January 27, 2020, marked the start of this year’s tax filing season. Complicating matters is a newly revised Form 1040, U.S. Individual Income Tax Return. With more than 150 million individual tax returns expected to be filed for the 2019 tax year, here’s what individual taxpayers can expect:
Another New Design for Form 1040
The new 2019 Form 1040, which was redesigned last year to be “postcard-sized” has been revised yet again. As with last year’s design, the form gathers information about the taxpayer(s) and dependents. It is also the form you need to sign and date when filing your return. New for this year, taxpayers aged 65 and older may be able to use Form 1040-SR (see below for more information).
More complex tax situations will generally require using one or more of the supplemental schedules that were also new for 2018, but which for 2019, have been consolidated into three schedules (Schedules 1, 2, and 3). Of note, is that the 2018 Schedule 6, Foreign Address and Third Party Designee, has been incorporated into the Form 1040.
As in 2018, Forms 1040A and 1040EZ no longer exist. Instead, taxpayers should use Form 1040 or Form 1040-SR.
Virtual Currency Questions
For the 2019 tax year, taxpayers who engaged in a transaction that involved virtual currency (e.g., Bitcoin and Ether) will need to file Schedule 1, Additional Income and Adjustments To Income. Taxpayers are reminded to maintain records that support any information provided on their tax returns such as records documenting receipts, sales, exchanges or other dispositions of virtual currency and the fair market value of the virtual currency.
Refunds
While more than nine out of 10 refunds are issued in less than 21 days, some tax returns require additional review and take longer to process than others. This may be necessary when a return has errors, is incomplete or is affected by identity theft or fraud.
Furthermore, tax law requires that the IRS hold refunds on tax returns claiming the Additional Child Tax Credit (ACTC) or Earned Income Tax Credit (EITC) until mid-February – even the portion not associated with the EITC or ACTC. Even so, most of these types of refunds are expected to be available in taxpayer bank accounts or on debit cards by the first week of March as long as the taxpayer chose direct deposit and there are no other issues with the tax return.
As a reminder, once refunds are issued by the IRS there may be additional time for processing by financial institutions, which must accept and deposit the refunds to bank accounts and products. Typically, refunds and payments are not processed on weekends or holidays, which can affect when refunds reach taxpayers. Refund information will generally be available within 24 hours after the IRS acknowledges receipt of an electronically filed return.
Tax Filing Deadline
For most taxpayers the filing deadline to submit 2019 tax returns is Wednesday, July 15, 2020; however, there’s no better time than right now to begin gathering information needed to prepare your tax return.
In 2020, the deadline for filing federal tax returns, as well as the tax payment deadline, has been extended from April 15 to July 15 due to the disruption caused by the coronavirus pandemic.
Questions?
If you have any questions about the new tax forms or need assistance preparing and filing your tax return, help is just a phone call away.
Any accounting, business or tax advice contained in this article, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.