Taxpayers are filing their returns and are being shocked with a smaller refund or even a tax bill to pay. The IRS is not surprised. When they issued the new tax tables last year they didn’t factor in the loss of exemptions or loss of some itemized deductions. They changed the laws to minimize under withholding and over withholding. Most taxpayers were unaware of these changes to exemptions and the IRS tried to warn people that they may receive less of a refund due to this or even a tax bill but most taxpayers didn’t receive the information.
If you find out that you are going to owe money, but can’t afford to pay the tax, file your return by April 15th or file an extension anyway. You will avoid a 5%-a-month late filing levy. You can also apply for an online payment agreement if you owe $50,000 or less in tax, penalties or interest.
If your child is too old to be a qualified child for the $2,000 child tax credit there is now a $500 credit for each dependent who is 17 years old or older as of December 31, 2018. This would also include college students, disabled adult children, or elderly parents you care for.
If you haven’t received your W-2 by the end of February you can call the IRS, which will send a letter to the employer. You have to provide the following information: the companies name, address and phone number; dates of employment and estimates of wages and tax withheld from your pay. Use a year end pay stub if you have it. Even if you don’t receive the W-2, by the time to file your taxes, file anyway without the W-2 and attach Form 4852. This form is used to estimate wages and income tax withheld to the best of your ability. This will help you avoid penalties, interest and a late payment levy.
The tax system will most likely feel the effects of the Government shutdown for a long time. Some experts are predicting the effects might be felt for up to 18 months. There is a huge backlog of unprocessed mail, over 5 million pieces, so if you mailed correspondence to the agency during the shutdown don’t expect them to get back to you anytime soon.