By: Ann Carrns - March 17, 2019
Tax preparers, bracing for a tricky filing season, are advising taxpayers to file returns as they usually do, but to be prepared for possible delays if they are due refunds.
The Internal Revenue Service is scheduled to begin processing 2018 federal tax returns on Monday, but is facing two major challenges that threaten to make this tax time chaotic. Even with the government reopening, it will take a while for the I.R.S. to return to normal. The shutdown started as I.R.S. employees were in the midst of being trained about the sweeping changes that Congress made to the tax code in 2017, the head of the union representing the agency’s workers said. So I.R.S. employees may not initially be fully up to speed and able to answer questions and tackle the inevitable snafus.
Nearly three-fourths of all returns result in refunds, and the average refund last year was nearly $3,000, the I.R.S. reports. Many families rely on their refunds to make purchases or pay bills.
The I.R.S. has said it expects refunds to be issued on schedule. Typically, that means nine of 10 refunds are issued within 21 days, if the return was filed electronically and the refund is sent using direct deposit.
“The I.R.S. expects business as usual with refunds,” said Lisa Greene-Lewis, a certified public accountant with the popular tax preparation software TurboTax.
Cindy Hockenberry, director of tax research and government relations at the National Association of Tax Professionals, said it remained to be seen how quickly the I.R.S. could get operations running, since the end of the impasse came just days before the opening of tax filing season.
“I still think it will take a bit of time to get everything rolling 100 percent at the I.R.S.,” she said, adding that “if there is another shutdown in three weeks, we’ll be back to square one.”
Much of the federal government has been shut down for more than a month as a result of the political stalemate between President Trump and Democrats in Congress over funding for a border wall.
Tony Reardon, national president of the National Treasury Employees Union, said on Thursday that the I.R.S. staff and agency funding had already been diminished before the shutdown and that it would probably take time for the agency to get back up to speed when it does reopened.
While the government is reopening for at least three weeks, it’s unclear whether all I.R.S. employees will return to work immediately, Mr. Reardon said on Friday evening. “The agency is hopeful of getting normal operations going on Monday,” he said, since tax filing season is officially starting. But workers, he said, were awaiting specific instructions from their supervisors. The union is urging the government to be flexible and pay workers as quickly as possible, he said, since many are facing financial hardship from missing two paychecks during the shutdown.
As to the I.R.S. help line, taxpayers and tax preparers will probably have longer waiting times this year.
“Even in a good season, there’s a backup,” said Edward Karl, vice president for taxation with the American Institute of Certified Public Accountants.
Despite the uncertain environment, Mr. Karl said, taxpayers who typically file early should do so, as soon as they have the necessary documents, like W-2 income statements.
“The critical thing for taxpayers is to presume it’s business as usual,” he said.
Meanwhile, the I.R.S. has announced a bit of relief for some taxpayers: If you underpaid your taxes in 2018, you’re less likely to pay a penalty this year. The agency said this month that because of tax changes passed by Congress in the Tax Cuts and Jobs Act, it would waive the penalty for many filers who underpaid.
The change — just for the 2018 tax year — is aimed at helping taxpayers who were “unable to properly adjust” their withholding and estimated tax payments because of the “array of changes” under the tax law, and may have inadvertently underpaid, the I.R.S. said.
The federal tax system is “pay as you go,” so taxes must be paid periodically, rather than all at once. Typically, taxpayers pay a penalty if their payments, from paycheck withholding or extra estimated tax payments, total less than 90 percent of the amount owed. (Other criteria also apply. For instance, if you underpaid but owe less than $1,000, you’re not subject to any penalty.) For 2018 returns, the I.R.S. said, the threshold will be lowered to 85 percent.
Here are some questions and answers about this year’s tax filing season:
When is the deadline?
For most taxpayers, the federal filing deadline is April 15. But because of the timing of local holidays on April 15 in Maine and Massachusetts — and another on April 16 in Washington, D.C. — taxpayers who live in Maine or Massachusetts have until April 17 to file.
Do I have to wait until Monday to file my taxes?
No. Consumers using professional preparers, or do-it-yourself tax software, can prepare their returns ahead of time, and have them filed electronically when the I.R.S. starts accepting them on Monday. The I.R.S. encourages electronic filing “for faster refunds.”
I completed my return using TurboTax but got a notice to redo it. What should I do?
Some TurboTax users were notified ahead of the filing season that they should redo their returns because of a software glitch. The potential problem occurred when TurboTax, which millions of people use to file their returns, transferred the prior year’s data into the current year’s return. “In some cases,” the notice to users said, “a few pieces of information may be inaccurate or left out.”
TurboTax advised users to clear their current return and start over. Intuit, the program’s parent, offered free tax filing for those affected.
TurboTax said the glitch had affected a “small” number of filers but declined to be specific.