Updated Withholding Calculator Reflects Changes in New Tax Law

To help taxpayers, the IRS updated the special Withholding Calculator tool on IRS.gov to reflect changes in the Tax Cuts and Jobs Act passed in December.

With most employees seeing withholding changes in their paychecks, the IRS recommends taxpayers use the Withholding Calculator to do a “paycheck checkup.” This will help taxpayers check that they are having the correct amount of income tax withheld from their paychecks.

Doing a checkup can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time in 2019. Some taxpayers might prefer to have less tax withheld up front and receive more in their paychecks, which would reduce their tax refund next year.

The IRS encourages everyone to check their withholding as soon as possible, but it’s especially important for these people to use the Withholding Calculator to make sure they have the right amount of tax withheld:

  • Two-income families
  • People with two or more jobs at the same time or who only work for part of the year
  • People who claim credits such as the Child Tax Credit
  • People who claim older dependents, including children age 17 or over
  • People who itemized deductions in 2017
  • People with high incomes and more complex tax returns
  • People with large tax refunds or large tax bills for 2017

Remember, the Withholding Calculator does not ask the user for personally identifiable information, such as name, social security number, address, or bank account numbers. The IRS does not save or record the information the taxpayer enters in the calculator.

More information:
Withholding Calculator Frequently Asked Questions
Withholding Calculator

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Things to Remember when Considering Early Withdrawals from Retirement Plans

Many taxpayers may need to take out money early from their Individual Retirement Account or retirement plan. Doing so, however, can trigger an additional tax on early withdrawals. They would owe this tax on top of other income tax they may have to pay. Here are a few key points to know:

  • Early withdrawals. An early withdrawal is taking a distribution from an IRA or retirement plan before reaching age 59½.
  • Additional tax. Taxpayers who took early withdrawals from an IRA or retirement plan must report them when they file their tax return. They may owe income tax on the amount plus an additional 10 percent tax if it was an early withdrawal.
  • Nontaxable withdrawals. The additional 10 percent tax doesn’t apply to nontaxable withdrawals, such as contributions that taxpayers paid tax on before they put them into the plan.
  • Rollover. A rollover happens when someone takes cash or other assets from one plan and puts it in another plan. They normally have 60 days to complete a rollover to make it tax-free.
  • Exceptions. There are many exceptions to the additional 10-percent tax. Some of the rules for retirement plans are different from the rules for IRAs.
  • Disaster Relief. Participants in certain disaster areas may have relief from the 10-percent early withdrawal tax on early withdrawals from their retirement accounts.
  • File Form 5329. Taxpayers who took early withdrawals last year may have to file Form 5329,  Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, with their federal tax returns.

Use IRS e-file. Early withdrawal rules can be complex. IRS e-file can help. It’s the easiest and most accurate way to file a tax return. The tax preparation software that taxpayers use to e-file will pick the right tax forms, do the math and help get the tax benefits they’re due. Seven out of 10 taxpayers qualify to use IRS Free File tax software. Free File is only available through the IRS website.

Additional resources:

Interactive Tax Assistants:

Phone Scams Pose Serious Threat; Remain on IRS ‘Dirty Dozen’ List of Tax Scams

IRS YouTube Videos:

WASHINGTON — The Internal Revenue Service reminded taxpayers to be careful with continuing aggressive phone scams as criminals pose as IRS agents in hopes of stealing money. These continuing phone calls remain a major threat to taxpayers and remain on the annual IRS “Dirty Dozen” list of tax scams for the 2018 filing season.

During filing season, the IRS generally sees a surge in scam phone calls threatening such things as arrest, deportation and license revocation if the victim doesn’t pay a bogus tax bill. In a new twist being seen in recent weeks, identity thieves file fraudulent tax returns with refunds going into the real taxpayer’s bank account – followed by a phone call trying to con the taxpayer to send the money to the scammer.

The Dirty Dozen is compiled annually by the IRS and lists a variety of common scams taxpayers may encounter any time during the year.

To help protect taxpayers, the IRS is highlighting each of these scams on 12 consecutive days to help raise awareness. The IRS also urges taxpayers to help protect themselves against identity theft by reviewing safety tips prepared the Security Summit, a collaborative effort between the IRS, states and the private-sector tax community.

How Do the Scams Work?

Con artists make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They convince the victim to send cash, usually through a wire transfer or a prepaid debit card or gift card. They may also leave “urgent” callback requests through phone “robo-calls,” or send a phishing email.

Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the driver’s license of their victim if they don’t get the money.

Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. The callers use IRS employee titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.

The IRS also reminded taxpayers today that scammers change tactics. Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, but variations of the IRS impersonation scam continue year-round and they tend to peak when scammers find prime opportunities to strike.

The Treasury Inspector General for Tax Administration (TIGTA) reports they have become aware of over 12,716 victims who have collectively paid over $63 million as a result of phone scams since October 2013.

Here are some things the scammers often do, but the IRS will not do. Taxpayers should remember that any one of these is a tell-tale sign of a scam.

The IRS Will Never:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed.
  • Ask for credit or debit card numbers over the phone.
  • Call you about an unexpected refund.

For Taxpayers Who Don’t Owe Taxes or Don’t Think They Do:

  • Do not give out any information. Hang up immediately.
  • Contact TIGTA to report the call. Use their IRS Impersonation Scam Reporting web page. Alternatively, call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

For Those Who Owe Taxes or Think They Do:

  • Call the IRS at 800-829-1040. IRS workers can help.

Stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more information visit Tax Scams and Consumer Alerts on IRS.gov.

Taxpayers have a set of fundamental rights they should be aware of when dealing with the IRS. These are the Taxpayer Bill of Rights. Explore these rights and the agency’s obligations to protect them on IRS.gov.

IRS: Refunds worth $1.1 billion waiting to be claimed by those who have not filed 2014 federal income tax returns

WASHINGTON ―Unclaimed federal income tax refunds totaling about $1.1 billion may be waiting for an estimated 1 million taxpayers who did not file a 2014 federal income tax return, according to the Internal Revenue Service.

To collect the money, these taxpayers must file their 2014 tax return with the IRS no later than this year’s tax deadline, Tuesday, April 17.

“We’re trying to connect a million people with their share of $1.1 billion in unclaimed refunds for 2014,” said Acting IRS Commissioner David Kautter. “Time is running out for people who haven’t filed tax returns to claim their refunds. Students, part-time workers and many others may have overlooked filing for 2014. And there’s no penalty for filing a late return if you’re due a refund.”

The IRS estimates the midpoint for the potential refunds for 2014 to be $847; half of the refunds are more than $847 and half are less.

In cases where a federal income tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a tax refund. If they do not file a tax return within three years, the money becomes the property of the U.S. Treasury. For 2014 tax returns, the window closes April 17, 2018. The law requires taxpayers to properly address, mail and ensure the tax return is postmarked by that date.

The IRS reminds taxpayers seeking a 2014 tax refund that their checks may be held if they have not filed tax returns for 2015 and 2016. In addition, the refund will be applied to any amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or past due federal debts, such as student loans.

By failing to file a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2014. Many low- and moderate-income workers may be eligible for the Earned Income Tax Credit (EITC). For 2014, the credit was worth as much as $6,143. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2014 were:

  • $46,997 ($52,427 if married filing jointly) for those with three or more qualifying children;
  • $43,756 ($49,186 if married filing jointly) for people with two qualifying children;
  • $38,511 ($43,941 if married filing jointly) for those with one qualifying child, and;
  • $14,590 ($20,020 if married filing jointly) for people without qualifying children.

Current and prior year tax forms (such as the tax year 2014 Form 1040, 1040A and 1040EZ) and instructions are available on the IRS.gov Forms and Publications page or by calling toll-free 800-TAX-FORM (800-829-3676).

Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years 2014, 2015 or 2016 should request copies from their employer, bank or other payer. Taxpayers who are unable to get missing forms from their employer or other payer can order a free wage and income transcript at IRS.gov using the Get Transcript Online tool. Alternatively, they can file Form 4506-T to request a wage and income transcript. A wage and income transcript shows data from information returns received by the IRS, such as Forms W-2, 1099, 1098, Form 5498, and IRA contribution Information. Taxpayers can use the information on the transcript to file their tax return.

State-by-state estimates of individuals who may be due 2014 income tax refunds 

State or District Estimated

Number of

Individuals

Median

Potential

Refund

Total

Potential

Refunds*

Alabama 17,700 $836 $18,302,700
Alaska 4,500 $898 $5,263,200
Arizona 23,800 $750 $23,496,700
Arkansas 9,500 $808 $9,726,900
California 93,600 $785 $95,745,100
Colorado 20,400 $796 $20,887,500
Connecticut 11,000 $934 $12,740,100
Delaware 4,000 $883 $4,378,400
District of Columbia 3,000 $850 $3,237,700
Florida 69,800 $865 $74,040,300
Georgia 34,800 $772 $35,006,000
Hawaii 6,200 $898 $6,830,900
Idaho 4,500 $723 $4,376,100
Illinois 39,500 $895 $43,600,000
Indiana 22,700 $878 $24,353,000
Iowa 10,500 $885 $11,083,400
Kansas 11,100 $852 $11,645,300
Kentucky 13,600 $848 $14,035,100
Louisiana 19,900 $846 $21,700,800
Maine 4,000 $804 $3,941,700
Maryland 21,800 $853 $23,773,000
Massachusetts 22,800 $935 $26,018,500
Michigan 34,100 $845 $36,505,700
Minnesota 15,800 $785 $15,832,600
Mississippi 10,200 $777 $10,291,100
Missouri 23,000 $797 $23,212,400
Montana 3,500 $808 $3,617,700
Nebraska 5,600 $806 $5,629,100
Nevada 12,000 $831 $12,663,200
New Hampshire 4,600 $917 $5,169,500
New Jersey 28,600 $928 $32,452,500
New Mexico 7,800 $831 $8,472,600
New York 53,600 $913 $60,135,600
North Carolina 30,800 $791 $30,659,900
North Dakota 3,000 $952 $3,433,300
Ohio 38,100 $826 $38,956,700
Oklahoma 17,200 $855 $18,366,800
Oregon 15,100 $747 $14,816,600
Pennsylvania 39,300 $907 $42,866,100
Rhode Island 2,900 $916 $3,217,200
South Carolina 12,000 $757 $12,023,400
South Dakota 3,000 $866 $3,075,300
Tennessee 20,300 $837 $20,967,500
Texas 108,100 $899 $121,956,100
Utah 7,800 $754 $7,831,300
Vermont 2,100 $816 $2,028,600
Virginia 27,800 $828 $29,345,300
Washington 27,000 $894 $30,423,900
West Virginia 5,200 $914 $5,875,100
Wisconsin 13,400 $774 $13,041,800
Wyoming 3,000 $973 $3,556,300
Totals 1,043,600 $847 $1,110,605,600

 

* Excluding the Earned Income Tax

Check Status of a Tax Refund in Minutes Using Where’s My Refund?

The Where’s My Refund? tool gives taxpayers access to their tax return and refund status anytime. All they need is internet access and three pieces of information:
• Their Social Security number.
• Their filing status.
• The exact whole dollar amount of their refund.
Taxpayers can start checking on the status of their return within 24 hours after the IRS received their e-filed return, or four weeks after they mail a paper return. Where’s My Refund? includes a tracker that displays progress through three stages: the IRS receives the tax return, then approves the refund, and sends the refund.
Where’s My Refund? updates once every 24 hours, usually overnight. Taxpayers should remember that checking the status more often will not produce new results. Taxpayers on the go can track their return and refund status on their mobile devices using the free IRS2Go app. Those who file an amended return should check out the Where’s My Amended Return? tool.
Generally, the IRS issues most refunds in less than 21 days, but some may take longer. IRS phone and walk-in representatives can research the status of refunds only if it’s been 21 days or more since a taxpayer filed electronically, or more than six weeks since they mailed a paper return. Taxpayers can also contact the IRS if Where’s My Refund? directs them to do so.
There is a misconception that a tax transcript can help taxpayers determine the status of their refund. The information included on a transcript does not necessarily reflect the amount or timing of a refund. Transcripts are best used to validate past income and tax filing status for loan applications, and to help with tax preparation.
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NATP

National Association of Tax Professionals