Top tax questions and answers
No one knows what taxes are really like for the millions of U.S. taxpayers like H&R Block does. Unlike its competitors, H&R Block helps both DIY taxpayers, as well as those who want a tax professional to prepare their return. And unlike the IRS, H&R Block prepares millions of returns every year. So no one is better able to answer the top tax questions from 2018.
1. Where’s my refund?
Like last year, the IRS was required to hold some refunds until mid-February. Early-season tax filers who claimed the earned income tax credit (EITC) or the additional child tax credit (ACTC) should have received their refunds starting the week of Feb. 27.
The IRS issues more than 90 percent of refunds in less than 21 days, but taxpayers may check the IRS Where’s My Refund tool for an expected tax refund delivery date. Taxpayers will need to enter their:
- Social Security number or individual taxpayer identification number (ITIN),
- filing status and
- exact refund amount shown on their return.
To check the status of their state refund, taxpayers can locate their state’s refund status tool.
“There are many reasons a tax refund could be delayed or reduced. If you are concerned about your refund status, we can help investigate the cause of a refund delay and communicate with the IRS for you,” said Catherine Martin, senior tax research analyst at The Tax Institute at H&R Block.
Learn more about H&R Block’s Tax Audit & Tax Notice Services.
2. Has the Affordable Care Act (ACA) been repealed? Do I need to pay a penalty if I didn’t have insurance?
Due to the new tax reform law, there will no longer be a penalty for being without minimum essential health insurance coverage starting in 2019. Just because the penalty has been removed beginning in 2019, does not mean taxpayers will get a pass on being medically uninsured in 2017 or 2018.
Taxpayers who did not have insurance for all of 2017 may still face a penalty if they do not qualify for an exemption. Likewise, those who do not have insurance for 2018 could face a penalty when they file their 2018 return next year.
“If you didn’t have the minimum essential coverage for all of 2017, a tax professional can help you identify if you qualify for any number of exemptions,” Martin said. “You will also want to see if you qualify for a special enrollment period for 2018 to avoid the same penalties.”
3. Why do I have to pay taxes or file a tax return in more than one state?
Taxpayers who reside in one state and work in another may have their income taxed in both states and may need to file two state returns. This is also the case for taxpayers who move during the year – they may be a resident, part-year resident or nonresident in more than one state. In some cases, it is possible for a taxpayer to be a resident of more than one state. Many states will give a tax credit for taxes paid to another state, so it is important to prepare state tax returns in the right order to maximize the tax benefit.
4. Who can I claim as a dependent? What benefits go along with claiming a dependent?
Determining who makes up a “tax family” can be very complex. The more complex the family situation, the more complex the tax situation.
“In some cases, one couple may be eligible to claim a grandchild as a qualifying child while another taxpayer is also eligible to claim the same child as a qualifying child,” Martin said. “They can’t both claim the same child, so not only do you have to understand who is eligible to claim a dependent, but you’ll need to understand whether the taxpayers can choose who claims the child and if so, which would result in the best overall tax outcome.”
Taxpayers who support qualifying relatives – including their own parents, grandchildren, stepchildren and more – could be able to get valuable tax benefits associated with dependents. But while claiming a qualifying relative as a dependent in 2017 could mean a $4,050 tax exemption, it does not come with other valuable benefits like the EITC or child tax credit (CTC).
If, however, a taxpayer can claim a qualifying child, they may also qualify for the added benefits of the EITC or CTC.
5. Do I need to update my tax withholding to account for the tax reform changes?
Although 2018 tax withholding tables have been updated for the new tax rates, taxpayers might still want to update their W-4 to account for tax reform. Take-home pay is just one piece of the financial picture; the other major piece is their tax refund or balance due. Changes to paychecks might mean some taxpayers get a smaller refund for 2018 even though their tax liability has decreased while others might get a much larger refund but they would prefer to see it in their paychecks.
Taxpayers can use a tax calculator to determine how much their tax liability could change in 2018 and then determine if the paycheck changes are correct for their desired outcome.
For more tax help and taxpayer questions and answers, visit H&R Block, use Ask a Tax Advisor inside H&R Block DIY products (live, free with paid products, unlimited chat with a tax expert weekdays from 10 a.m. to 10 p.m. CT, and on weekends from 9 a.m. to 5 p.m. CT) or call 1-800-HRBLOCK to schedule a tax appointment.