Americans are starting to get ready for tax season, with many taxpayers hopeful that new laws will result in bigger refunds. Yet with the government shutdown having hit at a particularly inopportune time for the Internal Revenue Service, it's still not clear exactly when tax season will officially start.
But even if you can't know for sure exactly when you'll be able to file your return, it's not too early to get ready for tax season -- whenever it comes. The IRS recently gave taxpayers five key things to consider as they get ready to file their taxes for the 2018 tax year.
1. Watch your withholding
Tax reform caused the amount of money withheld from paychecks to go down in 2018 for many taxpayers. That made their paychecks bigger, but it could result in smaller refund checks for many, and some might even end up owing tax when they file their returns.
The IRS has come up with a tool to assess whether your withholding is correct. If it's not, you can make adjustments to your payroll withholding by filing a new Form W-4 with your employer. Or looking at estimated tax payments can prevent you from owing penalties and interest.
2. Predict what your refund will be -- and when you'll get it
The biggest motivator for many to file their returns is to get their refund. But tax reform will likely affect those refund amounts in many ways. Higher standard deductions, lower tax rates, and larger child tax credits could boost refunds, while the elimination of personal exemptions, limitations on certain itemized deductions, and the phase-out of various other tax benefits could reduce them.
One thing families should remember is that if you're eligible for the earned income credit or the additional child tax credit, then your refund will be delayed at least until mid-February. Given the potential for delays to the beginning of tax season, it's likely that even those who aren't seeking those credits could have to wait at least that long to get money back from the IRS.
3. Look at these special rules for those without Social Security numbers
If you're required to file taxes but don't have a Social Security number and aren't eligible to get one, then the IRS issues what it calls individual taxpayer identification numbers. These ITINs fill the same role as a Social Security number for tax purposes for certain nonresident aliens, as well as a set of resident aliens and dependents or spouses.
The critical thing about ITINs is that they expire. Therefore, the IRS urges those whose ITINs could expire before they file their returns to submit a renewal application now in order to avoid any future hassles.
4. Familiarize yourself with new tax forms
Millions of taxpayers will have to deal with a new tax form for the very first time during the 2019 tax season. Everyone will use a shortened version of Form 1040, which has been shortened to more closely resemble short-form returns like the 1040-EZ and 1040A. Yet the 1040 will also require new schedules that taxpayers will have to attach in certain circumstances. With the new forms available on the IRS website, it's smart to get a head start by looking at them before starting your tax prep for the year.
5. Know where to get help
The IRS knows that tax reform will create a lot of confusion, but there's help available. From online assistance to taxpayer assistance centers and the Volunteer Income Tax Assistance program, Americans can get the guidance they need to deal successfully with their tax returns in the coming months.
Be ready for tax season
Preparing your tax return might seem daunting this year, especially with all the changes that have occurred lately. But with the prospect of possible tax savings, you have a big incentive, and getting ready now will help you get off to a running start when tax season officially opens.