They say only two things in life are certain, and the time of year has arrived for one of them. It’s tax season!

The Personal Capital Guide to Income Tax Filing will provide you with everything you need to know to file your income taxes this year.

Important dates for filing your taxes in 2019

First things first, mark these important tax dates on your calendar.

January

  • 15The deadline to pay taxes on income in the fourth quarter of 2018. Not sure if you need to make estimated quarterly payments? The IRS has comprehensive information on estimated tax.
  • 28First day to e-file with the IRS.
  • 31Deadline for employers to send out W-2 forms.
  • 31Deadline for businesses to send out the 1099-R form, which is for distributions from retirement accounts.

February

  • 15The usual deadline for financial institutions to mail out form 1099-B, Form 1099-S, and Form 1099-MISC if the sender is reporting payments in boxes 8 or 14. However, firms can and often do get an extension on this deadline. Jump to the “1099 Forms” section for more on these forms.
  • 28Deadline for businesses to mail Forms 1099 and 1096 to the IRS.

April

  • 15Deadline to file for a six-month extension of time to file income taxes.
  • 15File a 2018 tax return and pay any taxes. Last year this was temporarily extended due to the crashing of the IRS site, but best to be prepared by this official deadline!
  • 21Deadline to refile rejected returns and extensions.

June

  • 15Deadline for abroad filers.

October

  • 15Deadline to file if granted an extension.

Income Tax Brackets & Deductions

For the 2019 tax year, the seven tax brackets and marginal rates remain unchanged. However, the income rates have been adjusted for inflation.

Income Tax Brackets

With the sweeping tax reform put into place by President Trump for the 2018 tax year, income tax brackets have changed.

Here are the income tax brackets for the 2018 tax year, which will impact your filings in the spring of 2019.

Rate Single Filers Married, Filing Jointly Head of Household
10% $0 – $9,525 $0 – $19,050 $0 – $13,600
12% $9,526 – $38,700 $19,051 – $77,400 $13,601 – $51,800
22% $38,701 – $82,500 $77,401 – $165,000 $51,801 – $82,500
24% $82,501 – $157,500 $165,001 – $315,000 $82,501 – $157,500
32% $157,501 – $200,000 $315,001 – $400,000 $157,501 – $200,000
35% $200,001 – $500,000 $400,001 – $600,000 $200,001 – $500,000
37% $500,000+ $600,001+ $500,000+
Rate Single Filers
10% $0 – $9,525
12% $9,526 – $38,700
22% $38,701 – $82,500
24% $82,501 – $157,500
32% $157,501 – $200,000
35% $200,001 – $500,000
37% $500,000+
Rate Married, Filing Jointly
10% $0 – $19,050
12% $19,051 – $77,400
22% $77,401 – $165,000
24% $165,001 – $315,000
32% $315,001 – $400,000
35% $400,001 – $600,000
37% $600,001+
Rate Head of Household
10% $0 – $13,600
12% $13,601 – $51,800
22% $51,801 – $82,500
24% $82,501 – $157,500
32% $157,501 – $200,000
35% $200,001 – $500,000
37% $500,000+

For this next tax year (2019), income tax brackets have shifted marginally.

Rate Single Filers Married, Filing Jointly Head of Household
10% $0 $0 $0
12% $9,700 $19,400 $13,850
22% $39,475 $78,950 $52,850
24% $84,200 $168,400 $84,200
32% $160,725 $312,450 $160,700
35% $204,100 $408,200 $204,100
37% $510,300 $612,350 $510,300
Rate Single Filers
10% $0
12% $9,700
22% $39,475
24% $84,200
32% $160,725
35% $204,100
37% $510,300
Rate Married, Filing Jointly
10% $0
12% $19,400
22% $78,950
24% $168,400
32% $312,450
35% $408,200
37% $612,350
Rate Head of Household
10% $0
12% $13,850
22% $52,850
24% $84,200
32% $160,700
35% $204,100
37% $510,300

Source: https://taxfoundation.org/2019-tax-brackets/

For the 2019 tax year, the seven tax brackets and marginal rates remain unchanged. However, the income rates have been adjusted for inflation.

Deductions

A tax deduction is an amount that the IRS allows you to subtract from your Adjusted Gross Income (AGI), which means it reduces your taxable income. There are two ways to claim deductions: standard deductions and itemized deductions. You must choose one or the other and cannot do both.

Standard Deductions:

The standard deduction is a flat-rate reduction in your AGI.

For tax year 2018, the standard deduction amounts are as follows:

Filing Status Standard Deduction
Single $12,000
Married Filing Jointly or Qualifying Widow(er) $24,000
Married Filing Separately $12,000
Head of Household $18,000
There is an additional standard deduction for elderly and blind taxpayers, which is $1,300 for tax year 2018. This amount increases to $1,600 if the taxpayer is also unmarried.

For 2019, the standard deduction amounts will raise $200 for single filers and $400 for joint filers. This will affect your 2020 tax filings.

Itemized Deductions:

Itemizing can allow you to reduce your taxable income by taking advantage of the many individual tax deductions that you might qualify for. Itemized deductions might add up to more than the standard deduction, but tax reform has completely changed the landscape of itemized deductions. Jump to tax law changes for more.

Read More: Itemized vs. Standard Deductions

Alternative Minimum Tax

The 2018 tax law changes didn’t eliminate AMT as was expected, but instead increased the exemption amounts to reduce the number of individuals subject to AMT.

Alternative minimum tax is a mandatory alternative income tax designed for institutions, individuals, and trusts who use exemptions to pay lower income taxes. If you earn more than the AMT exemption, then you must calculate your taxes twice, once for regular income tax, and once for AMT (which eliminates many deductions). Whichever tax bill is larger is the one that is required to be paid. The Tax Cuts and Jobs Act kept the AMT but raised the exemptions and phaseouts.

AMT is highly complex and confusing; most high-earning individuals will want to work with a tax professional to determine if they are subject to AMT.

The 2018 tax law changes didn’t eliminate ATM as was expected, but instead increased the exemption amounts to reduce the number of individuals subject to AMT.

Status 2017 2018-2025
Exemption Phaseout Exemption Phaseout
Single/Head of Household $54,300 $120,700 $70,300 $500,000
Married Filing Jointly $84,500 $160,900 $109,400 $1,000,000
Married Filing Separate $42,250 $80,450 N/A N/A
Status 2017
Exemption Phaseout
Single/Head of Household $54,300 $120,700
Married Filing Jointly $84,500 $160,900
Married Filing Separate $42,250 $80,450
Status 2018-2025
Exemption Phaseout
Single/Head of Household $70,300 $500,000
Married Filing Jointly $109,400 $1,000,000
Married Filing Separate N/A N/A

Know Your Filing Options

1. Work with a tax professional in your area

A certified tax professional will not only help you prepare your taxes, but will also provide guidance on when and how to file, and can help you ensure tax-efficiency going forward.

Read More: Hiring a Tax Professional

2. E-filing

Four electronic filing options for individual taxpayers are listed below.

  • Use IRS Free File or Fillable Forms
    • Use IRS Free File if your adjusted gross income is $66,000 or less.
    • If you are comfortable doing your own taxes, try Free File Fillable Forms.

      Learn More

  • Use a Free Tax Return Preparation Site
    • The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs offer free tax help and e-file for taxpayers who qualify.

      Learn More

  • Use Commercial Software
    • Such as TurboTax, H&R Block, Quicken
    • Commercial tax prep software allows you to prepare and file your taxes.Transmitted through IRS approved electronic channels.
  • Find an Authorized e-file Provider
    • Tax pros accepted by our electronic filing program are authorized IRS e-file providers.
    • They are qualified to prepare, transmit and process e-filed returns.

      Find a Tax Pro Now*Source: IRS

3. File by mail

Click here for a list of important IRS mailing addresses.

How To File For An Extension

Need a little extra time on your taxes this year? Here’s how to file for an extension with the IRS.

If you don’t think you can finish your 1040 tax return by April 15th, there is no reason to panic. You can simply file an extension, which will give you six additional months (until October 15) to file your tax return. Here are some tips to make filing an extension is quick and easy.

Here are some tips to make filing an extension is quick and easy.

Complete IRS Form 4868

To get a six month extension to file your income tax return, all you need to do is complete IRS Form 4868 – Application for Automatic Extension of Time To File U.S. Individual Income Tax Return (you can get a copy here). Note that the name on the form says “Automatic Extension.” You don’t even need to provide a reason – just complete the form. However, you must file the Form 4868 by April 15 or you may be subject to a Late Filing Penalty.

This is an Extension to File, Not an Extension to Pay

While completing and filing Form 4868 will allow you a six month extension to file your tax return, there is no extension for paying any taxes you may owe. When completing Form 4868, you will be asked to estimate your tax liability and indicate the tax payments you have already made. If there is a balance due, you must pay that balance by April 15. If you don’t pay the remaining tax due, or if you underestimate the taxes you owe, you’ll be subject to a Late Payment Penalty (usually ½ of 1% of any tax not paid by April 15). If you overestimate your tax due and overpay, the overpayment will be refunded when you file your tax return. If you expect that you are due a tax refund, then no payment needs to be made when you file your extension.

There is No Increased Audit Risk When Filing an Extension

Some people fear filing an extension, thinking this will put them at additional risk for a tax audit. This is simply not true. The IRS has many programs and flags to identify tax returns for additional scrutiny. An extension is not one of those flags. Filing your tax return on extension puts you at no greater risk for an audit than if you filed before the April 15 deadline.

Read More: 10 IRS Audit Triggers

Don’t Forget Your State

If you need to file a tax return for any of the 43 states (and/or the District of Columbia) that has an income tax, you can also get an extension for your state tax return. But, many states require that you complete a separate extension form with them. And, like the IRS extension, it is only an extension to file, not an extension to pay your taxes. Check your state tax authority’s website for their process.

1099 Forms

These are the most common events the government wants to know about your investment portfolio and assets.

  • Capital gains and losses – e.g. profits or losses made from buying and selling stocks
  • Dividend / investment income – e.g. cash received from stock (dividend) or income received from other types of investments. Dividends and income are taxed differently
  • Interest paid – e.g. home mortgage and student loan interest
  • Distributions – e.g. from retirement, profit sharing and HSA plans
  • Royalties, rents and other non-employee compensation – e.g. rental property income and contracting work
  • Real estate sales – e.g. selling your house

What are 1099 Forms?

Typically, after each calendar year ends, banks, brokers and other institutions generate tax forms that report to the IRS any relevant events that occurred during the prior year. Many of the forms used are known as 1099 tax forms. There are several different variations of the 1099 depending on the event that took place and associated account type. The IRS and account holders should each receive a copy.

Corrected 1099 Forms

We recommend that investors consider filing taxes in mid to late March if they have a taxable account with mutual funds or ETFs. This will minimize the need to refile or amend tax returns for the year.

If you receive a corrected 1099 from your financial institution or account custodian, there is no need to panic! Revised 1099s are quite common and are issued if there is any change or discrepancy in the reporting of gains or dividends from any security in your portfolio. Usually it’s not the custodian who is causing a need for revision. However, they do need to issue corrected 1099s no matter what the difference of the corrected amount (revised 1099s can sometimes be issued over a few cents!)

Since a diversified portfolio often includes several complex investments like mutual funds, your custodian could be aggregating information from hundreds or thousands of securities. If any of these securities issue a correction, then a revised 1099 must be issued.

In many cases, you might not have to take any action if you receive an updated 1099 form (the 1099-DIV form, which deals with dividends, is one of the most commonly revised 1099 forms). However, if the amount is large enough to impact your tax return, then you can file an amended return.

We recommend that investors consider filing taxes in mid to late March if they have a taxable account with mutual funds or ETFs. This will minimize the need to refile or amend tax returns for the year.

Common Investor Tax Forms and Filing Dates

The filing date for all 1099 Forms (excluding 1099-MISC) is February 28th, 2019 if filing by paper, and April 1st, 2019 if filed electronically.

Name Event Details
1099-B Capital gains or losses from trades on publicly traded securities (e.g. stocks and ETFs) The “B” stands for broker or barter exchange. This form includes details such as short-term versus long-term gains or losses, as well as other important transaction information, including your cost basis, date of sale, ticker symbol, quantity sold, gross proceeds, and federal tax withheld
1099-DIV Dividend payments and other distributions This form reports if you received dividend payments in your portfolio last year or received a capital gains distribution on one of your mutual funds. If you held any foreign securities domiciled outside the United States, any foreign taxes you paid are reported on this form. It also reports ordinary dividends separately from qualified dividends, and specifies if you had any state or federal taxes withheld from your distributions.
1099-INT Interest income Banks, savings institutions, and brokerage firms typically generate these forms when you receive interest payments in your accounts. Common account types that receive interest income include checking, savings, money market, CD’s, U.S. savings bonds, and investment accounts holding interest-bearing securities.
1099-MISC The January 31st deadline only applies to Form 1099-MISC with an amount in box 7, Nonemployee Compensation Miscellaneous This form is used to report various types of non-employee compensation. Examples include money earned as an independent contractor, royalty income, prize monies, awards, and rental property income.
1099-OID Original issue discount If you purchased a bond or note for an amount less than face value last year, you could receive this form. It reports when the redemption price or face value of your investment was higher than its issue price. Some examples include income from zero-coupon bonds, T-bills, or peer-to-peer lending.
1099-R Distributions from qualified plans You could receive this form if you had distributions from retirement plans, profit-sharing, annuities, pensions, insurance contracts, and disability payments. You should receive a separate 1099-R for each account and distribution code. If you rolled over an employer-sponsored plan into an IRA, you should also expect to receive Form 5498, which should balance out the distribution reported on your 1099-R.
1099 Consolidated One account with multiple events in one year A 1099 Consolidated takes multiple 1099 forms and compiles them all together into one file. For example, a consolidated 1099 statement could include 1099-DIV, 1099-INT, 1099-B, and a 1099-OID combined in one pdf.
1099-B
Capital gains or losses from trades on publicly traded securities (e.g. stocks and ETFs)
The “B” stands for broker or barter exchange. This form includes details such as short-term versus long-term gains or losses, as well as other important transaction information, including your cost basis, date of sale, ticker symbol, quantity sold, gross proceeds, and federal tax withheld
1099-DIV
Dividend payments and other distributions
This form reports if you received dividend payments in your portfolio last year or received a capital gains distribution on one of your mutual funds. If you held any foreign securities domiciled outside the United States, any foreign taxes you paid are reported on this form. It also reports ordinary dividends separately from qualified dividends, and specifies if you had any state or federal taxes withheld from your distributions.
1099-INT
Interest income
Banks, savings institutions, and brokerage firms typically generate these forms when you receive interest payments in your accounts. Common account types that receive interest income include checking, savings, money market, CD’s, U.S. savings bonds, and investment accounts holding interest-bearing securities.
1099-MISC The January 31st deadline only applies to Form 1099-MISC with an amount in box 7, Nonemployee Compensation
Miscellaneous
This form is used to report various types of non-employee compensation. Examples include money earned as an independent contractor, royalty income, prize monies, awards, and rental property income.
1099-OID
Original issue discount
If you purchased a bond or note for an amount less than face value last year, you could receive this form. It reports when the redemption price or face value of your investment was higher than its issue price. Some examples include income from zero-coupon bonds, T-bills, or peer-to-peer lending.
1099-R
Distributions from qualified plans
You could receive this form if you had distributions from retirement plans, profit-sharing, annuities, pensions, insurance contracts, and disability payments. You should receive a separate 1099-R for each account and distribution code. If you rolled over an employer-sponsored plan into an IRA, you should also expect to receive Form 5498, which should balance out the distribution reported on your 1099-R.
1099 Consolidated
One account with multiple events in one year
A 1099 Consolidated takes multiple 1099 forms and compiles them all together into one file. For example, a consolidated 1099 statement could include 1099-DIV, 1099-INT, 1099-B, and a 1099-OID combined in one pdf.

Tax Law Changes You Need to Know

The tax-filing season that just got underway is the first one under the major tax reform law that was passed in late 2017. This was the biggest change in the U.S. tax code in more than three decades, so you might be wondering how it could affect your taxes this year.

To Itemize or Not to Itemize?

Two of the biggest tax law changes for 2019 that will affect many taxpayers are the doubling of the standard deduction and elimination of the personal exemption. The $4,150 personal exemption has been repealed.

As a result of these changes, fewer taxpayers may decide to itemize deductions. This is because the total amount of itemized deductions may no longer be greater than the standard deduction. If this applies to your situation, the tax preparation process could be easier for you this year if you’ve itemized deductions in the past.

Tax reform also lowered individual tax rates across the board.

Read More: How Will Tax Law Changes Affect Me in 2019?

More Beneficial Tax Law Changes for 2019 Filing

A few other beneficial changes of tax reform include the following:

  • The adjusted gross income (AGI) threshold for deducting medical expenses is lowered from 10% to 7.5% this year. This could benefit you if anyone in your family had major medical expenses last year.
  • The alternative minimum tax (AMT) exemption amount is raised, potentially resulting in you not being subject to the AMT, depending on your AGI and other factors.
  • The Affordable Care Act’s individual mandate requiring taxpayers to buy a qualifying health plan or pay a penalty has been repealed. This will benefit you if you choose not to purchase health insurance for your family.
Deductions Eliminated or Reduced

The flip side of these beneficial changes is that tax reform eliminated or reduced some popular deductions.

The legislation also set a combined limit of $10,000 for deductions of sales and property taxes and state and local taxes, while reducing the size of a mortgage that qualifies for the home mortgage interest deduction from $1 million to $750,000.

Read More: A Summary of Key Tax Reform Changes

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