Tax Attic: Tax season coming to an end

We have about five weeks left in this tax season. It’s been interesting but from a tax preparation point of view, it had somewhat of a slow start to it. My tax preparer friends all seem to agree on that point. There are a couple of reasons for the slow start.

First, the Internal Revenue Service was not prepared to accept and process tax returns until almost the end of January. They also made it clear that if a refund was requested that included an earned income tax credit, a child tax credit, or an education credit, that refund would not be issued until at least mid-February. Ultimately, the IRS is doing its best to stop fraudulent returns from being processed and delaying the processing of returns seems to be effective.

Second, Congress passed late legislation, in both December and then February, which affected returns being prepared. Granted, the bills Congress passed didn’t immediately cause taxpayers to make changes but some of the provisions affected the preparation process and served to allow taxpayers to take deductions and credits for actions they took all of the way back to January 1 of 2017. Hopefully, this is a one and done action by Congress. They have all spring, summer, and fall to make up and pass tax bills. They don’t have to do it in the winter, in general, and during the tax season in particular.

Third, as a rule, there are more returns being filed today that require the taxpayer to receive more paperwork before the return can be prepared. More of that paper work is being received in February or even March. For example, all taxpayers who buy health insurance through the marketplace will receive a Form 1095-A that documents the monthly gross premium of the health insurance policy the taxpayer buys and the amount of that premium the federal government paid for the taxpayer. It’s not possible to file a tax return for a marketplace purchaser without having the information on the Form 1095-A. We are having appointments regularly with people who haven’t received their 1095-A as yet.

Also, taxpayers with investments, such as stocks, bonds, or mutual funds, will receive a Form 1099-B if there are sales of those capital assets within the investment during the year. The 1099-B will document the sales price of the investment and the cost associated with the sold investment. It’s impossible to prepare a tax return without the 1099-B and 1099-B’s are not released until mid-February at the earliest. All of these items added together mean that a tax season that used to begin more or less promptly on January 2 now begins more or less on January 31. It’s back loaded with the same 130 million or so returns getting filed with more getting filed later in the season. Of course, it all still ends at midnight on April 15 or this year on April 17.

That magic date is still five weeks, two days, two hours, and fifteen minutes away from when I am writing this article, but who is counting?

Ones of the nicest community events of the year is coming up this Saturday, March 17, when the annual Rockford Expo, sponsored by the Rockford Chamber of Commerce, is held at Rockford’s high school. From 9am-3pm, over 130 exhibitors will display their wares and will be ready to discuss the incredible range of services and products they offer. Several thousand residents of the area will flow through the gymnasium, the auxiliary gymnasium, the cafeteria, and the surrounding hallways.

In addition, a stage is set up in the gymnasium where choirs and bands from the entire school system will perform throughout the day. Having had the opportunity to listen to these choirs and bands over the years, I can attest to the talent on display year after year. Action Tax is located at Booth 36. Stop in and say hi; ask a question; or just to do what we do best-talk taxes. Sorry, even though it’s St. Patrick’s Day, we won’t have any green beer to give away but we could talk about craft beer in general. The craft brewing sensation still seems to be growing and I happen to do my personal best to keep that trend positive. This is Jerry Coon signing off.

 

Jerry Coon is an Enrolled Agent.

He owns Action Tax Service on Northland Dr in Rockford.

Contact Jerry at www.actiontaxservice.com.