Year-round tax planning is important for everyone. Just because a taxpayer already filed their tax return doesn’t mean they don’t need to think about taxes for the rest of the year. In fact, what they do now may affect any tax they might owe next year. It could also affect the refund they expect.

Since federal taxes operate on a pay-as-you-go basis, taxpayers need to pay most of their tax during the year as they earn the income. Taxpayers should make sure they’re having the correct amount of tax withheld from their paychecks. It’s a good idea for taxpayers to do a Paycheck Checkup for these reasons:

• Having too little withheld could lead to a smaller than expected refund.
• Having too little withheld could even lead to an unexpected tax bill.
• Employees who have too much tax withheld will see less money in each paycheck. Having more money in each paycheck may be more helpful than getting a large refund when they file.

Taxpayers can use the IRS Tax Withholding Estimator to check their withholding. All taxpayers should use this tool to do a Paycheck Checkup ASAP if they haven’t already done so in 2019. Some taxpayers should do another Paycheck Checkup even if they already did one this year. This includes anyone whose personal or financial information changes due to a life event. Some life events that can affect withholding are:

• Marriage
• Having a baby
• Getting a new job
• Getting a raise at work

Taxpayers who want to change how much tax is withheld from their paycheck simply need to submit an updated Form W-4 to their employer.

The IRS has several digital tools taxpayers can use to stay updated on important tax information that may help with tax planning. In addition to visiting the IRS.govwebsite, they can download the IRS2Go app, watch IRS YouTube videos, and follow the IRS on Twitter and Instagram.

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Summer is a season when people have fun, yet get things done. From buying a new house to cleaning their old one, taxpayers who itemize their deductions may be doing things this summer that will affect the tax returns they file next year.

The higher standard deduction means fewer taxpayers are itemizing their deductions. However, taxpayers who still plan to itemize next year should keep these tips in mind:

• Deducting state and local income, sales and property taxes. The deduction that taxpayers can claim for state and local income, sales and property taxes is limited. This deduction is limited to a combined, total deduction of $10,000. It is $5,000 if married filing separately. Any state and local taxes paid above this amount can’t be deducted.
• Refinancing a home. The deduction for mortgage interest is also limited. It’s limited to interest paid on a loan secured by the taxpayer’s main home or second home. For homeowners who choose to refinance, they must use the loan to buy, build, or substantially improve their main home or second home, and the mortgage interest they may deduct is subject to the limits described in the next bullet under “buying a home.”
• Buying a home. People who buy a new home this year can only deduct mortgage interest they pay on a total of $750,000 in qualifying debt for a first and second home. It’s $375,000 if married filing separately. For existing mortgages, if the loan originated on or before Dec. 15, 2017, taxpayers continue to deduct interest on a total of $1 million in qualifying debt secured by first and second homes.
• Donating items and deducting money. Many taxpayers do a good summer clean-out during the warm months. They often find unused items in good condition they can donate to a qualified charity. These donations may qualify for a tax deduction. Taxpayers must itemize deductions to deduct charitable contributions and must have proof of all donations. Taxpayers can use the Interactive Tax Assistant to help determine whether they can deduct their charitable contributions.
• Deducting mileage for charity. Driving a personal vehicle while donating services on a trip sponsored by a qualified charity could qualify for a tax break. Itemizers can deduct 14 cents per mile for charitable mileage driven in 2019.
• Reporting gambling winnings and claiming gambling losses.Taxpayers who itemize can deduct gambling losses up to the amount of gambling winnings. They can use the Interactive Tax Assistant to find out more about reporting gambling winnings and  losses next year.

More information:
Publication 5307, Tax Reform: Basics for Individuals and Families.

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A taxpayer’s adjusted gross income is one factor that determines how much tax they owe. Taxpayers who plan today can  lower their AGI.

This tip is one in a series about tax planning. These tips focus on steps taxpayers can take now to help them down the road.

Here are a couple things taxpayers can do now to lower their AGI:

Know how adjusted gross income affects taxes

• A taxpayer’s AGI and tax rate are important factors in figuring their taxes. AGI is their income from all sources minus any adjustments or deductions to their income. Generally, the higher the AGI, the higher their tax rate, and the more tax they pay.
• Tax planning can include making changes during the year that  can lower a taxpayer’s AGI. The taxpayer could:
  • Contribute to a Health Savings Account
  • Claim educator expenses if they’re a qualifying educator
  • Pay student loan interest

A full list is on Schedule 1 of Form 1040.

Save for retirement

• Retirement savings can also lower AGI.
  • Contributing money to a retirement plan at work like a 401(k) plan can reduce a taxpayer’s AGI.
  • Investing in a traditional IRA plan is another way to save for retirement and lower AGI.
  • Self-employed SEP, SIMPLE, and qualified plans are also retirement options that can lower AGI.

The IRS has several digital tools taxpayers can use to stay updated on important tax information that may help with tax planning. In addition to visiting IRS.gov, they can download the IRS2Go mobile app, watch IRS YouTube videos, and follow the IRS on Twitter and Instagram.

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With scam artists hard at work all year, taxpayers should be on the lookout for a surge of evolving phishing emails and telephone scams.

Taxpayers should watch for new versions of two tax-related scams. One involves Social Security numbers related to tax issues. The other threatens taxpayers with a tax bill from a fictional government agency. Here are some details about these scams to help taxpayers recognize them:

The SSN scheme

• The latest twist includes scammers claiming to be able to suspend or cancel the victim’s Social Security number. This scam is similar to and often associated with the IRS impersonation scam.
• It is yet another attempt by con artists to frighten taxpayers into returning robocall voicemails.
• Scammers may mention overdue taxes in addition to threatening to cancel the taxpayer’s SSN.

Fake tax agency

• This scheme involves a letter threatening an IRS lien or levy.
• The scammer mails the letter to the taxpayer.
• The lien or levy is based on bogus overdue taxes owed to a non-existent agency.
• The fake agency is called the “Bureau of Tax Enforcement.” There is no such agency.
• The lien notification scam also likely references the IRS to confuse potential victims into thinking the letter is from a legitimate agency.

Both these schemes show classic signs of being scams. The IRS and its Security Summit partners – the state tax agencies and the tax industry – remind everyone to stay alert to scams that use the IRS or reference taxes. Being alert is especially important in late spring and early summer as tax bills and refunds arrive.

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While the federal income tax filing deadline has passed for most people, there are some taxpayers still facing tax-related issues. This includes taxpayers who haven’t paid their taxes and those who are waiting for their refund.

Here are some tips for taxpayers handling some of the most typical after-tax-day issues. Here’s how taxpayers can:

Check the status of a refund
Taxpayers can check on their refund using the “Where’s My Refund?” tool. It is available on IRS.gov and the IRS2Go app. Taxpayers without access to a computer can call 800-829-1954. To use this tool, taxpayers need the first Social Security number on the tax return, the filing status, and the expected refund amount. The tool updates once daily, so taxpayers do not need to check more often.

Do a Paycheck Checkup
The IRS urges all employees, including those with other sources of income, to perform a Paycheck Checkup now. Doing a checkup will help employees make sure their employers are withholding the right amount of tax from their paychecks. Doing so now will help avoid an unexpected year-end tax bill and possibly a penalty.

The easiest way to a Paycheck Checkup is to use the Withholding Calculator on IRS.gov. Taxpayers can use the results from the Calculator to help fill out the Form W-4 and adjust their income tax withholding with their employer.  Taxpayers who receive pension income can use the results from the calculator to complete a Form W-4P and give it to their payer.

Review payment options
Taxpayers who owe taxes can review their options online. Taxpayers can:

• View their balance online
• Pay their balance with IRS Direct Pay
• Pay by debit or credit card
• Apply online for a payment plan

Before accessing their tax account online, users must authenticate their identity through the Secure Access process.

Find out if they need to amend a tax return
After filing their return, taxpayers may find they made an error or forgot to enter something on it. Taxpayers can use the Interactive Tax Assistant, Should I File an Amended Return? to help determine if they should correct an error or make other changes to the tax return they already filed.

Common errors that taxpayers should fix are those made about filing status, income, deductions and credits. Taxpayers usually do not need to file an amended return to fix a math error or if they forgot to attach a form or schedule. Normally the IRS will correct the math error and notify the taxpayer by mail. Similarly, the agency will send a letter requesting any missing forms or schedules.

Taxpayer must file Form 1040-X, Amended U.S. Individual Income Tax Return, on paper. Those expecting a refund from their original return, should not file an amended return before the original return has been processed

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IRS YouTube Videos: Individual Taxpayer Identification Number (ITIN) – English | Spanish WASHINGTON — Nearly 2 million Individual Taxpayer Identification Numbers (ITINs) are set to expire at the end of 2019 as the Internal Revenue Service continues to urge affected taxpayers to submit their renewal applications early to avoid refund delays next year. “We urge taxpayers with expiring ITINs to take action and renew the number as soon as possible. Renewing before the end of the year will avoid unnecessary delays related to their refunds,” said IRS Commissioner Chuck Rettig. “To help with this process, the IRS is sharing this material in multiple languages. We encourage partner groups to share this important information to reach as many people with ITINs as possible.” Under the Protecting Americans from Tax Hikes (PATH) Act, ITINs that have not been used on a federal tax return at least once in the last three consecutive years will expire Dec. 31, 2019. In addition, ITINs with middle digits 83, 84, 85, 86 or 87 that have not already been renewed will also expire at the end of the year. These affected taxpayers who expect to file a tax return in 2020 must submit a renewal application as soon as possible. ITINs are used by people who have tax filing or payment obligations under U.S. law but who are not eligible for a Social Security number. ITIN holders who have questions should visit the ITIN information page on IRS.gov and take a few minutes to understand the guidelines. The IRS continues a nationwide education effort to share information with ITIN holders. To help taxpayers, the IRS offers a variety of informational materials, including flyers and fact sheets, available in several languages, including English, Spanish, Traditional Chinese, Russian, Vietnamese, Korean and Haitian/Creole on IRS.gov. Who should renew an ITIN Taxpayers whose ITIN is expiring and who expect to have a filing requirement in 2020 must submit a renewal application. Others do not need to take any action. ITINs with the middle digits 83, 84, 85 or 86, 87 (For example: 9NN-83-NNNN) need to be renewed even if the taxpayer has used it in the last three years. The IRS will begin sending the CP-48 Notice, You must renew your Individual Taxpayer Identification Number (ITIN) to file your U.S. tax return, in early summer to affected taxpayers. The notice explains the steps to take to renew the ITIN if it will be included on a U.S. tax return filed in 2020. Taxpayers who receive the notice after acting to renew their ITIN do not need to take further action unless another family member is affected. ITINs with middle digits of 70 through 82 have previously expired. Taxpayers with these ITINs can still renew at any time, if they have not renewed already. Family option remains available Taxpayers with an ITIN that has middle digits 83, 84, 85, 86 or 87, as well as all previously expired ITINs, have the option to renew ITINs for their entire family at the same time. Those who have received a renewal letter from the IRS can choose to renew the family’s ITINs together, even if family members have an ITIN with middle digits that have not been identified for expiration. Family members include the tax filer, spouse and any dependents claimed on the tax return. How to renew an ITIN To renew an ITIN, a taxpayer must complete a Form W-7 and submit all required documentation. Taxpayers submitting a Form W-7 to renew their ITIN are not required to attach a federal tax return. However, taxpayers must still note a reason for needing an ITIN on the Form W-7. See the Form W-7 instructions for detailed information. Spouses and dependents residing outside of the U.S. only need to renew their ITIN if filing an individual tax return, or if they qualify for an allowable tax benefit (e.g., a dependent parent who qualifies the primary taxpayer to claim head of household filing status.) In these instances, a federal return must be attached to the Form W-7 renewal application. There are three ways to submit the Form W-7 application package. Taxpayers can: Mail the form, along with original identification documents or copies certified by the agency that issued them, to the IRS address listed on the Form W-7 instructions. The IRS will review the identification documents and return them within 60 days. Work with Certified Acceptance Agents (CAAs) authorized by the IRS to help taxpayers apply for an ITIN. CAAs can authenticate all identification documents for primary and secondary taxpayers, verify that an ITIN application is correct before submitting it to the IRS for processing and authenticate the passports and birth certificates for dependents. This saves taxpayers from mailing original documents to the IRS. In advance, call and make an appointment at a designated IRS Taxpayer Assistance Center to have each applicant’s identity authenticated in person instead of mailing original identification documents to the IRS. Each family member applying for an ITIN or renewal must be present at the appointment and must have a completed Form W-7 and required identification documents. See the TAC ITIN authentication page for more details. Avoid common errors now and prevent delays next year Federal tax returns that are submitted in 2020 with an expired ITIN will be processed. However, certain tax credits and any exemptions will be disallowed. Taxpayers will receive a notice in the mail advising them of the change to their tax return and their need to renew their ITIN. Once the ITIN is renewed, applicable credits and exemptions will be restored, and any refunds will be issued. Additionally, several common errors can slow down some ITIN renewal applications. These mistakes generally center on: mailing identification documentation without a Form W-7, missing information on the Form W-7, or insufficient supporting documentation, such as U.S. residency documentation or official documentation to support name changes. The IRS urges any applicant to check over their form carefully before sending it to the IRS. As a reminder, the IRS no longer accepts passports that do not have a date of entry into the U.S. as a stand-alone identification document for dependents from a country other than Canada or Mexico, or dependents of U.S. military personnel overseas. The dependent’s passport must have a date of entry stamp, otherwise the following additional documents to prove U.S. residency are required: U.S. medical records for dependents under age 6, U.S. school records for dependents under age 18, and U.S. school records (if a student), rental statements, bank statements or utility bills listing the applicant’s name and U.S. address, if over age 18. To expand ITIN services, the IRS continues to encourage more individuals to apply for the Acceptance Agent Program To increase the availability of ITIN services nationwide, particularly in communities with high ITIN usage, the IRS is actively recruiting Certified Acceptance Agents and accepting applications year-round. Interested individuals are encouraged to review all CAA program changes and requirements and submit an application to become a Certified Acceptance Agent. For more information, visit the ITIN information page on IRS.gov.

All taxpayers should check their withholding – also known as doing a Paycheck Checkup – as soon as possible. They should do a checkup even if they did one last year.

By checking their withholding, taxpayers can make sure enough is being taken out of their paychecks or other income to cover the tax owed. Here are some things taxpayers should know about withholding and why checking it is important:

• Taxpayers should check their withholding as early in the year as possible. If someone still has not done a Paycheck Checkup, there’s still time to get their withholding on track. They should do a checkup ASAP.
• Taxpayers should also check their withholding when life changes occur. These changes include things like:
  • Marriage or divorce
  • Birth or adoption of a child
  • Purchase of a home
  • Retirement
  • Chapter 11 bankruptcy
  • New job or loss of job
• Some taxable income is not subject to withholding. People with this income who also have income from a job may want to adjust the amount of tax their employer withholds from their paycheck. This includes income from things like:
  • Interest
  • Dividends
  • Capital gains
  • Self-employment and gig economy income
  • IRA distributions, including certain Roth IRAs
• Some life changes might affect a taxpayer’s itemized deductions or tax credits. The taxpayer should check their withholding if they experience changes to their:
  • Medical expenses
  • Taxes
  • Interest expense
  • Gifts to charity
  • Dependent care expenses
  • Education credit
  • Child tax credit
  • Earned income tax credit

The best way for taxpayers to check their withholding is to use the Withholding Calculator on IRS.gov.

The IRS is committed to ensuring taxpayers pay no more than the correct amount of tax owed. Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly. This is one of 10 basic rights known collectively as the Taxpayer Bill of Rights.

Here are some important things taxpayers should know about their right to pay no more than the correct tax owed. They can:

• File for a refund if they believe they overpaid their taxes.
• Contact the IRS if they believe there is an error on a notice or bill.
• File an amended tax return if an error is discovered after the original return was filed.
• Request that any amount owed be removed if it exceeds the correct amount due.
• Request that the IRS remove interest from the account if the agency caused unreasonable errors or delays.
• Submit an offer in compromise using Form 656-L. Taxpayers use this form to ask the IRS to accept less than the full amount of tax debt. Taxpayers do this if they believe all or part of the debt is not owed.

More information:
What the Taxpayer Bill of Rights Means for You
Topic 653, IRS Notices and Bills, Penalties and Interest Charges
Topic 308, Amended Returns
Taxpayer Advocate Service
Forms and Publications About Your Appeal Rights
Payment Plans, Installment Agreements

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Small business owners may qualify for a home office deduction that will help them save money on their taxes, and benefit their bottom line. Taxpayers can take this deduction if they use a portion of their home exclusively, and on a regular basis, for any of the following:

• As the taxpayer’s main place of business.
• As a place of business where the taxpayer meets patients, clients or customers. The taxpayer must meet these people in the normal course of business.
• If it is a separate structure that is not attached to the taxpayer’s home. The taxpayer must use this structure in connection with their business
• A place where the taxpayer stores inventory or samples. This place must be the sole, fixed location of their business.
• Under certain circumstances, the structure where the taxpayer provides day care services.

Deductible expenses for business use of a home include:

• Real estate taxes
• Mortgage interest
• Rent
• Casualty losses
• Utilities
• Insurance
• Depreciation
• Repairs and Maintenance

Certain expenses are limited to the net income of the business. These are known as allocable expenses. They include things such as utilities, insurance, and depreciation.  While allocable expenses cannot create a business loss, they can be carried forward to the next year. If the taxpayer carries them forward, the expenses are subject to the same limitation rules.

There are two options for figuring and claiming the home office deduction.

Regular method
This method requires dividing the above expenses of operating the home between personal and business use. Self-employed taxpayers file Form 1040, Schedule C, and compute this deduction on Form 8829.

Simplified method
The simplified method reduces the paperwork and recordkeeping for small businesses. The simplified method has a set rate of $5 a square foot for business use of the home. The maximum deduction allowed is based on up to 300 square feet.

There are special rules for certain business owners:

• Daycare providers complete a special worksheet, which is found in Publication 587.
• Self-employed individuals use Form 1040, Schedule C, Line 30 to claim deduction.
• Farmers claim the home office deduction on Schedule F, Line 32.

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