GETTING READY FOR YOUR 2019 TAXES
January 13, 2020 - Douglas Myser
Getting ready for your 2019 taxes. The Internal Revenue Service urged taxpayers to act now to avoid a tax time surprise and ensure that they have smooth processing of their 2019 federal tax return. The IRS urges everyone to use the tax withholding calculator to perform a paycheck or pension income checkup. This is even more important for those who received a smaller refund than expected or owed an unexpected tax bill last year. It's also a good idea for anyone who had a key life event, such as getting married, getting divorced, having or adopting a child, retiring, buying a home or starting college. If the Tax Withholding Calculator recommends a change, an employee can then submit a new form W-4, employee's withholding allowance certificate, to their employer. Getting ready for your 2019 taxes.
Taxpayers who receive a substantial amount of non-wage income should make quarterly estimated tax payments. This can include self-employment income, investment income, including income from the sale, exchange or other disposition of virtual currency, taxable Social Security benefits and in some instances, pension and annuity income. Making estimated tax payments can also help a wage earner cover an unexpected withholding shortfall. Estimated tax payments are due quarterly, with the last payment for 2019 due on Jan. 18, 2020. Form 1040-Es, Estimated Tax for Individuals, has a worksheet to help figure these payments. Payment options can be found at IRS.GOV
Workers and retirees who receive self employment income or income from the gig economy, including payments in the form of virtual currency, should make sure to take these amounts into account when they fill out the tax withholding calculator. Payments received in virtual currently by independent contractors and other service providers are taxable, and self employment tax rules generally apply. Normally, payers must issue 1099-Misc. Similarly, IRS wages paid using virtual currency are taxable to the employee, subject to withholding and must be reported by the employer on a form W-2. People with more complex tax situations should use the instructions in form 505.
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