With the start of a new year, it is time to get ready for tax season. Here are some things you need to know:
- The federal government shutdown does not affect your tax deadlines. It may affect when you get your refund. The IRS has stated that taxes must still be paid by the appropriate deadline. However, they will not be able to give refunds until the government is funded and the shutdown ends.
- Your federal and state estimated payments are still due on January 15th. You will incur a penalty if you are late.
- If you did not adjust your withholding for 2018 after the Tax Reform Act passed, you may be in for an unpleasant surprise on April 15th. While tax rates went down for almost everybody, withholding was also reduced. You may therefore be surprised to find you owe and must pay an underpayment penalty.
- Filing deadlines: The Form 1040 is due on April 15th. S corporations and partnerships must file their returns by March 15th. You can get an extension by filing the appropriate IRS form before the deadline. However, it is only an extension to file. It is not an extension of time to pay any balance due. You need to pay at least the amount you paid last year to avoid an underpayment penalty.
- Itemized deductions: Most of you will not itemize deductions under the Tax Reform Act, unless you give significant amounts to charity or have a mortgage on your home. The standard deduction is at $24,000 for a married couple, so it will be hard to jump over that figure to justify itemizing deductions. However, you should get your information on deductions together anyway, so you can see where you are.
Personal returns can be filed starting January 28th. Tax filing will be more challenging with the government shutdown. However, with a little preparation, you can make filing easier.