It is always alarming to receive a notice from the IRS. If you had capital gains activity reported on the 2018 Schedule D Tax Worksheet an error may result in an IRS notice for some taxpayers.
IRS notices are being sent to some taxpayers because the 2018 tax law changes did not get incorporated into the 2018 form used for calculating income taxes when certain capital gains transactions existed.
In May of 2019, the IRS revised the 2018 form and instructions for Schedule D. These changes, made in accordance with TCJA, apply to 2018 returns including those filed prior to the revision date.
Returns prepared prior to 5.15.19 used calculations from the Schedule D instructions in place at the time; these instructions were made obsolete with the 5.15.19 revision.
Taxpayers do not need to file amended returns or call the IRS. Most taxpayers will not be affected by this change.
Notices are being mailed to taxpayers who filed individual returns prior to 5.15.19 and contain certain Schedule D transactions impacted by the change.
The notices indicate that Schedule D was filed with an error in the tax calculation. Most likely, a balance will be due.
Please note that notices may be sent to taxpayers who file jointly with both husband and wife listed on one notice, or as individual notices for each spouse separately.
Please give us a call if you have received a notice regarding the change in Schedule D.