The U.S. Internal Revenue Service is closed, thanks to the government shutdown, but your taxes are still due on April 15, and that is why individuals need to proceed through tax season as if nothing is amiss, experts say.
The opening day of e-filing traditionally occurs during the third week in January. This year, however, there is still a lot of unfinished business because of the Tax Cuts and Jobs Act of 2017.
One of the most complex changes in the legislation is how to calculate income for self-employed individuals or those with partnerships. Filers need to figure out something called qualified business income and run an algorithm for a new 20 percent deduction on this income, which has a lot of phase-outs and special qualifications.
It is “way more complicated than first blush would make it seem,” said New Jersey tax preparer David Tolleth.
When Tolleth looks at 2018 forms in his professional software, they are all still marked draft, including the main 1040 form. In prior years plagued by filing delays, Tolleth prepared returns and then sent them once the system was online.
“I’m hoping that will happen this year, but I don’t know,” he said.
Jake Johnstun, an enrolled agent tax preparer from Ogden, Utah, is not trusting his tax software, especially when it comes to qualified business income. Instead, he built spreadsheets with different variables and has been running numbers for a month and a half.
Tax accountants say they get busy signals when they try to fax the Internal Revenue Service. Major software companies, meanwhile, are mostly just pinging electronic servers as they test their 2018 software updates. The IRS is not answering questions from professionals or from individuals, other than what is already publicly available on its website.
Even though Jackson Hewitt Tax Service is not on its usual schedule of speaking with the IRS daily, chief tax officer Mark Steber does not expect chaos.
TurboTax, the tax software service, said it is fully up to date and ready for taxpayers to start working on their returns as of Jan. 4.
If e-filings are delayed, some early filers may start to worry about their refunds. The IRS will accept tax payments during a shutdown and will charge penalties and fees on money past due, but it will not dole out refunds.