Today TaxMama® says you can breathe a sigh of relief. The U.S. government will stay open. The IRS is still funded. You, your family and friends, who work for the government will be able to continue to pay your living costs. Whew!
Dear Family,
The IRS is trying to catch up with their functions – which did,
as expected, fall behind. Tax professionals waiting for licensing renewals have
automatically been extended. Those applying for the first time are experiencing
delays getting their Enrolled Agent designations – but they will come. (Hopefully
before tax season ends.)
To reduce the long waits on IRS telephone lines, the IRS is encouraging more
use of their online resources. Taxpayers can get their own information online
using the Get Transcript Online service.
Of course, you must pass the Secure Access identity verification
process. So if you put a freeze on your Equifax credit reports – unlock them
for the time it takes to get into your IRS accounts.
And how IS tax season going? Asking tax pros around the country, they report that I need to explain the concept of tax liability to you – rather than tax refund. So here goes.
Most people in the lower and middle income brackets, especially those with children, are seeing lower tax liabilities. (That’s the total amount of tax based on your income, reduced by your tax credits .) However, many are seeing lower refunds – or they owe some money. And they are frustrated and upset, taking it out on their tax pros – please don’t do that.
Why the lower refunds, if your tax liabilities are lower? You have been getting less money taken out of your paycheck since February 2018. I alerted you to this problem last May and again, last November.
Moving on…
How are people affected who cannot deduct their job-related expenses? Honestly?
Some people who were only able to itemize because of the employee business
expenses – some of them are doing fine because of the higher standard
deductions. But those who deduct mortgage and taxes AND job-related expenses are
showing much higher taxable income than before. In some cases, the lower tax
bracket helps. For others, they are hit with much higher tax liabilities.
What about people with businesses – especially those who might benefit from the new 20% Qualified Business Income Deduction (Sec 199A). Unless your business is really straight-forward (say, a Schedule C and no employees) – consider putting your tax return on extension. Folks who have multiple streams of pass-through income (partnerships, rentals, S corporations, Schedule Cs, and certain investments) – each one of those requires a separate Sec 199A computations. Definitely do not prepare your own tax return this year.
Incidentally, it’s OK to file extensions early (Form 4868 and Form 7004). No need to wait until the last minute.
And remember, you can find answers to all kinds of questions about taxes and business issues, free. Where? Where else? At https://iTaxMama.com/AskQuestion
Note to those who bought the Trump Tax Cut book. Thank you. To show my appreciation, I have some bonus resources for you. Drop by https://www.trumptaxplanbook.com/ to pick them up.
