Get Ready for Taxes:

Tax reform changes likely to reduce number of taxpayers who itemize

WASHINGTON — The Internal Revenue Service today advised taxpayers that the doubling of the standard deduction due to tax law changes is likely to reduce the number of taxpayers who normally itemize.

In previous years, about one out of three taxpayers itemized. The IRS expects that number to be less for tax year 2018. The Tax Cuts and Jobs Act (TCJA) passed in December 2017, significantly affects deductions in several ways, impacting those taxpayers who normally itemize.

The TCJA doubles the standard deduction amount for all filing statuses. The standard deduction is a dollar amount that reduces the amount of income on which a taxpayer is taxed and varies according to their filing status. Because of this, many qualifying taxpayers may find the increased standard deduction more than their total itemized deductions and opt for choosing the standard deduction rather than itemizing.

Taxpayers should check their 2017 itemized deductions to make sure they understand what the tax reform changes could mean for their tax situation in 2018. Those who still plan to itemize will complete an updated version of Schedule A, Itemized Deductions, and attach it to their tax return.
Publication 5307, Tax Reform Basics for Individuals and Families, is a key resource to understanding the impact of the tax reform law on deductions. The publication provides information about:

  • increasing the standard deduction,
  • suspending personal exemptions,
  • increasing the child tax credit,
  • adding a new credit for other dependents, and
  • limiting or discontinuing certain deductions.

The IRS reminds taxpayers that the best way to file an accurate tax return is to use tax software and e-file or seek the help of a tax professional who will prepare and e-file their tax return. The IRS offers tips for choosing a tax professional.

Taxpayers who earned less than $66,000 in 2018 may qualify for IRS Free File and can access no cost tax software online.

Get ready today to file your 2018 federal income tax return.

Tax Reform- Review new IRS Publication 5307, Tax Reform Basics for Individuals and Families, to learn about how the new tax law may affect your tax return next year.

Withholding

What You Need to Know

  • Due to tax changes in the Tax Cuts and Jobs Act, many taxpayers’ withholding went down in early 2018, giving them more money in their paychecks in 2018.
  • You may receive a smaller refund - or even owe an unexpected tax bill – when you file your 2018 tax return next year, especially if you did not adjust your withholding after the withholding tables changed.Other changes that affect you and your family include increasing the standard deduction, suspending personal exemptions, increasing the child tax credit, adding a new credit for other dependents and limiting or discontinuing certain deductions.

What You Need to Do

  • Use the IRS Withholding Calculator to perform a Paycheck Checkup to help you decide if you need to adjust your withholding or make estimated or additional tax payments now.
  • Use your results from this Calculator to submit a new Form W-4, Employee's Withholding Allowance Certificate, tof your employer.
  • Make estimated or additional tax payments if the withholding from your salary, pension or other income doesn’t cover the 2018 income tax that you’ll owe for the year. Form 1040-ES, Estimated Tax for Individuals also has a worksheet to help you figure your estimated payments.

Refunds

What You Need to Know

• Expecting a refund? Some refunds cannot be issued before mid-February.
• By law, the IRS cannot issue refunds before mid-February for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit.
• This applies to the entire refund, even the portion not associated with these credits.
• While the IRS will process your return when it is received, it cannot issue EITC/ACTC related refunds before mid-February.
• Your refund may be different - or you may even owe an unexpected tax bill – when you file your 2018 tax return next year.
• New tax law may affect the tax refund you expect next year. Review new IRS Publication 5307, Tax Reform Basics for Individuals and Families, to learn more.

What You Need to Do

• Be careful not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations.
• File a complete and accurate return using your year-end W-2, bank and 1099 income statements and include all known refundable credits when you file your original tax return.
• File when you’ve received all your year-end statements and are ready to do so. If you usually file early in the year and you’re ready to file a complete and accurate return, there is no need to wait to file.
• Be aware that some returns may require additional review for a variety of reasons and take longer. For example, the IRS, along with its partners in the state’s and the nation’s tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud.
• Perform a Paycheck Checkup to help you decide if you need to adjust your withholding or make estimated or additional tax payments now.

New Form 1040, Filing Electronically and 2017 Adjusted Gross Income (AGI)

What You Need to Know

What You Need to Know
• The Form 1040 for tax year 2018 is a shorter form and replaces the current Form 1040, Form 1040A and the Form 1040EZ.
• The new Form 1040 can be supplemented with up to six additional schedules if needed.
• If you prepare and file your own taxes electronically, you must sign and validate your electronic tax return by entering your prior-year AGI or your prior-year Self-Select PIN.
• Some taxpayers using a software product for the first time may need to provide their 2017 Adjusted Gross Income, or AGI, to e-file their 2018 tax return.
• If you’re using the same tax software you used last year, you will not need to enter your prior year information to electronically sign your 2018 tax return.

What You Need to Do

• File electronically in 2019 as you usually do. Since more than nine out of 10 taxpayers use software or a tax preparer, the IRS is working with the tax community to prepare for the Form 1040 update.
• Check out IRS Free File to learn more about online free tax preparation and e-file options.
• Taxpayers who file on paper will use the updated Form 1040 and supplement it with any needed schedules.
• If you are using a software product for the first time and you have a copy of your 2017 federal income tax return, your AGI is on line 37 of the Form 1040; line 21 on the Form 1040-A or line 4 on the Form 1040-EZ.
• If you don’t have a copy of your 2017 tax return:

  • oAsk your paid preparer, if you used one last year.
  • oLog in to IRS.gov/account if you are an existing user.
  • oAsk the IRS to mail a Tax Return Transcript to you by requesting it here or call 800-908-9946. Allow 5 to 10 days for delivery.

• Learn more about how to verify your identity and electronically sign your tax return at Validating Your Electronically Filed Tax Return.

Individual Taxpayer Identification Number (ITIN)

What You Need to Know

• You are likely to experience processing delays if you file a tax return using an expired Individual Taxpayer Identification Number.
• There are two reasons your ITIN would expire December 31, 2018:

  • oIf you have not used your ITIN on a U.S. tax return at least once for tax years 2015, 2016 or 2017
  • oIf your ITIN has the middle digits 73, 74, 75, 76, 77, 81 or 82 (9NN-73-NNNN)

• If your ITIN has middle digits 78 or 79 (expired 12/31/2016), or 70, 71, 72 or 80 (expired 12/31/2017), you can still renew it.

What You Need to Do

• Renew your ITIN now if it has or will expire and you need to file a U.S. federal tax return in 2019.
• You don’t need to take any action to renew your ITIN if you are not required to file a federal tax return.
• Understand the new documentation requirements when applying for, or renewing, an ITIN for some of your dependents.
• Ensure you submit an accurate W-7 and valid ID documents.
• Find more information at IRS.gov/ITIN.

IRS Help

What You Need to Know

• IRS.gov is the official IRS website where you can find answers to your questions and resolve tax issues online.
• Those who earn around $55,000 or less may qualify for free tax help at a VITA or TCE site.
• IRS Free File has free online options for taxpayers to prepare and e-file their tax returns.
• The IRS is looking for volunteers for the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) Programs to provide free tax preparation services to their neighbors in 2019.

What You Need to Do

• Use the Let Us Help You page where you can get help answering most tax questions, get a copy of your tax record and make a payment among other services.
• You can also call (844) 545-5640 to make an appointment at one of our Taxpayer Assistance Centers if you need face-to-face help.
• The IRS Services Guide also links you to these and other IRS services.
• Go to the VITA or TCE page to learn more, then click on the VITA/TCE Locator tool beginning in mid-January to find a site near you that can help you prepare and e-file your return for free, if you qualify.
• Go to the IRS Tax Volunteer page to learn more and sign up to become a VITA or TCE tax volunteer.

IR-2018-225

WASHINGTON --The IRS reminds taxpayers to keep a copy of their past tax returns and supporting documents for at least three years. Certain key information from their prior year return may be required to file in 2019.
This is the fifth in a series of reminders to help taxpayers Get Ready for the upcoming tax filing season. The IRS has recently updated its Get Ready page with steps to take now for the 2019 tax filing season.
Keeping copies of prior year tax returns saves time. Often previous tax information is needed to file a current year tax return or to answer questions from the Internal Revenue Service. Taxpayers claiming certain securities or debt losses should keep their tax returns and documents for at least seven years.

Use a tax return to validate identity

Taxpayers using tax filing software for the first time may need their adjusted gross income (AGI) amount from their prior year’s tax return to verify their identity. Learn more at Validating Your Electronically Filed Tax Return. Those who need a copy of their tax return should first check with their software provider or tax preparer. Taxpayers can also obtain a free tax transcript from the IRS, or for a fee, order a copy of their tax return.

Order a transcript

A tax transcript can be ordered from the IRS. It summarizes tax return information and includes AGI. Tax transcripts are free and available for the most current tax year after the IRS has processed the tax return. Tax transcripts are available for the past three tax years.

Plan ahead. Delivery times for online and phone orders typically take five to 10 days from the time the IRS receives the request. Taxpayers who order by mail should allow 30 days to receive transcripts and 75 days for tax returns.

There are three ways for taxpayers to order a transcript:

  • Online. Taxpayers can use Get Transcript Online on IRS.gov to view, print or download a copy of all transcript types. Those who use it must authenticate their identity and create an account using the Secure Access process. Please allow five to 10 calendar days for delivery.
  • By phone. Call 800-908-9946.
  • By mail. Taxpayers who are unable to register or prefer not to use Get Transcript Online may use Get Transcript by Mail. Taxpayers can complete and send the IRS either Form 4506-T, Request for Transcript of Tax Return, or Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Use Form 4506-T to request other tax records: tax account transcript, record of account, wage and income and verification of non-filing. These forms are available on the Forms, Instructions and Publications page on IRS.gov.Those who need an actual copy of a tax return can get one for the current tax year and as far back as six years. The fee per copy is $50. Taxpayers can complete and mail Form 4506 to request a copy of a tax return and mail the request to the appropriate IRS office listed on the form.
  • If taxpayers need information to verify payments within the last 18 months or a tax amount owed, they can view their tax account.
  • The IRS is now redacting tax transcripts so that sensitive information, such as the taxpayer’s name, address and Social Security number, is partially masked. However, all financial entries, such as the adjusted gross income, are visible. The redacted transcript will better protect taxpayers from identity theft.