The Internal Revenue Service will waive the estimated tax penalty for any qualifying farmer or fisherman who files his or her 2018 federal income tax return and pays any tax due by Monday, April 15, 2019.
The IRS is providing this relief because, due to certain rule changes, many farmers and fishermen may have difficulty accurately determining their tax liability by the March 1 deadline that usually applies to them. For tax year 2018, an individual who received at least two-thirds of his or her total gross income from farming or fishing during either 2017 or 2018 qualifies as a farmer or fisherman.
I am still waiting to see if Illinois is following the IRS extension of time to file for farmers.
How many of you have already filed your tax return and received a refund that was lower than previous years? There are many possible reasons but one may be that you had less federal withholding deducted from your paycheck in 2018.
Recall that about this time last year, the hype was that employees would be seeing a larger net paycheck. Who didn't want that?! IRS accomplished this by changing the withholding tables to have less federal withholding deducted from paychecks. Instead of a larger refund at tax time, you received it throughout the year. Not liking that? Many people rely on the refund as their savings account to pay their real estate taxes or pay for vacation.
You can complete a new Form W-4 to give to your employer to have more federal withholding deducted in 2019. On Line 5 of Form W-4, if you lower the number of allowances, your federal withholding will increase. For example, if you are currently claiming 2 allowances, you could change it to zero allowances. Another option is to request additional withholding on Line 6 of Form W-4. For example, you could have an additional $25 per paycheck federal withholding in addition to the calculated withholding.
In my next blog, I'll discuss the tax law changes in itemized deductions.
As always, I recommend that you discuss your situation with a tax professional. Tax time is the perfect time to discuss any changes for the upcoming year and plan for future years.
Wow! This has been the first major tax law change since 1986! I was just starting my accounting career back then having graduated from college in 1985. Everything was new to me back then. I remember thinking back then that there was no way I was ever going to remember all of these tax laws. You know what? I still don't know it all but I know a lot more than I did back then. I believe that is called experience.
I like to mail an annual newsletter in December of each year outlining tax changes throughout the year. Sometimes the newsletter may contain tips and reminders such as keeping receipts. I will continue to do that for our clients. However, now you can come to this page on the website and get current tax updates instead of waiting until year end.
Everyone's tax situation is different. Always talk to your tax professional on how current laws impact you currently and in the future.