By\u00a0Laura Davison Capitol Hill Tax reporter, Bloomberg News.<\/p>\n
Filing taxes last year was a nightmare for taxpayers, their accountants and the Internal Revenue Service. This year might not be much better. The IRS is still working to issue guidance for the changes to the tax code signed into law more than two years ago. Congress also passed a series of tax breaks late last year that will require the IRS and tax software providers to revise forms at the last minute, and taxpayers may have to amend returns from prior years to claim those breaks. It also could be another disappointing year for taxpayers expecting a hefty refund. \u201cI hold my breath for the entire filing season and breathe a sigh of relief every April 15,\u201d said Robert Kerr, the executive vice president of the National Association of Enrolled Agents, a group that represents tax preparers. \u201cEvery filing season is a miracle. The IRS fights an uphill battle every year.\u201d<\/p>\n
There are a few bright spots. The agency made it through one filing season with the changes from the 2017 tax overhaul, which greatly revised the tax code for individuals, small businesses and corporations. And unlike last year, the IRS won\u2019t be facing a government shutdown forcing the agency to spend the final weeks of preparation with a bare-bones staff. Still, tax preparers are bracing themselves for the 2020 filing season, which runs Jan. 27 to April 15. \u201cI don\u2019t think we know enough or learned enough last year to say this year is going to be substantially easier,\u201d Mike Greenwald, a partner at accounting firm Friedman LLP, said.<\/p>\n
Everyone wants extensions<\/strong><\/p>\n For many accountants, the crunch isn\u2019t concentrated just in the spring anymore. The new busy season now includes fall deadlines, reflecting the increased number of people filing on the extension due date to have more time to comply with new complex rules for pass-through entities. Tax professionals are still recovering from last year\u2019s Sept. 15 deadline for partnership returns and Oct. 15 due date for corporate and individual returns. \u201cLast April was moderately harder than any other tax season,\u201d said Steve Rossman, an accountant at Drucker & Scaccetti. \u201cSeptember was the worst tax season I\u2019ve ever had.\u201d Accountants say a large portion of their sophisticated clients \u2014 especially those who have stakes in partnerships or invest in hedge funds or private equity \u2014 wait to file until the fall, because they don\u2019t have the information yet from the fund to submit their own taxes. \u201cThey are going to want to wait as long as possible to see if more guidance comes out,\u201d especially rules about write-offs for debt and carried interest, Greenwald said. \u201cThey want us to learn on somebody else\u2019s dime.\u201d Congress gave some taxpayers a gift in December, when it retroactively extended several expired tax breaks, including write-offs for some medical expenses, mortgage insurance premiums and college tuition. Taxpayers have the option to amend their 2018 and 2019 tax returns to claim those deductions if they\u2019re eligible, but they should weigh whether the value of the tax break is worth re-submitting paperwork to the IRS. \u201cIf you\u2019re paying a professional $400 to get back $40, that math doesn\u2019t work for me,\u201d Kerr said.<\/p>\n Refund delays<\/strong><\/p>\n Refunds could also take a while to reach taxpayer bank accounts, as the IRS clamps down on fraud. The agency has to wait until at least Feb. 15 to send refunds to taxpayers who claim the earned income tax credit or subsidies for health coverage. The agency says taxpayers who file at the start of the filing season can expect those as soon as the first week in March, as long as there are no problems with the returns. The IRS recommends submitting a return electronically and requesting the refund via direct deposit, rather than check, for the quickest turnaround time. Some taxpayers could also face longer-than-usual waits for their refunds because of a fraud filter that catches hundreds of thousands of legitimate returns, the Taxpayer Advocate Service said in a recent report. The screening system \u2014 intended to flag returns possibly filed by fraudsters looking to steal refund checks \u2014 identified nearly 1.1 million returns, but about 71 percent of those were false positives. Taxpayers who weren\u2019t happy with the size of their refunds last year could be similarly disappointed this year unless they changed the amount of tax withheld from their paychecks. Taxpayers often judge their tax preparer based on the size of their refund, Kerr said, even though it has more to do with how much they did or didn\u2019t have withheld.<\/p>\n Optimize your refund<\/strong><\/p>\n At the start of last tax season, the average refund was nearly 9 percent lower than in 2018, before the tax overhaul took effect. That gap largely closed by the end of 2019, but some taxpayers were startled by how the tax cuts and withholding rate changes meant they ended up with a much smaller refund than usual, even if they paid less in federal tax overall. The IRS at the start of this year made it slightly easier for taxpayers to more accurately calculate how much employers should take out of their paycheck, according to Pete Isberg, vice president of government affairs for Automatic Data Processing, Inc. The agency released a new Form W-4 that aligns with the 2017 tax code changes. It eliminates using so-called \u201callowances\u201d to determine the withholding rate. Instead, the form asks for information about income sources, dependents and anticipated deductions. The IRS says the new form reduces the complexity and increases the transparency about withholding, though some tax preparers say the form is still difficult for the average taxpayer to fill out. But since these changes won\u2019t affect this year\u2019s tax returns, the best way to optimize your refund is to get in touch with your accountant as soon as possible, before they get too busy, Rossman said. \u201cDon\u2019t wait until the deadline,\u201d he said. \u201cWhether you owe money or get a refund, it\u2019s better to know now.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" By\u00a0Laura Davison Capitol Hill Tax reporter, Bloomberg News. Filing taxes last year was a nightmare for taxpayers, their accountants and the Internal Revenue Service. This year might not be much better. The IRS is still working to issue guidance for the changes to the tax code signed into law more than two years ago. Congress […]<\/p>\n","protected":false},"author":4,"featured_media":4628,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[23,24],"tags":[],"class_list":["post-7282","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-irs","category-us-tax-return-1040-1040nr"],"acf":[],"_links":{"self":[{"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/posts\/7282","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/comments?post=7282"}],"version-history":[{"count":0,"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/posts\/7282\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/media\/4628"}],"wp:attachment":[{"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/media?parent=7282"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/categories?post=7282"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/tags?post=7282"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}