IRS Updates November 15

IRS Makes Retirement Contribution Adjustments

 

The IRS has announced changes to limits on retirement contributions for tax year 2019. For those taxpayers contributing to 401(k), 403(b) and some other retirement plans, the contribution limit will increase from $18,500 to $19,000 in 2019. The annual limit on IRA contributions will increase from $5,500 to $6,000. There is no change to the $1,000 catch-up contributions allowed by those age 50 or over. Income limits will be adjusted for taxpayers who qualify for deductible contributions.

Improvements to Free File Partnership Announced

The IRS announced changes to their Free File program, which enables taxpayers making less than $66,000 to use software to e-file their tax returns free of charge. The adjustments aim to make the program more taxpayer-friendly and improve security. Free File partners will remove any buttons or links from their Free File pages which would take users to a fee service. This will reduce confusion and make clear what is offered in Free File programs. Additionally, taxpayers will be automatically redirected to irs.gov if they do not qualify for Free File, and taxpayers returning to a website where they used Free File in previous years will be offered Free File first, instead of paid services, upon login. See here for more information and details.

Grants for Elderly and Volunteer Programs

The IRS approved $24 million for Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) applicants. The TCE program serves taxpayers age 60 or older who may need tax counseling and assistance filing their tax returns, and VITA programs assist underserved communities, low- and middle-income earners, and those with limited English to prepare and file their returns. Non-profit agencies, faith-based organizations, large employers, and others operate these programs and volunteers are trained and certified by the IRS. For information about becoming a volunteer, visit IRS Tax Volunteers.

IRS Issues Final Regulations for Paid Preparers of Head of Household Returns

Tax preparers filing returns beginning now for tax year 2018 have expanded due diligence required for head of household returns. Paid preparers will have to submit Form 8867 with any return claiming head of household status that also claims the Earned Income Tax Credit, Child Tax Credit, or other designated credit. Failure to comply with the regulations can incur a $520 penalty.

Family Tax Credits Reviewed

The IRS encourages taxpayers to be aware of family tax credit changes brought about by the Tax Cuts and Jobs Act (TCJA) of 2017. The Child Tax Credit has increased from $1,000 to $2,000 ($1,400 is refundable) for qualifying children, and the income limit has increased. A new credit, Credit for Other Dependents, is available for taxpayers supporting a dependent child 17 or older for whom they cannot claim the Child Tax Credit, or other qualifying relative. The Interactive Tax Assistant can help determine if your situation qualifies you for either of these.

E-File For 2017 Taxes Closes November 17

The IRS reminds taxpayers, including those in disaster zones, that returns for tax year 2017 cannot be sent electronically after November 17. The e-file system will require maintenance and updates to prepare for the 2018 tax filing season after this date, so anyone needing to file returns after November 17, 2018 will have to do so on paper.