Georgia residents and others who are getting ready for the 2020 tax year have just received critical information from the IRS. The government agency announced that the standard deduction for single filers is going to be $12,400. For those who are filing jointly with a spouse, the standard deduction will be $24,800. There are deductions available for those who are blind or who are over the age of 65 during a given tax year.
The tax code can be confusing to taxpayers in Georgia and throughout the country. However, it is important to know the difference between fact and fiction when it comes to paying taxes and filing returns in a timely manner. Those who earn money from a side gig will need to pay taxes on that income, but it is their responsibility to make payments on a quarterly basis.
In Georgia and across the United States, taxpayers may want to pay attention to two new Internal Revenue Service (IRS) tax guidelines. Watch for a new checkbox located on Form 1040. This checkbox will inquire whether the taxpayer received, sold, sent, exchanged or acquired virtual currency during 2019. The checkbox is the first item located at the top of Schedule 1. A similar question will appear on Schedule B, Part III. This question, located next to Foreign Accounts and Trusts, asks the taxpayer whether they had any holdings in a financial institution located in another country in 2019.
Georgia taxpayers will have to fill out a slightly longer 1040 form when they file their 2019 taxes, according to the Internal Revenue Service. The agency has posted a draft of the new form, which updates the postcard-sized return that debuted in 2018, on its website.
Georgia residents who are 65 and older may able to make use of Form 1040-SR, which is designed to be easier to read. It is also designed to focus more on retirement income and making older taxpayers aware of potential tax benefits. A draft version of the form was released in early July 2019, and the IRS says that it will be available when it comes time to file 2019 tax returns.
Georgia taxpayers will need to get ready for the new W-4 form that the IRS is rolling out for next year. The government agency says that the goal of the new form is to make sure that taxpayers owe as little as possible at the end of they year. Ideally, neither the government or a taxpayer will owe the other any money at tax time. However, the new form will require taxpayers to provide more information.
Taxpayers in Georgia and anywhere else who don't pay their federal income taxes on time could be subject to IRS collection activities. The first step in the process is to send a letter detailing how much the government thinks is owed. Typically, the balance will include penalties and interest in addition to the principal balance. The next step in the process may be to file a lien, garnish wages or seize other assets to satisfy the debt.
College students who participate in a paid internship in Georgia or any other state may owe federal taxes on their earnings. This could be true even if participation in the internship is required by the school. In some cases, individuals are paid as independent contractors, which means that they will receive a Form 1099 as opposed to a traditional W-2. The difference is important as it determines how much in FICA taxes an individual is required to pay.
Tax time can be particularly challenging for people in Georgia who are dealing with the burden of tax debt. People may find themselves with tax bills that they are unable to pay, and they may not be sure how they can find a way out of the situation. As 2018 opened, there were over 14 million open cases involving tax debts for individuals and businesses, even though the IRS has cut its tax liens filed each year by over 50 percent since 2010. The American economy has grown in the past 10 years, but many people still face significant tax debt.
Georgia residents may need to get familiar with a series of new forms when they complete their tax returns this year. This may apply to those who are self-employed and made more than $400 from such activity. If so, they will need to pay self-employment tax and report it on line 57. However, the actual calculation of that tax takes place on Schedule SE.