General Filing Rules

Whether you need to file a tax return this year depends on several factors. In most cases, the amount of your income, your filing status, and your age determine whether you must file a tax return. For example, if you’re single and 24 years old you must file if your income, was at least $12,200. If you are age 65 or older, income thresholds are higher ($13,850 in 2019 for single filers). If you’re self-employed or if you’re a dependent of another person, other tax rules may apply (see below).

Tax Withheld or Paid

Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year, and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund, but you have to file a tax return to receive the refund.

Eligibility for Certain Tax Credits

1. Premium Tax Credit. If you, your spouse , or a dependent was enrolled in healthcare coverage purchased from the Marketplace in 2019 you might be eligible for the Premium Tax Credit if you chose to have advance payments of the premium tax credit sent directly to your insurer during the year; however, you must file a federal tax return and reconcile any advance payments with the allowable premium tax credit.

2. Earned Income Tax Credit. Did you work and earn less than $55,952 last year? You could receive EITC as a tax refund if you qualify with or without a qualifying child. You may be eligible for up to $6,557. If you qualify, file a tax return to claim it.

3. Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit and receive a refund even if you do not owe any tax.

4. American Opportunity Credit. The AOTC (up to $2,500 per eligible student) is available for four years of post-secondary education. You or your dependent must have been a student enrolled at least half-time for at least one academic period. Even if you don’t owe any taxes, you still may qualify; however, you must complete Form 8863, Education Credits, and file a return to claim the credit.

5. Health Coverage Tax Credit. If you, your spouse, or a dependent received advance payments of the health coverage tax credit, you will need to file a 2019 tax return. Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments, shows the amount of the advance payments.

Other Situations

You must file a return in other situations as well, including, but not limited to the following situations:

  • You owe special taxes such as the alternative minimum tax (AMT), additional tax on qualified plans such as an individual retirement arrangement (IRA), or another tax-favored account, or household employment taxes. However, if you are filing a return only because you owe these taxes, you can file Schedule H, Household Employment Taxes, by itself.
  • You (or your spouse if filing jointly) received Archer MSA, Medicare Advantage MSA, or health savings account distributions.
  • You had net earnings from self-employment of at least $400.
  • You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes.

If you have any questions about whether you should file a return, please contact the office.

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, April 15, 2020; however, there’s no better time than right now to begin gathering information needed to prepare your tax return.

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.