After 35 days, the longest-ever government shutdown in the United States is over. However, there could still be significant effects on the 2019 tax season, especially as the possibility of another government shutdown looms.
The deadline to file taxes this year is Monday, April 15, 2019, but Maryland residents receive an extra two days to file. While this might seem like plenty of time to get your tax documents in order, thousands of people across the United States will miss the deadline.
A tax collection program that relies on private companies to chase down debts brought in just more than it cost to set up and operate, according to an audit by the Office of the Inspector General. The Internal Revenue Service set up the program based on legislation from 2015 to pursue overdue taxes in Maryland and across the U.S. The expectation of lawmakers was that these companies would net $2.4 billion for the U.S. Treasury by 2025.
Creating the Foreign Account Tax Compliance Act (FATCA) is among a series of steps that the government has taken to close the international tax gap. This gap is the difference between what the IRS takes in each year from overseas filers compared to what it is owed. However, Maryland residents and others who live or travel internationally may face passport restrictions for not paying taxes or filing tax returns in a timely manner.
Many Maryland residents will not be allowed to apply for passports or renew their existing travel documents due to their unpaid taxes. Federal officials are renewing their efforts to enforce a 2015 law passed by Congress that compels the Internal Revenue Service and State Department to revoke or deny passports for individuals with tax debts of at least $51,000.
Many people living in Maryland are struggling with debt from student loans. For those with government loans, options are available that can reduce their monthly payments and provide debt forgiveness after a long period of repayment. However, what many people entering these programs don't realize is that they could face significant tax issues after the debt is forgiven.
Tax season does not always result in federal tax refunds for people in Maryland. A variety of reasons could cause someone to owe taxes at the end of the year and face challenges in coming up with the money for the Internal Revenue Service. According to the IRS, tax penalties hit roughly 10 million people every year. A tax bill cannot be ignored, but people sometimes have options for gaining more time to pay or negotiate a settlement.
Many people living in Maryland experience difficulty paying their federal taxes. While these individuals and couples may make good-faith efforts to work with the IRS, sometimes these efforts fail. The IRS is permitted to contract with private debt collection companies to pursue delinquent taxpayers.
Taxpayers in Maryland are increasingly using e-filing technology to submit their tax returns to the Internal Revenue Service each year. Tax returns must be filed each year in a timely fashion in order to avoid potential penalties. In the past, this simply meant mailing off a paper return before the due date, and the famous "mailbox rule" applied to tax returns filed close to the deadline. Lines at U.S. post offices were a frequent sign as April 15 approached.
Maryland residents may not think much of paying a household worker in cash. However, it may be a mistake to not withhold payroll taxes for those who made more than $2,000 in either 2016 or 2017. While children and parents are exempt from this requirement, others such as maids and gardeners may be subject to the nanny tax. Those who are classified as independent contractors will pay their own taxes at the end of the year.