Taxpayers can act right now to avoid any tax-time surprises and ensure smooth processing of their 2019 federal return, with these handy reminders and suggestions.
Make estimated or additional tax payments
Clients with substantial non-wage income might need to be reminded to make quarterly estimated tax payments on: self-employment or investment income (“including gain from the sale, exchange or other disposition of virtual currency”), taxable Social Security benefits and, in some instances, pension and annuity income. The last payment for 2019 is due Jan. 15.
Gather documents, organize records
Taxpayers should assemble a record keeping system — electronic or paper — that keeps important information in one place. This includes copies of filed returns and all supporting documents for at least three years: W-2s, Tofes 106, 1099s, other income documents, records documenting all virtual currency transactions, and of course, all expense items.
Clients should also confirm that each employer, bank or other payer has their current mailing or email address. Clients are reminded to have all those forms before filing, to avoid delays in processing and refunds.
Renew expiring ITINs
Clients with expiring ITINs can get the numbers renewed more quickly and avoid refund delays by submitting their renewal application soon. Any ITIN with middle digits 83, 84, 85, 86 or 87 expired at the end of 2019. Any ITIN not used on a return in the past three years will expire. ITINs with middle digits 70 through 82 that expired in 2016, 2017 or 2018 can also be renewed. Once filed, it typically takes about seven weeks to receive an ITIN assignment letter from the IRS, but it can take up to 11 weeks if an applicant waits until peak season to submit the form.
Update power of attorney/third-party authorization records
Clients that have provided power of attorney or third-party authorization to tax accountants or lawyers should review those records. If the professional is no longer a service provider, the client should submit revocations to end the authorization.
Clients are encouraged to plan and schedule appointments ahead of the filing deadlines. The following deadlines are for the 2019 tax year:
- Partnership returns (IRS Form 1065): March 16, 2020, Extended deadline is Sept. 15, 2020
- Estates and Trusts income tax returns (IRS Form 1041): April 15, 2020, Extended deadline is Sept. 30, 2020
- C-corporation income tax returns (IRS Form 1120): April 15, 2020 for C corporations that operate on a calendar year, Extended deadline is Oct. 15, 2020
- S-corporation returns (IRS Form 1120-S): March 15, 2020 for corporations on a calendar year, Extended deadline is Sept. 15, 2020
- Foreign bank account reports (IRS FinCen Form 114): April 15, 2020, Extended deadline with Form 1040 is Oct. 15, 2020
Many trivial errors are made in the days and weeks leading up to a filing deadline — errors that may be preventable with additional planning and review time prior to filing.
The US tax professionals at Grant Thornton can guide you in with your US tax filings. For a consultation or to make an appointment, please contact our office.