Even though tax returns for 2019 aren't due until July 15, changes in the tax law may impact how you file.
The coronavirus outbreak will also see more people file online. So how has Governor Steve Sisolak's order that all non-essential businesses close for 30-days impacted local tax preparers?
What do you need to know as you self-quarantine and prepare your taxes?
Nick Maldonado, co-founder and CEO of Toro Taxes, says you might as well file now, especially if you're due a refund for 2019.
“If we have a 90-day extension – great. Should you wait 90 days to file? Probably not because the IRS has officially announced that they have cut back their staff and that staff has been reduced call centers, which is a lot of the customer service departments. They actually reduced their staff in the department that actually processes your tax refunds. So, I would recommend that people file sooner rather than later,” he said.
Besides the moving of the filing date, the impact from the coronavirus won't be felt until next tax season.
This year's tax season is being heavily impacted by tax reforms put in place in 2018.
The biggest change people are going to see is the near doubling of the standard deduction. It moved to $12,200 for single people and married people filing separately. It is $24,000 for married people filing jointly.
“This standard deduction change really limited a lot of the deductions that were going to your return moving forward because unless you’re exceeding your standard deduction, it makes no difference. It has no impacts,” he said.
Basically, Maldonado said that unless you have several deductions that add up to way more than $12,200 or $24,000 then it makes more sense to use the standard deduction.
He also noted that several itemized deductions have been eliminated like deducting a home office. That is still allowed for people who are self-employed but for people who are employees.
Maldonado also said that for people who don't own property the standard deduction is most likely the best bet because it's the mortgage interest deduction that pushes most people into the itemized category.
Other changes people should know about is the elimination of the penalty for not having health insurance. That part of the Affordable Care Act was changed.
But Maldonado said if someone is receiving subsidies to purchase health insurance under the ACA, they will need to file that.
“So, anybody who did receive a subsidy is still going to receive a form called 1095a," he said, "Basically, you have to report that in your taxes. At that point, there will be a calculation. If you received too much of a subsidy, you’ll have to owe some back. If you received too little, it is actually going to benefit you at the time of filing your taxes.”
Another change impacts people paying alimony and those receiving it.
“It’s not taxable and not deductible. So, if you are either paying or receiving alimony, that is completely disregarded as far as your tax filing goes,” he said.
Maldonado said drivers for ride-sharing companies like Uber and Lyft are considered self-employed. They have deductions they can make.
“The biggest deduction that I’ve seen that works in their favor is their mileage deduction because for every single mile that they drive for work purposes they actually get 57-and-half cent deduction per mile,” he said.
For more information on filing, go to IRS.gov.
Click Here for a more complete list of changes for the 2019 tax year.
RESOURCES:
TOP TEN TIPS FROM THE IRS:
Gather your records: Round up any documents you will need when filing your taxes, including receipts, canceled checks and other documents that support income or deductions you will be claiming on your tax return. Store them in a safe place.
Report all your income: You will need all your Forms W-2, Wage and Tax Statements, and 1099 income statements to report your income when you file your tax return. To ensure you don’t misplace them, add them to your other records.
Get answers to questions: Use the Interactive Tax Assistant tool available on the IRS website to find answers to your questions about tax credits and deductions.
Use Free File: There is at least one option available for everyone to prepare and e-file a tax return at no cost. Let IRS Free File do the work for you with brand-name tax software or online fillable forms. It's available exclusively at IRS.gov. If your income was $57,000 or less, you qualify to use free tax software. If your income was higher, or you are comfortable preparing your own tax return, there's Free File Fillable Forms, the electronic version of IRS paper forms. Visit IRS.gov/freefile to review your options.
Try IRS e-file: IRS e-file is the best way to file an accurate tax return. It’s safe, easy and the way most taxpayers file their return. Last year, more than 80 percent of taxpayers used IRS e-file. Many tax preparers are now required to use e-file. If you owe taxes, you have the option to file early and pay by April 15.
Weigh your filing options: You have several options for filing your tax return. You can prepare it yourself or go to a tax preparer. You may be eligible for free, face-to-face help at a volunteer site. Weigh your options and choose the one that works best for you.
Use direct deposit: Combining e-file with direct deposit is the fastest and safest way for you to get your refund.
Visit the IRS website: The IRS website at IRS.gov is a great place to find everything you need to file your tax return. This includes many online tools, filing tips, answers to frequently asked questions, the latest tax law changes, forms and publications.
Remember number 17: Check out Publication 17, Your Federal Income Tax, on the IRS website. It’s a complete tax resource that includes information such as whether you need to file or how to choose your filing status.
Review your return: Don’t rush. We all make mistakes when we rush. Mistakes slow down the processing of your return. Be sure to double-check all Social Security numbers and math calculations on your return as these are the most common errors. If you run into a problem, remember the IRS is here to help. Start with IRS.gov.
- Sharing Economy Tax Center
- Interactive Tax Assistant tool
- IRS Free File
- E-file Options
- Free Tax Return Preparation for You by Volunteers
- Filing Your Taxes
- Publication 17, Your Federal Income Tax
- Publication 5307 Tax Reform Basic for Individuals and Families
IRS Podcasts:
Nick Maldonado, co-founder and CEO, Toro Taxes.