IRS Waives Tax Penalty for Farmers and Fishermen

The Internal Revenue Service will waive the estimated tax penalty for any qualifying farmer or fisherman who files their 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.

To be eligible for the waiver, qualifying taxpayers must attach Form 2210-F to their 2018 income tax return. The taxpayer’s name and tax ID number are entered at the top of the form, and the waiver box (Part I, Box A) should be checked. The rest of the form should be left blank.

New Tax Rules Regarding the Child Tax Credit

Credit Amount: the child tax credit has increased from $1,000 to $2,000 per child. As in past years, a taxpayer can claim the credit if all of these apply: 1) the child was younger than 17 at the end of the tax year, 2) the taxpayer claims the child as a dependent, and 3) the child lives with the taxpayer for at least six months of the year.

Credit Refunds: The credit is refundable, now up to $1,400. This means a taxpayer who doesn’t owe any tax before claiming the credit can still receive up to $1,400 as part of their tax refund.

Earned Income Threshold: The minimum income needed to claim the credit has been lowered to $2,500 per family. This means a family must earn at least $2,500 to claim the credit. The upper income limit at which the child tax credit begins to phase out is increased to $200,000, or $400,000 if married filing jointly. This allows more families to qualify for the child tax credit.

Facts About the New Form 1040

There are several changes to the 2018 Form 1040. Here are a few things taxpayers need to know:

● The new Form 1040 is shorter than before. It is about half the size of the old form.

● The 2018 Form 1040 replaces Forms 1040,1040A and 1040EZ with one 2018 Form 1040 that all taxpayers will file. Forms 1040A and 1040EZ are no longer available. Taxpayers who used one of these forms in the past will now file Form 1040.

● In addition to the familiar schedules many taxpayers know (such as Schedule A for itemized deductions and Schedule C for self-employment income), there are six new schedules taxpayers may need to use. The most commonly used lines on the prior year’s Form 1040 are still on the form, while other lines are moved to the new schedules organized by category.

Electronic filers may not notice any changes because the tax return preparation software will automatically use their answers to the tax questions to complete the Form 1040 and any needed schedules.