110 percent if their income was more than $150,000). See Form 2210 and its instructions for more information.

Employees have a choice

Many employees who also receive income from other sources may be able to forgo making estimated tax payments and instead increase the amount of income tax withheld from their pay. They can do this by claiming fewer withholding allowances on their Form W-4 by completing the Deductions, Adjustments, and Additional Income Worksheet in the instructions section. If that’s not sufficient, on the Form W-4 they can ask their employer to withhold an additional flat-dollar amount each pay period.

Perform a paycheck checkup

Because of the far-reaching tax changes taking effect this year, the IRS urges all employees, including those with other sources of income, to perform a paycheck checkup now. Doing so now will help avoid an unexpected year-end tax bill and possibly a penalty. The easiest way to do this is to use the Withholding Calculator available on IRS.gov.

To use the Withholding Calculator most effectively, users should have a copy of last year’s tax return and recent paystub. After filling out the Withholding Calculator, the tool will recommend the number of allowances the employee should claim on their Form W-4. Though primarily designed for employees who receive wages, the Withholding Calculator can also be helpful to some recipients of pension and annuity income.

If the Withholding Calculator suggests a change, the employee should fill out a new Form W-4 and submit it to their employer as soon as possible. Similarly, recipients of pensions and annuities can make a change by filling out Form W-4P and giving it to their payer.

Employees who expect to receive long term capital gains or qualified dividends, or employees who owe self-employment tax, alternative minimum tax, or tax on unearned income of minors should use the instructions in Publication 505 to check whether they should change their withholding or pay estimated tax.

How and when to pay

For tax-year 2018, estimated tax payment due dates are April 18, June 15, Sept. 17 and Jan. 15, 2019. Taxpayers due a refund on their 2017 federal income tax return may be able to reduce or even skip one or more of these payments by choosing to apply their 2017 refund to their 2018 estimated tax. See Form 1040 and its instructions for more information.

Taxpayers in presidentially-declared disaster areas may have more time to make these payments without penalty. Visit the Tax Relief in Disaster Situations page for details.

The fastest and easiest way to make estimated tax payments is to do so electronically using IRS Direct Pay or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS). For information on other payment options, visit IRS.gov/payments. For filers paying by check, the check must be payable to the “United States Treasury.”

More information about tax withholding and estimated tax can be found on the agency’s Pay As You Go web page, as well as in Publication 505, Tax Withholding and Estimated Tax.

Tips for teenage taxpayers starting a summer job

Tips for teenage taxpayers starting a summer job

Now that school’s out, many students will be starting summer jobs…from working at a summer camp to being an office intern. The IRS reminds students that not all the money they earn may make it to their pocket. That’s because employers must withhold taxes from the employee’s paycheck. Here are a few things these workers need to know when starting a summer job:

New employees. Students and teenage employees normally have taxes withheld from their paychecks by the employer. When a taxpayer gets a new job, they need to fill out a Form W-4. Employers use this form to calculate how much federal income tax to withhold from the employee’s pay. The Withholding Calculator on IRS.gov can help a taxpayer fill out this form.
Self-employment. Students who do odd jobs over the summer to make extra cash – like baby-sitting or lawn care – are considered self-employed. They should remember that money earned from self-employment is taxable. Workers who are self-employed may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments during the year. Taxpayers who do this should keep good records of all money they receive.
Tip income. Someone working as a waiter or a camp counselor who receives tips as part of their summer income should know that tip income is taxable income and subject to federal income tax. They should keep a daily log to accurately report them, as they will report tips of $20 or more received in cash in any single month.
Payroll taxes. This tax pays for benefits under the Social Security system. While taxpayers may earn too little from their summer job to owe income tax, employers usually must still withhold Social Security and Medicare taxes from their pay. If a taxpayer is self-employed, then Social Security and Medicare taxes may still be due and are generally paid by the taxpayer.
Reserve Officers’ Training Corps pay. If a taxpayer is in an ROTC program, active duty pay, such as pay for summer advanced camp, is taxable. Other allowances the taxpayer may receive – like food and lodging allowances paid to ROTC students participating in advanced training – may not be taxable. The Armed Forces’ Tax Guide on IRS.gov has more details.

More Information:
Tax rules for students.
Is My Tip Income Taxable?
Do I Have Income Subject to Self-Employment Tax?

IRS provides additional day to file and pay for taxpayers through Wednesday, April 18; IRS processing systems back online

IRS provides additional day to file and pay for taxpayers through Wednesday, April 18; IRS processing systems back online

WASHINGTON — The Internal Revenue Service announced today that it is providing taxpayers an additional day to file and pay their taxes following system issues that surfaced early on the April 17 tax deadline. Individuals and businesses with a filing or payment due date of April 17 will now have until midnight on Wednesday, April 18. Taxpayers do not need to do anything to receive this extra time.

The IRS encountered system issues Tuesday morning. Throughout the system outage, taxpayers were still able to file their tax returns electronically through their software providers and Free File. Taxpayers using paper to file and pay their taxes at the deadline were not affected by the system issue.

“This is the busiest tax day of the year, and the IRS apologizes for the inconvenience this system issue caused for taxpayers,” said Acting IRS Commissioner David Kautter. “The IRS appreciates everyone’s patience during this period. The extra time will help taxpayers affected by this situation.”

The IRS advised taxpayers to continue to file their taxes as normal Tuesday evening – whether electronically or on paper. Automatic six-month extensions are available to taxpayers who need additional time to file can visit https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return.

What Taxpayers Should do When They Need More Time to Pay

What Taxpayers Should do When They Need More Time to Pay

All taxpayers should file their taxes on time, even if they can’t pay what they owe. This saves them from a potential failure-to-file penalty. While taxes are due by the original due date of the return, some taxpayers are unable to pay them by the deadline.

Here are some tips for those who can’t pay their taxes in full by the April 17 deadline:

File on Time and Pay as Much as Possible. Taxpayers can pay online, by phone, by check or money order, or with their mobile device using the IRS2Go app.

Get a Loan or Use a Credit Card to Pay the Tax. The interest and fees charged by a bank or credit card company may be less than IRS interest and penalties.

Use the Online Payment Agreement tool. Taxpayers should not wait for the IRS to send a bill before setting up a payment plan. The best way to do this is to use the Online Payment Agreement tool. Taxpayers can also file an Installment Agreement Request with their return and set up a direct debit agreement, eliminating the need to send a check each month.

Don’t Ignore a Tax Bill. The IRS may take collection action against taxpayers who don’t respond to notices. Taxpayers should contact the IRS right away by calling the phone number on their bills to talk about options. The IRS will work with taxpayers suffering financial hardship.

IRS direct deposit leads to faster refunds

IRS direct deposit leads to faster refunds

WASHINGTON — With the tax deadline just around the corner, the Internal Revenue Service reminds taxpayers that making an electronic direct deposit of their refund into a bank or other account is the fastest way to get their money. A taxpayer can deposit their refund into one, two or even three accounts to help with retirement or savings.

Eight out of 10 taxpayers get their refunds by using direct deposit. It is simple, safe and secure. The IRS uses the same electronic transfer system to deposit tax refunds that is used by other federal agencies to deposit nearly 98 percent of all Social Security and Veterans Affairs benefits into millions of accounts. Direct deposit also avoids the possibility that a refund check could be lost or stolen or returned to the IRS as undeliverable.

Direct deposit is easy to use. A taxpayer simply selects it as the refund method when using tax software or working with a tax preparer, and then types in their account and routing number. It’s important to double check entries to avoid errors.

Direct deposit also saves taxpayer money. It costs the more than $1 for every paper refund check issued, but only a dime for each direct deposit made.

Split refunds

By using direct deposit, a taxpayer can split their refund into up to three financial accounts, including a bank or Individual Retirement Account. Part of the refund can even be used to purchase up to $5,000 in U.S. Series I Savings Bonds.

A taxpayer can split their refund by using tax software or by using IRS Form 8888, Allocation of Refund (including Savings Bond Purchases), if they file a paper return. If a taxpayer wants the IRS to deposit their refund into just one account, they simply use the direct deposit line on their tax form. Some people use split refunds as a convenient option for managing their money, sending some of their refund to an account for immediate use and some for future savings.

The IRS reminds taxpayers they should only deposit refunds directly into accounts that are in their name, their spouse’s name or both if it’s a joint account. No more than three electronic tax refunds can be deposited into a single financial account or prepaid debit card. Taxpayers who exceed the limit will receive an IRS notice and a paper refund will be issued for the refunds exceeding that limit.

E-file plus direct deposit yields fastest refunds

The IRS also encourages taxpayers to file electronically. While a person can choose direct deposit whether they file their taxes on paper or electronically, a taxpayer who e-files will typically see their refund in less than 21 days. Taxpayers can track their refund using “Where’s My Refund?” on IRS.gov or by downloading the IRS2Go Mobile App.

“Where’s My Refund?” is updated once daily, usually overnight, so there’s no reason to check more than once per day or call the IRS to get information about a refund. Taxpayers can check “Where’s My Refund?” within 24 hours after the IRS has received their e-filed return or four weeks after receipt of a mailed paper return. “Where’s My Refund?” has a tracker that displays progress through three stages: (1) Return Received, (2) Refund Approved, and (3) Refund Sent.

Whether through IRS Free File or commercially available software, electronic filing vastly reduces tax return errors, as the tax software does the calculations, flags common errors and prompts taxpayers for missing information.

Other last-minute tips from IRS:

Need more time to file? Avoid a late-filing penalty by requesting an extension of time to file. There are several ways to do so, including through the Free File link on IRS.gov or by making an electronic payment and designating it as an extension payment. An extension of time to file is not an extension to pay. Taxpayers can file up to six months later when they have an extension, but their taxes are still due by the original due date. They can get an automatic extension of time to file when making a full or partial payment with Direct Pay, the Electronic Federal Tax Payment System or by debit or credit card.

When paying electronically, taxpayers must select Form 4868 as the payment type and the payment date to get the automatic extension, and there’s no need to file a paper or electronic Form 4868. Keep the confirmation as proof of the payment and extension. With Direct Pay and EFTPS taxpayers can opt in to receive email notifications about their payment.

Taxpayers can file Form 4868, Application for Extension of Time To File U.S. Income Tax Return, electronically or by mail. April 17 is the deadline for most to pay taxes owed and avoid penalty and interest charges.

Watch out for email schemes.Taxpayers will only receive an email from Direct Pay or EFTPS if they’ve opted in for email notifications when they initiate the payment process in Direct Pay or sign up for email notifications through EFTPS. Report all unsolicited email claiming to be from the IRS or an IRS-related function to phishing@irs.gov.

Owe tax? Taxpayers who owe taxes can use IRS Direct Pay or any of several other electronic payment options. They are secure and easy and taxpayers receive immediate confirmation of their payment. Or, mail a check or money order made payable to the “United States Treasury” along with a Form 1040-V, Payment Voucher. Taxpayers who can’t pay by April 17 often qualify to set up a monthly payment agreement with the IRS using the Online Payment Agreement option on IRS.gov.

For further help and resources, check out the IRS Services Guide.

Start Your Small Business: Everything You Need to Succeed as a Small Business Owner Right Now

Starting a small business is equal parts exciting and overwhelming, especially if this is your first venture. You may have a great idea that you want to bring to market or just an itch to create something of your own and you’re not sure what it is yet. This article can help you understand the necessities for getting your business up and running, as well as suggest some resources for more in-depth learning.

**Find Your Right Small Business Idea**

If you’re looking to start a business but don’t have a specific idea in mind, consider researching markets where small businesses are already faring well. It’s much easier for first-time business owners to start a business that fits into an existing market than it is to create a market for an existing business. So consider ideas that improve upon winning business models.

Business Idea Resources:

This article from Small Biz Ahead discusses the 10 best markets to start a business in right now.
While you’re at it, consider location and perhaps you’ll want to avoid one of these 10 terrible markets for businesses.
If you already have a business up and running, but are looking for ideas on how to improve it, check out this article on free insights for your business.
Learn how to test out business ideas in small doses before betting the farm with this episode of the Small Biz Ahead podcast.

Create Your Business Plan

First-time business owners often think of their business plan as a detailed roadmap that outlines every single step for their business’s success. In reality, a business plan should function as more like a compass. It provides direction and keeps you from veering too far off course. It’s a good idea to document your goals, strategies and resources, but an in-depth, detailed business plan may only necessary if you’re courting investors.

Business Plan Resources:

Get a comprehensive look at creating a business plan with this article from the Business Owner’s Playbook.
Learn what you need to do before you start writing your business plan.
Listen to Small Biz Ahead podcast hosts Gene Marks and Elizabeth Larkin discuss how much you need in a business plan.
Read about why your business plan is useless and how to make it better.
And here’s how to give your business plan a long shelf life.

Protect Your Small Business with the Right Insurance

The right business insurance will protect your venture from unforeseeable threats and help you maintain peace of mind without costing an arm and leg. The size and function of your business greatly determine the types of insurances you need. For example, a pizza shop most likely needs property insurance, workers compensation and commercial auto insurance. An e-commerce business may need data breach protection.

Resources for Protecting Your Business with the Right Insurance:

Get a simple overview of the most common business insurances that are available today with this article from the Business Owner’s Playbook.
Assess your current insurance coverage to determine if your business is covered for the typical risks facing your industry.
No two businesses are alike; learn how to tailor insurance to your industry with this article from the Business Owner’s Playbook.

Manage Cash Flow and Fund Your Small Business

Eighty-two percent of businesses fail due to cash flow mismanagement. Whether you’re looking to get your business off the ground or keep operations running smoothly, you will need adequate funding and great cash flow management.

Cash Flow and Funding Resources:

Gene Marks and Elizabeth Larkin discuss options for raising capital in this episode of the SBA podcast.
Learn how to prepare your pitch for investors by listening to Shark Tank survivor Tim Barklage share his strategy on the SBA podcast.
Gain an in-depth knowledge of cash flow management with this comprehensive guide from the Business Owner’s Playbook.
Plug in your headphones and let Gene Marks and Elizabeth Larkin explain the difference between cash flow and profit in this episode of the Small Biz Ahead podcast.

Manage Your Accounting and Taxes

“The hardest thing in the world to understand is the income tax.” – Albert Einstein

Taxes are inevitable. In order to keep your business from running into any unfortunate surprises during tax season, or from suffering due to misplaced money, you need to manage your accounting and business taxes.

Accounting and Taxes Resources:

Get an overview of how and when you should manage your own finances, hire a bookkeeper or hire an accountant.
Learn some basics of business taxes with this comprehensive article from the Business Owner’s Playbook.

Pick Your Business Structure

“Every company has two organizational structures: The formal one is written on the charts; the other is the everyday relationship of the men and women in the organization.” – Harold S. Geneen

You’ll want to choose a business structure based on how your business will operate and what its needs will be. For example, if you plan to seek funding from investors, then you may want to consider forming a limited liability corporation (LLC). If your business is smaller and you have no employees, a sole proprietorship may be your best option.

Learn about different business structures and their pros and cons in this article from Business Owner’s Playbook.

Set Up Your Office

There’s a lot to consider when choosing an office for your business. You want to weigh the pros and cons of working from home versus renting/leasing space. You also want to consider how much space you need and whether you can share that space with others outside of your company.

This article from the Business Owner’s Playbook offers a great overview of things a business owner should know when selecting an office location.

Start an E-Commerce Website

An e-commerce website can function as an additional source of revenue for a brick-and-mortar store or as a standalone, online business. With a little bit of know-how, you could have an e-commerce website up and running within 24 hours. Best of all, your doors are open to sales 24/7.

Here’s some information on how to start an e-commerce website.

Take Your Business Online

If you think your business can survive without a website and social media presence, you’re probably wrong. A survey conducted by Verisign found that 77 percent of consumers believe a website makes a business appear more credible and 93 percent of consumers use the internet to do research before making a purchase. Even if you don’t sell goods online, you still need a website. The same study found 91 percent of consumers use the internet to look for local goods and services.

Resources for Taking Your Business Online:

Gain a comprehensive understanding of things you need to build a website for your business.
Listen to hosts Gene Marks and Elizabeth Larkin share valuable insights on business websites and social media presence in this episode of the Small Biz Ahead podcast.
Get an introduction to social media marketing with this article from the Business Owner’s Playbook.
Learn how to handle social media complaints about your business in this episode of the Small Biz Ahead podcast.

Hire Employees, Vendors and Contractors

Knowing when to hire an additional employee and how to choose the best candidate requires a great amount of research, skill and experience. Even if your business is a sole proprietorship, you may need to hire vendors and contractors. Though it sounds simple enough to hire someone who’ll produce profitable work, know that it’s not always that easy. And it can be costly if you end up hiring the wrong person for the wrong job.

Resources for Hiring Employees, Vendors and Contractors:

Learn everything from writing job ads to conducting interviews and making a job offer with this article on how to hire your first employee.
Gene Marks and Elizabeth Larkin share their expert opinions on letting employees work remotely in this episode of the Small Biz Ahead podcast.
Cut down on overhead costs by learning how to create a virtual workforce with this article from the Business Owner’s Playbook.
You may not need employees for your small business, but you will definitely need advisors. Get familiar with the five different advisors you’ll need for your small business.
Learn how to master the art of managing a contingent workforce (freelancers, contractors, consultants, etc.) to increase productivity and efficiency with this article from Small Biz Ahead.
Hiring vendors can be a great way to keep costs low. Learn the best ways to manage vendors with this article from the Business Owner’s Playbook.

There will never be an absolute, definitive prescription for starting or running any business. There’s a lot of trial and error (more error than you’d expect) involved. You don’t need to be a master of accounting to get your web development business up and running. Nor do you need to be a prolific web developer to ensure your coffee shop/used bookstore business is a success. But to be a successful business owner, you’ll want to have at least a general understanding of all of the topics covered here.

Special thanks to Mike Kelly and The Hartford for “Content share”

Nine Facts About the Adoption Credit

Nine Facts About the Adoption Credit

Adoptive parents around the country may qualify for a tax credit. Parents who either adopted a child or tried to adopt a child may claim the adoption credit. Here are nine things you should know about this credit.

Credit. The credit is nonrefundable. This means the credit may only reduce a taxpayer’s tax liability to zero. If the credit is more than the tax owed, the taxpayer can’t receive an additional amount as a refund.
Credit carryover. Taxpayers can carry any unused credit forward to the next year. This happens when the credit is more than the tax owed. In other words, taxpayers who have an unused credit in tax year 2017 can use it to reduce their taxes for 2018. Taxpayers can carry any remaining credits for up to five years, or until they fully use the credit, whichever comes first.
Exclusion. If the taxpayer’s employer helped pay for the adoption through a qualified adoption assistance program, the taxpayer may qualify to exclude that amount from tax.
Eligibility. An eligible child is an individual under age 18. It can also be an individual of any age who is physically or mentally unable to care for themselves.
Special needs child. Special rules apply to taxpayers who adopted an eligible U.S. child with special needs. The taxpayers may be able to take the exclusion even if they didn’t pay any qualified adoption expenses.
Qualified expenses. Adoption expenses must be directly related to the adoption of the child. The expenses must also be reasonable and necessary. Types of expenses that can qualify include adoption fees, court costs, attorney fees and travel.
Domestic or foreign adoptions. In most cases, taxpayers can claim the credit whether the adoption is domestic or foreign. However, the rules for which year a taxpayer can claim qualified expenses differ between these two types of adoption.
No double benefit. Depending on the adoption’s cost, taxpayers may be able to claim both the tax credit and the exclusion. However, they can’t claim both a credit and exclusion for the same expenses.
Income limits. The credit and exclusion are subject to income limitations. The limits may reduce or eliminate the amount a taxpayer can claim depending on the amount of their income.