Extension filers can avoid making these common filing errors

The IRS has issued a notifications for taxpayers who filed for an extension of time, that they have until Oct. 15 to submit their tax return. To make sure they meet their tax obligations, taxpayers should file accurate tax returns. If a taxpayer makes an error on their tax return, it will likely take longer to process and could delay a refund. Taxpayers can avoid many common errors by filing electronically, the most accurate way to file a tax return. All taxpayers can e-file using IRS Free File or Free File Fillable Forms.

Here are common errors for taxpayers to avoid when preparing their tax return:

  • Missing or inaccurate Social Security numbers. Taxpayers should be sure to enter each SSN on a tax return exactly as printed on the Social Security card.
  • Misspelled names. People should double check to make sure they spelled all names listed on a tax return exactly as listed on the taxpayers’ Social Security cards.
  • Filing status. Some taxpayers claim the wrong filing status, such as Head of Household instead of Single. The Interactive Tax Assistant on IRS.gov can help taxpayers choose the correct status. E-file software also helps prevent mistakes.
  • Math mistakes. Math errors are common, ranging from simple addition and subtraction to more complex items. Figuring the taxable portion of a pension, IRA distribution or Social Security benefits is more difficult and results in more errors. Taxpayers should always double check their math. Better yet, tax preparation software does it automatically.
  • Figuring credits or deductions. Taxpayers can make mistakes figuring their Earned Income Tax CreditChild and Dependent Care Credit, the standard deduction and other items. Follow the instructions carefully. For example, a taxpayer who’s 65 or older, or blind, should claim the correct, higher standard deduction, if not itemizing. The IRS Interactive Tax Assistant can help determine if a taxpayer is eligible for tax credits or deductions.
  • Incorrect bank account numbers. Taxpayers who are due a refund should choose direct deposit for ease and convenience, but the IRS cautions taxpayers to use the correct routing and account numbers on the tax return.
  • Unsigned forms. An unsigned tax return isn’t valid. Both spouses must sign a joint return; an exception may apply for some members of the military. Taxpayers can avoid this error by filing their return electronically and digitally signing it before sending it to the IRS. Taxpayers who are using a tax software product for the first time will need their adjusted gross income from their 2016 tax return to file electronically. Taxpayers who are using the same tax software they used last year usually will not need to enter prior-year information to electronically sign their 2017 tax return.
  • Filing with an expired ITIN. The IRS will process and treat as timely a return filed with an expired Individual Tax Identification Number, but won’t allow any exemptions or credits. Taxpayers will receive a notice explaining that an ITIN must be current before the IRS will pay a refund. Once the taxpayer renews the ITIN, the IRS will process exemptions and credits and pay an allowed refund. ITIN expiration and renewal information is available on IRS.gov.

Taxpayers can sign up to receive IRS email subscription services

The IRS issues tax information by email for many different audiences. Here are some of the electronic subscriptions people can request by visiting the e-News Subscriptions page on IRS.gov:

  • Guidewire: People who sign up for Guidewire receive email notifications when the IRS issues advance copies of tax guidance, such as regulations, revenue rulings, revenue procedures, announcements, and notices.
  • e-News for Tax Professionals: Provides the latest national news for the tax professional community, as well as links to resources on IRS.gov and local news and events by state.
  • Outreach Corner:  Provides organizations such as businesses and non-profits articles content that they can use in their own communication products and newsletters.
  • Tax Statistics: Supplies information about the most recent tax statistics.
  • Quick Alerts: Provides tax professionals and tax software providers with the latest information about e-file issues and events.
  • IRS Newswire: Provides news releases issued by IRS National Media Relations Office in Washington, DC.

Here are some other electronic subscriptions the IRS offers:

Missed the tax deadline and owe tax? File by June 14 to avoid higher late-filing penalty

Taxpayers who owe tax and file their federal income tax return more than 60 days after the deadline will usually face a higher late-filing penalty. For that reason, the Internal Revenue Service urges affected taxpayers to avoid the penalty increase by filing their return by Thursday, June 14.

Ordinarily, the late-filing penalty, also known as the failure-to-file penalty, is assessed when a taxpayer fails to file a tax return or request an extension by the due date. This penalty, which only applies if there is unpaid tax, is usually 5 percent for each month or part of a month that a tax return is late.

If a tax return is filed more than 60 days after the April due date — or more than 60 days after the October due date if an extension was obtained — the minimum penalty is either $210 or 100 percent of the unpaid tax, whichever is less. This means that if the tax due is $210 or less, the penalty is equal to the tax amount due. If the tax due is more than $210, the penalty is at least $210.

The late-filing penalty does not apply to the more than 135 million taxpayers who met this year’s April 18 deadline to file their individual tax return. It also won’t apply to the estimated 14 million taxpayers who asked the IRS for a six-month extension of time to file, as long as they file by Oct. 15, 2018. Though a tax return claiming a refund is also not subject to penalty, the IRS reminds taxpayers that, by law, they only have three years to file for the refund.

For those who did not file or request an extension, the IRS recommends filing by June 14 to avoid a penalty increase. The late-filing penalty will stop accruing once the taxpayer files.

In addition, the IRS urges taxpayers to pay what they owe to avoid additional late-payment penalty and interest charges. The late-payment penalty, also known as the failure-to-pay penalty, is usually    ½ of 1 percent of the unpaid tax for each month or part of a month the payment is late. Interest, currently at the rate of 5 percent per year, compounded daily, also applies to any payment made after the original April 18 deadline.

After a return is filed, the IRS will figure the penalty and interest due and bill the taxpayer. Normally, the taxpayer will then have 21 days to pay any amount due.

Taxpayers can use their online account to view their amount owed, make payments and apply for an online payment agreement. Before accessing their online account, taxpayers must authenticate their identity through the Secure Access process.

Penalty relief may be available

Taxpayers who have a history of filing and paying on time often qualify to have the late filing and payment penalties abated. A taxpayer usually qualifies for this relief if they haven’t been assessed penalties for the past three years and meet other requirements. For more information, see the First-Time Penalty Abatementpage on IRS.gov.

Even if a taxpayer does not qualify for this special relief, they may still be able to have penalties reduced or eliminated if their failure to file or pay on time was due to reasonable cause and not willful neglect. Be sure to read the penalty notice carefully and follow its instructions for requesting this relief.

Payment options

Many taxpayers delay filing because they are unable to pay what they owe. Often, these taxpayers qualify for one of the payment options available from the IRS. These include:

  • Installment Agreement – An installment agreement, or payment plan, allows a taxpayer to pay over time. Individuals who owe $50,000 or less in combined tax, penalties and interest can request a payment plan using the IRS’s Online Payment Agreement application. Those who have a balance under $100,000 may also qualify for a short term agreement. The agreement can usually be set up in minutes and requesters receive immediate notification of approval. To reduce the chance of default and avoid having to write and mail a check each month, select the direct debit option for making these payments. For other ways to set up a payment plan, visit Payment Plans, Installment Agreements.
  • Offer in Compromise — Some struggling taxpayers may qualify to settle their tax bill for less than the amount they owe by submitting an offer in compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool.

Special filing deadline rules apply to members of the military serving in combat zonestaxpayers living outside the U.S. and those living in declared disaster areas. For those who qualify, these special deadlines affect any penalty and interest calculations. Visit IRS.gov for details on these special filing rules.

Check withholding

Taxpayers who owe tax for 2017 can avoid having the same problem for 2018 by increasing the amount of tax withheld from their paychecks. For help determining the right amount to withhold, use the Withholding Calculator on IRS.gov

Tips for Taxpayers Who Have to Amend a Tax Return

Taxpayers who discover they made mistakes or omissions on their tax return can correct them by filing an amended tax return. Those who need to amend should remember these tips:

  • File using paper form. Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct the tax return. Taxpayers can’t file amended returns electronically. They can obtain the form on IRS.gov/forms. Mail the Form 1040X to the address listed in the form’s instructions.
  • Amend to correct errors. File an amended tax return to correct errors or make changes to an original tax return; for example, taxpayers should amend to change their filing status or to correct their income, deductions or credits.
  • Don’t amend for math errors, missing forms. Taxpayers generally don’t need to file an amended return to correct math errors on their original return. The IRS will automatically correct these items. In addition, taxpayers don’t need to file an amended return if they forgot to attach tax forms, such as a Form W-2 or a schedule. The IRS will mail a request to the taxpayer, if needed.
  • File within three-year time limit. Taxpayers usually have three years from the date they filed the original tax return to file Form 1040X to claim a refund. Taxpayers can file it within two years from the date they paid the tax, if that date is later.
  • Use separate forms for each year. Taxpayers who are amending more than one tax return must file a Form 1040X for each tax year. They should mail each year’s Form 1040X in separate envelopes to avoid confusion. Taxpayers should check the box for the calendar year or enter the other calendar year or fiscal year they are amending. The form’s instructions have the mailing address for the amended return.
  • Attach other forms with changes. Taxpayers who use other IRS forms or schedules to make changes must attach them to the Form 1040X.
  • Wait to file for corrected refund for tax year 2017. Taxpayers who are due refunds from their original tax year 2017 return should wait to get it before filing Form 1040X to claim an additional refund. Amended returns may take up to 16 weeks to process.
  • Pay additional tax. Taxpayers who will owe more tax should file Form 1040X and pay the tax as soon as possible to avoid penalties and interest. They should consider using IRS Direct Pay to pay any tax directly from a checking or savings account at no cost.
  • Track amended return. Generally, taxpayers can track the status of their amended tax return three weeks after they file, using ‘Where’s My Amended Return?’ It’s available in English, Spanish, Chinese, Korean, Vietnamese and Russian. The tool can track the status of an amended return for the current year and up to three previous years. Taxpayers who have filed amended returns for multiple years can check each year, one at a time.

IRS Uses YouTube to Provide Tax Information to Small Business Owners

Welcome to Small Business Week!

During National Small Business Week – and any time of the year – small business owners can visit the IRS channel to watch a series of videos that can help them navigate tax topics that affect their business.

The small business playlist on the official IRS YouTube channel features several videos that might be short, but that pack in a lot of helpful information. The videos walk business owners through topics such as:

Last-minute tips from IRS; e-file for convenience, faster refund

The Internal Revenue Service offered taxpayers still working on their 2017 taxes a number of tips. These basic tips are designed to help people avoid common errors that could delay refunds or cause future tax problems.

 The IRS encourages taxpayers to file electronically. Doing so, whether through e-file or IRS Free File, vastly reduces tax return errors, as the tax software does the calculations, flags common errors and prompts taxpayers for missing information. Free File Fillable Forms means there is a free option for everyone.

 Request extra time

Anyone who needs more time to file can get it. The easiest way to do so is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an extension on Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. To get the extension, taxpayers must estimate their tax liability on this form and pay any amount due.

Alternatively, people can complete a paper copy of Form 4868 and mail it to the IRS. The form must be mailed with a postmark on or before April 17. Download, print and file it anytime from IRS.gov/forms.

Taxpayers are reminded, however, that an extension of time to file is not an extension of time to pay. Tax payments are generally due April 17, and taxpayers should pay as much as they can to avoid possible penalties and interest.

Make a payment, get an extension

In addition to using Free File to get a filing extension, taxpayers can pay all or part of their estimated income tax due and indicate that the payment is for an extension when using IRS Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or paying by a credit or debit card. By selecting “extension” as the reason for the payment, the IRS will also accept the payment as an extension – no need to separately file a Form 4868. Taxpayers will also receive a confirmation number after they submit their payment. When paying with Direct Pay and EFTPS taxpayers can sign up for email notifications.

Any payment made with an extension request will reduce or, if the balance is paid in full, eliminate interest and late-payment penalties that apply to payments made after April 17. The interest rate is currently 5 percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.

Refunds

The safest and fastest way for taxpayers to get their refund is to have it electronically deposited into their bank or other financial account. Taxpayers can use direct deposit to deposit their refund into one, two or even three accounts. See Form 8888, Allocation of Refund, for details.

 After filing, use “Where’s My Refund?” on IRS.gov or download the IRS2Go Mobile App to track the status of a refund. It provides the most up-to-date information. It’s updated once per day, usually overnight, so checking more often will not generate new information. Calling the IRS will not yield different results from those available online, nor will ordering a tax transcript.

 The IRS issues nine out of 10 refunds in less than 21 days.

 Special instructions for paper filers

 Math errors and other mistakes are common on paper returns, especially those prepared or filed in haste at the last minute. These tips may help those choosing this option:

 

  • Fill in all requested Taxpayer Identification Numbers, usually Social Security numbers, including all dependents claimed on the tax return. Check only one filing status and the appropriate exemption boxes.
  • When using the tax tables, be sure to use the correct row and column for the filing status claimed and taxable income amount shown.
  • Sign and date the return. If filing a joint return, both spouses must sign.
  • Attach all required forms and schedules.
  • Mail the return to the right address. Check Where to Fileon IRS.gov.Penalties and interest

    By law, the IRS may assess penalties to taxpayers for both failing to file a tax return and for failing to pay taxes they owe by the deadline. Taxpayers who are thinking of missing the filing deadline because they can’t pay all of the taxes they owe should consider filing and paying what they can to lessen interest and penalties. Penalties for those who owe tax and fail to file either a tax return or an extension request by April 17 can be higher than if they had filed and not paid the taxes they owed.

    The failure-to-file penalty is generally 5 percent per month and can be as much as 25 percent of the unpaid tax, depending on how late the taxpayer files. The failure-to-pay penalty, which is the penalty for any taxes not paid by the deadline, is 0.5 percent of the unpaid taxes per month.

    Installment agreements

    Qualified taxpayers can choose to pay any taxes owed over time through an installment agreement. An online payment plan can be set up in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement application to set up a short-term payment plan of 120-days or less, or a monthly agreement for up to 72 months.

    Alternatively, taxpayers can request a payment agreement by filing Form 9465, Installment Agreement Request. This form can be downloaded from IRS.gov/forms and should be mailed to the IRS along with a tax return, IRS bill or notice.

    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 when they submit their payment. Or, mail a check or money order payable to the “United States Treasury” along with a Form 1040-V, Payment Voucher.

Updated Withholding Calculator, Form W-4 Released; Calculator Helps Taxpayers Review Withholding Following New Tax Law

If you submitted your tax return for 2017 and want to know how the Tax Cuts and Jobs Act will affect your 2018 earnings, the IRS has released an updated Withholding Calculator on IRS.gov and a new version of Form W-4 to help taxpayers check their 2018 tax withholding.

The IRS urges taxpayers to use these tools to make sure they have the right amount of tax taken out of their paychecks.

“Following the major changes in the tax law, the IRS encourages employees to check their paychecks to help ensure they’re having the right amount of tax withheld for their personal situation,” said Acting IRS Commissioner David Kautter.

The Tax Cuts and Jobs Act made changes to the tax law, including increasing the standard deduction, removing personal exemptions, increasing the child tax credit, limiting or discontinuing certain deductions and changing the tax rates and brackets.

If changes to withholding should be made, the Withholding Calculator gives employees the information they need to fill out a new Form W-4, Employee’s Withholding Allowance Certificate. Employees will submit the completed W-4 to their employer.

“Withholding issues can be complicated, and the calculator is designed to help employees make changes based on their personal financial situation,” Kautter said. “Taking a few minutes can help taxpayers ensure they don’t have too little – or too much – withheld from their paycheck.”

Steps to Help Taxpayers: Do a “Paycheck Checkup” 

The IRS encourages employees to use the Withholding Calculator to perform a quick “paycheck checkup.”  An employee checking their withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time in 2019. It can also prevent employees from having too much tax withheld; with the average refund topping $2,800, some taxpayers might prefer to have less tax withheld up front and receive more in their paychecks.

The Withholding Calculator can be used by taxpayers who want to update their withholding in response to the new law or who start a new job or have other changes in their personal circumstances in 2018.

As a first step to reflect the tax law changes, the IRS released new withholding tables in January. These tables were designed to produce the correct amount of tax withholding — avoiding under- and over-withholding of tax — for those with simple tax situations. This means that people with simple situations might not need to make any changes. Simple situations include singles and married couples with only one job, who have no dependents, and who have not claimed itemized deductions, adjustments to income or tax credits.

People with more complicated financial situations might need to revise their W-4.  With the new tax law changes, it’s especially important for these people to use the Withholding Calculator on IRS.gov to make sure they have the right amount of withholding.

Among the groups who should check their withholding are:

  • Two-income families.
  • People with two or more jobs at the same time or who only work for part of the year.
  • People with children who claim credits such as the Child Tax Credit.
  • People who itemized deductions in 2017.
  • People with high incomes and more complex tax returns.

Taxpayers with more complex situations might need to use Publication 505, Tax Withholding and Estimated Tax, expected to be available on IRS.gov in early spring, instead of the Withholding Calculator.  This includes those who owe self-employment tax, the alternative minimum tax, or tax on unearned income from dependents, and people who have capital gains and dividends.

Plan Ahead: Tips for Using the Withholding Calculator

The Withholding Calculator asks taxpayers to estimate their 2018 income and other items that affect their taxes, including the number of children claimed for the Child Tax Credit, Earned Income Tax Credit and other items.

Take a few minutes and plan ahead to make using the calculator on IRS.gov as easy as possible. Here are some tips:

  • Gather your most recent pay stub from work. Check to make sure it reflects the amount of Federal income tax that you have had withheld so far in 2018.
  • Have a completed copy of your 2017 (or possibly 2016) tax return handy. Information on that return can help you estimate income and other items for 2018.  However, note that the new tax law made significant changes to itemized deductions.
  • Keep in mind the Withholding Calculator results are only as accurate as the information entered. If your circumstances change during the year, come back to the calculator to make sure your withholding is still correct.
  • The Withholding Calculator does not request personally-identifiable information such as name, Social Security number, address or bank account numbers. The IRS does not save or record the information entered on the calculator. As always, watch out for tax scams, especially via email or phone calls and be especially alert to cybercriminals impersonating the IRS. The IRS does not send emails related to the calculator or the information entered.
  • Use the results from the Withholding Calculator to determine if you should complete a new Form W-4 and, if so, what information to put on a new Form W-4. There is no need to complete the worksheets that accompany Form W-4 if the calculator is used.
  • As a general rule, the fewer withholding allowances you enter on the Form W-4 the higher your tax withholding will be. Entering “0” or “1” on line 5 of the W-4 means more tax will be withheld. Entering a bigger number means less tax withholding, resulting in a smaller tax refund or potentially a tax bill or penalty.
  • If you complete a new Form W-4, you should submit it to your employer as soon as possible. With withholding occurring throughout the year, it’s better to take this step early on.