Relief is also extended to any creditor that would otherwise be required to file information returns and furnish payee statements for the discharge of any indebtedness within the scope of this revenue procedure.
Previously, the Treasury Department and the IRS provided relief for federal loans discharged by the Department of Education under the Closed School or Defense to Repayment discharge process, or where the private loans are discharged based on settlements of certain types of legal causes of action against nonprofit or other for-profit schools and certain private lenders. However, this relief is now extended to taxpayers who took out federal and private student loans to finance attendance at nonprofit or other for-profit schools not owned by Corinthian College, Inc. or American Career Institutes, Inc.
What this means for taxpayers
Under the safe harbor, taxpayers should not report the amount of the discharged loan in gross income on his or her federal income tax return. Additionally, the IRS will not require that a creditor must file information returns and furnish payee statements for the discharge of any indebtedness within the scope of this revenue procedure.
Please contact the office if you have any questions about this topic.
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.
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.
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.