IRS systems are back up and running

April 18, 2018

IRS systems are back up and running

Taxpayers have until midnight Wednesday to file their taxes

IR-2018-101, April 18, 2018

WASHINGTON – The Internal Revenue Service said today the agency’s processing systems are fully back up and running.

As of 9 a.m. today, the IRS has accepted more than 14 million tax submissions since processing systems reopened following a Tuesday morning system outage caused by a hardware issue.

“IRS teams worked hard throughout the night,” Acting Commissioner David Kautter said. “We are back up and running. The overnight performance means that the IRS is current with all of the tax submissions, and no backlog remains.”

The IRS reminds taxpayers they have until Wednesday night to file and pay their taxes. As the midnight April 18 deadline approaches, the IRS reminds taxpayers that help is available at IRS.gov, including automatic six-month extensions to file.

“The IRS appreciates the patience from taxpayers as well as the help and support of the nation’s tax professionals and software transmitters during this period

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What Taxpayers Should do When They Need More Time to Pay 

April 17, 2018

All taxpayers should file their taxes on time, even if they can’t pay what they owe. This saves them from a potential failure-to-file penalty. While taxes are due by the original due date of the return, some taxpayers are unable to pay them by the deadline.

Here are some tips for those who can’t pay their taxes in full by the April 17 deadline:

  • File on Time and Pay as Much as Possible. Taxpayers can pay online, by phone, by check or money order, or with their mobile device using the IRS2Go app.
  • Get a Loan or Use a Credit Card to Pay the Tax. The interest and fees charged by a bank or credit card company may be less than IRS interest and penalties.
  • Use the Online Payment Agreement tool. Taxpayers should not wait for the IRS to send a bill before setting up a payment plan. The best way to do this is to use the Online Payment Agreement tool. Taxpayers can also file an Installment Agreement Request with their return and set up a direct debit agreement, eliminating the need to send a check each month.
  • Don’t Ignore a Tax Bill. The IRS may take collection action against taxpayers who don’t respond to notices. Taxpayers should contact the IRS right away by calling the phone number on their bills to talk about options. The IRS will work with taxpayers suffering financial hardship.

Tax Time Guide: ‘Where’s My Refund?’

April 10, 2018

Answers to commonly asked questions

WASHINGTON — The Internal Revenue Service today said that most tax refunds are issued in less than 21 days, although some may take longer. As of March 16, the IRS had already issued more than 61 million refunds averaging $2,960. Taxpayers can check the status of their refund online at IRS.gov by visiting the “Where’s My Refund?” tool or through the IRS2Go mobile app.

This is the last in a series of nine IRS tips called the Tax Time Guide. The guide is designed to help taxpayers as they near the April 17 tax filing deadline.

There are many factors that can affect the timing of a tax refund. Some tax returns take longer to process because the return includes errors or is incomplete, is affected by identity theft or fraud or, in general, needs further review. The IRS will contact taxpayers by mail if more information is needed to process a return. Once a refund has been approved the time it takes a bank to post the refund to an account can also have an impact. If requesting a paper refund check, taxpayers should also take into consideration the time it takes for it to arrive in the mail.

Taxpayers can use “Where’s My Refund?” to start checking on the status of their return within 24 hours after the IRS receives an e-filed return or four weeks after the taxpayers mailed a paper return. The tool has a tracker that displays progress through three phases: (1) Return Received; (2) Refund Approved; and (3) Refund Sent.

Those who use “Where’s My Refund?” on IRS.gov or the IRS2Go app must have information from their current tax return to access their information.

The IRS updates “Where’s My Refund?” once a day, usually overnight. Rather than calling the IRS and waiting on hold or ordering a tax transcript, taxpayers are encouraged to visit the website and use the tool. The information available online is the same information available to IRS telephone assistors.

Some taxpayers believe they can learn about the status of their refund by ordering a tax transcript. The IRS notes that the information on a transcript does not necessarily reflect the amount or timing of a refund. While taxpayers can use a transcript for help with tax preparation and to validate past income and tax filing status for certain loan applications, they should use the “Where’s My Refund?” tool to check the status of their refund.

The use of e-file and direct deposit continue to be the fastest and safest way to file an accurate return and receive a tax refund. More than four out of five tax returns are expected to be filed electronically, with a similar proportion of refunds issued through direct deposit.


Tips for Using the Withholding Calculator

March 27, 2018

The IRS recommends that taxpayers use the Withholding Calculator on IRS.gov to do a “paycheck checkup” to check that their employers withhold the correct amount of income tax from their paychecks.

The Withholding Calculator can help prevent employees from having too little or too much withheld from their paycheck. Having too little tax withheld can mean an unexpected tax bill or potentially a penalty at tax time in 2019. And with the average refund topping $2,800, some taxpayers might prefer to have less tax withheld up front and receive more in their paychecks.

Here are some tips for using the Withholding Calculator. Taxpayers should:

  • Use their most recent pay stubs and federal income tax return to help estimate income and other items for 2018. Keep in mind the new tax law made significant changes to itemized deductions.
  • Fill in all information that applies to their situations.
  • Make estimates when necessary, but keep in mind the results are only as accurate as the information entered.
  • Check the information links embedded in the program whenever ttaxpayers have questions.
  • Print the final screen that summarizes their entries and the results. Use the results from the Withholding Calculator to determine if they should complete a new Form W-4, Employee’s Withholding Allowance Certificate.

Remember, the Withholding Calculator does not ask the user for personally identifiable information, such as name, social security number, address, or bank account numbers. The IRS does not save or record the information the taxpayer enters in the calculator.


Taxpayers Can Spread the Word About Tax Credit that Benefits Friends and Family

January 27, 2018

The earned income tax credit provides a boost to workers, their families and the communities where they live. A tax credit usually means more money in the taxpayer’s pocket. Many qualified taxpayers don’t claim this credit simply because they don’t know about it. In fact, every year millions of people are newly eligible for EITC because their family or financial situation changed. Word of mouth is one way to spread information about this credit.

This credit can not only reduce the amount of taxes someone owes, it can also result in a refund. The amount of EITC taxpayers receive is based on their income, family size and filing status. The maximum amount of credit for Tax Year 2017 is:

  • $6,318 with three or more qualifying children
  • $5,616 with two qualifying children
  • $3,400 with one qualifying child
  • $510 with no qualifying children

The IRS encourages taxpayers who have claimed and benefitted from the EITC to help spread awareness about this important credit. Here are a few ways taxpayers can help their friends, family members and neighbors find out about EITC. Tell them about:

  • IRS.gov: Taxpayers who want to learn more about EITC can go to IRS.gov/eitc. They can find information about who qualifies for the credit and how to claim it.
  • Tax help in Foreign Languages: People can pass along information from IRS.gov about EITC in other languages:
  • EITC Assistant: This tool on IRS.gov, available in English or Spanish, walks people through a series of questions to find out if they qualify.
  • IRS on Social media: Share a link on Facebook or Twitter. People can follow the IRS on social media for the latest news and information about tax credits.
  • Free Tax Help from Volunteers: The IRS works with community organizations around the country to train volunteers who prepare taxes for people with low and moderate income. These volunteers can help determine if a taxpayer is eligible to claim the EITC. There are two IRS-sponsored programs:
    • Volunteer Income Tax Assistance: This program is also known as VITA. It offers free tax return preparation to eligible taxpayers who generally earn $54,000 or less.
    • Tax Counseling for the Elderly: TCE is mainly for people age 60 or older, but offers service to all taxpayers. The program focuses on tax issues unique to seniors. AARP participates in the TCE program through AARP Tax-Aide.

By law, the IRS cannot issue refunds before mid-February for tax returns that claim the EITC or the additional child tax credit. The law requires the IRS to hold the entire refund — even the portion not associated with the EITC or ACTC. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting Feb. 27, 2018, if these taxpayers choose direct deposit and there are no other issues with their tax return.


In 2018, Some Tax Benefits Increase Slightly Due to Inflation Adjustments, Others Unchanged

October 19, 2017

The Internal Revenue Service today announced the tax year 2018 annual inflation adjustments for more than 50 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2017-58 provides details about these annual adjustments. The tax year 2018 adjustments generally are used on tax returns filed in 2019.   The tax items for tax year 2018 of greatest interest to most taxpayers include the following dollar amounts:

  • The standard deduction for married filing jointly rises to $13,000 for tax year 2018, up $300 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $6,500 in 2018, up from $6,350 in 2017, and for heads of households, the standard deduction will be $9,550 for tax year 2018, up from $9,350 for tax year 2017.
  • The personal exemption for tax year 2018 rises to $4,150, an increase of $100. The exemption is subject to a phase-out that begins with adjusted gross incomes of $266,700 ($320,000 for married couples filing jointly). It phases out completely at $389,200 ($442,500 for married couples filing jointly.)
  • For tax year 2018, the 39.6 percent tax rate affects single taxpayers whose income exceeds $426,700 ($480,050 for married taxpayers filing jointly), up from $418,400 and $470,700, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds for tax year 2018 are described in the revenue procedure.
  • The limitation for itemized deductions to be claimed on tax year 2018 returns of individuals begins with incomes of $266,700 or more ($320,000 for married couples filing jointly).
  • The Alternative Minimum Tax exemption amount for tax year 2018 is $55,400 and begins to phase out at $123,100 ($86,200, for married couples filing jointly for whom the exemption begins to phase out at $164,100). The 2017 exemption amount was $54,300 ($84,500 for married couples filing jointly). For tax year 2018, the 28 percent tax rate applies to taxpayers with taxable incomes above $191,500 ($95,750 for married individuals filing separately).
  • The tax year 2018 maximum Earned Income Credit amount is $6,444 for taxpayers filing jointly who have three or more qualifying children, up from a total of $6,318 for tax year 2017. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-outs.
  • For tax year 2018, the monthly limitation for the qualified transportation fringe benefit is $260, as is the monthly limitation for qualified parking,
  • For calendar year 2018, the dollar amount used to determine the penalty for not maintaining minimum essential health coverage remains as it was for 2017:  $695.
  • For tax year 2018, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,300, an increase of $50 from tax year 2017; but not more than $3,450, an increase of $100 from tax year 2017. For self-only coverage, the maximum out-of-pocket expense amount is $4,600, up $100 from 2017. For tax year 2018, participants with family coverage, the floor for the annual deductible is $4,600, up from $4,500 in 2017; however, the deductible cannot be more than $6,850, up $100 from the limit for tax year 2017. For family coverage, the out-of-pocket expense limit is $8,400 for tax year 2018, an increase of $150 from tax year 2017.
  • For tax year 2018, the adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit is $114,000, up from $112,000 for tax year 2017.
  • For tax year 2018, the foreign earned income exclusion is $104,100, up from $102,100 for tax year 2017.
  • Estates of decedents who die during 2018 have a basic exclusion amount of $5,600,000, up from a total of $5,490,000 for estates of decedents who died in 2017.
  • The annual exclusion for gifts increased to $15,000, an increase of $1,000 from the exclusion for tax year 2017.

With 2017 Extension Deadline Passed, All Eyes on 2018

October 18, 2017

Now that the tax return extension filing deadline has passed, the IRS suggests that taxpayers look ahead and get ready for next year.

Taxpayers still have time to take these three actions that may affect the 2017 tax return they will file in 2018.

  1. Charitable contributions. Taxpayers can deduct contributions that they make to charitable organizations only in the year the donation is made. There is still time for taxpayers to contribute to a charity before the end of 2017. After several storms this year, many taxpayers are making donations to disaster relief organizations. Taxpayers can use the IRS Exempt Organization Select Check tool on IRS.gov to make sure that these charities and any other tax-exempt organization is eligible to receive tax-deductible contributions.
  2. IRA distributions. Taxpayers over age 70 ½ should receive payments from their individual retirement accounts and workplace retirement plans by the end of 2017. A special rule allows those who reached 70 ½ in 2017 to wait until April 1, 2018 to receive their distributions.
  3. IRA Contributions. Taxpayers generally must make workplace retirement account contributions by the end of the year. However, they can make 2017 IRA contributions until April 17, 2018.

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