IRS Tax Updates January 23

Individual Filing Season Opens

For individuals, the IRS will begin accepting tax returns on January 27, 2020. The deadline to file 2019 tax returns and pay any tax owed is Wednesday, April 15, 2020, unless an extension is filed (estimated tax payments will still be due). The IRS says this will help ensure the security and readiness of tax processing systems and address the potential impact of recent tax laws on 2019 tax returns. Taxpayers are encouraged to e-file, and to remember that they don’t have to wait until January 27 to start their tax return or contact a reputable tax preparer.

Gig Economy Tax Center Helps Businesses, Workers

The IRS has launched the Gig Economy Tax Center on to help the many people involved in the gig economy find streamlined information that affects them. Ride-sharing and home- or room-rentals are the most popular, but other services are part of the gig economy, including the businesses that provide the apps or platforms to connect customers with services. The Gig Economy Tax Center will help to educate taxpayers about their filing requirements, making estimated income tax payments, paying self-employment, FICA, and medicare taxes, and deductible business expenses. Though earners might not be issued W-2s or 1099s, gig income is still subject to these rules.

Use Direct Deposit For Fast Refund

The IRS encourages taxpayers who are expecting refunds to choose to have their refund direct deposited into their bank account. This is the fastest way to receive a refund. Taxpayers can elect to have their refund deposited into one account, or divided up into as many as three accounts. Whether you use tax software or a preparer, your bank routing number and account number(s) are all that is needed to take advantage of this system. 

New Withholding Estimator Launched

The IRS has launched a new and improved tax withholding estimator to help employees when they fill out the new 2020 W-4. Under- and over-paying taxes have consequences and having the right amount withheld from one’s paycheck is the best way to stay on track with paying your expected tax burden. Beginning in 2020, withholding is no longer based on marital status or allowances, but on expected filing status and standard deduction. Benefits such as the Child Tax Credit, or outside income (such as from the gig economy) can also be reflected in one’s withholding.