RENO, Nev. — In the tax return preparation world, tax filing season (ergo “busy season”) starts Feb. 1 of each year.
To the less informed, January is reserved for folks getting 1099s, W-2s, etc. filed, and while internal accounting staff, bookkeepers and the like were working late nights and weekends to meet the Jan. 31 deadline, most tax planners and preparers were working on their base tan, or trying to get some sleep since the next two and a half months is historically going to be marked with its own set of extended days and weekends.
As a practicing CPA, I thought it would be fruitful to shed some light on the things that changed this year.
A tax preparer's best friend is SALY. SALY (same as last year) is what creates comfort in most taxpayer's worlds. After all, if it was OK last year, it MUST be OK this year. Understanding the differences between what the law is this year versus last year should bridge the gap between expectations and results.
Perhaps the most important change has to do with the seemingly innocuous question at the top of Form 1, Form 1040. Specifically, it asks, “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”
If the only thing you did in 2019 was “hold” virtual currency, you should generally answer “no.” This would generally be the case if your ending unit of virtual currency is the same as the beginning, and there was no “air drops” or “hard forks.”
If you check “yes,” the IRS will be looking for a transaction recognized as a sale. The “sticky-wicket” is you should answer the question “yes” if you acquired crypto-currency (even with no dispositions). In this case, consider adding a statement to the return disclosing your purchases. While not required, it discloses the reason for answering the question “yes.”
Form 1040-SR, U.S. Tax Return for Seniors, has been introduced for 2019. You can use this form if you were born before Jan. 2, 1955. It generally is an abbreviated form for senior citizens. The irony is that it accomplished on two pages what the standard 1040 captures in five pages. If your tax return preparer charges based on the complexity (number of pages) of your tax return, it would be worth a discussion as to why they didn't file on the simplified form if you qualify.
Changes have been made to how Medicaid waiver payments are treated for purposes of the earned income credit. See the instructions for line 18a.
Recent legislation also has extended certain tax benefits that had expired at the end of 2017. These tax benefits include the following:
If you are eligible for one or more of these benefits in 2019, you can claim them on your 2019 return. If you are eligible for one or more of these benefits for tax year 2018, you will need to file an amended return, Form 1040-X, to claim them.
See my last article in the Jan. 27 edition, or go to IRS.gov/Form1040X for more information about amending a tax return.
Please note that this discussion is general in nature. Please consult with a CPA to get answers to your specific fact pattern.
Michael Bosma, CPA, is Principal-in-Charge of the Reno office of CliftonLarsonAllen LLP. He is a regular Voices columnist for the Northern Nevada Busines Weekly. Reach him for comment at mike.bosma@claconnect.com.
-->RENO, Nev. — In the tax return preparation world, tax filing season (ergo “busy season”) starts Feb. 1 of each year.
To the less informed, January is reserved for folks getting 1099s, W-2s, etc. filed, and while internal accounting staff, bookkeepers and the like were working late nights and weekends to meet the Jan. 31 deadline, most tax planners and preparers were working on their base tan, or trying to get some sleep since the next two and a half months is historically going to be marked with its own set of extended days and weekends.
As a practicing CPA, I thought it would be fruitful to shed some light on the things that changed this year.
A tax preparer's best friend is SALY. SALY (same as last year) is what creates comfort in most taxpayer's worlds. After all, if it was OK last year, it MUST be OK this year. Understanding the differences between what the law is this year versus last year should bridge the gap between expectations and results.
Perhaps the most important change has to do with the seemingly innocuous question at the top of Form 1, Form 1040. Specifically, it asks, “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”
If the only thing you did in 2019 was “hold” virtual currency, you should generally answer “no.” This would generally be the case if your ending unit of virtual currency is the same as the beginning, and there was no “air drops” or “hard forks.”
If you check “yes,” the IRS will be looking for a transaction recognized as a sale. The “sticky-wicket” is you should answer the question “yes” if you acquired crypto-currency (even with no dispositions). In this case, consider adding a statement to the return disclosing your purchases. While not required, it discloses the reason for answering the question “yes.”
Form 1040-SR, U.S. Tax Return for Seniors, has been introduced for 2019. You can use this form if you were born before Jan. 2, 1955. It generally is an abbreviated form for senior citizens. The irony is that it accomplished on two pages what the standard 1040 captures in five pages. If your tax return preparer charges based on the complexity (number of pages) of your tax return, it would be worth a discussion as to why they didn't file on the simplified form if you qualify.
Changes have been made to how Medicaid waiver payments are treated for purposes of the earned income credit. See the instructions for line 18a.
Recent legislation also has extended certain tax benefits that had expired at the end of 2017. These tax benefits include the following:
If you are eligible for one or more of these benefits in 2019, you can claim them on your 2019 return. If you are eligible for one or more of these benefits for tax year 2018, you will need to file an amended return, Form 1040-X, to claim them.
See my last article in the Jan. 27 edition, or go to IRS.gov/Form1040X for more information about amending a tax return.
Please note that this discussion is general in nature. Please consult with a CPA to get answers to your specific fact pattern.
Michael Bosma, CPA, is Principal-in-Charge of the Reno office of CliftonLarsonAllen LLP. He is a regular Voices columnist for the Northern Nevada Busines Weekly. Reach him for comment at mike.bosma@claconnect.com.
