Get Ready to File Your 2019 Tax Return
Don’t wait until April to find out you have a big tax liability! You can take steps now to see if what you may owe and how to lower that tax liability. The IRS is urging taxpayers to act now to ensure the smooth processing of their 2019 federal tax return.
The IRS urges everyone to use the Tax Withholding Estimator to perform a paycheck or pension income checkup. This is even more important for those who received a smaller refund than expected or owed an unexpected tax bill last year. Due to the changes made by the Tax Cuts and Jobs Act of 2017, taxpayers could still get some surprises when filing their taxes.
Estimating your tax withholding is a good idea for anyone who had a key life event, such as getting married, getting divorced, having or adopting a child, retiring, buying a home or starting college.
If the Tax Withholding Estimator recommends a change, an employee can then submit a new Form W-4, Employee’s Withholding Allowance Certificate, to their employer. Don’t send this form to the IRS.
Taxpayers who receive a substantial amount of non-wage income should make quarterly estimated tax payments. This can include self-employment income, investment income (including gain from the sale, exchange or other disposition of virtual currency), taxable Social Security benefits and in some instances, pension and annuity income. Making estimated tax payments can also help a wage-earner cover an unexpected withholding shortfall. Estimated tax payments are due quarterly, with the last payment for 2019 due on Jan. 15, 2020. You can view the different payment options for estimated tax payments here.
Workers and retirees who receive self-employment income or income from the gig economy, including payments in the form of virtual currency, should make sure to take these amounts into account when they fill out the Tax Withholding Estimator. Payments received in virtual currency by independent contractors and other service providers are taxable, and self-employment tax rules generally apply. Normally, payers must issue Form 1099-MISC. Similarly, wages paid using virtual currency are taxable to the employee, subject to withholding, and must be reported by the employer on a Form W-2.
If you think you may owe more taxes than you can afford or need help filing your 2019 tax return, Polston Tax can help! Our team of tax accountants can help you fill out and file your federal tax return so that you take advantage of every deduction you qualify for. You can give us a call at 844-841-9857 or click below to schedule a free consultation.