tax-refund-check

IRS Holding $164.6 Million in Undelivered Tax Refund Checks

Missing Your Tax Refund?

The Internal Revenue Service is looking to return $164.6 million in undelivered tax refund checks. A total of 111,893 taxpayers are due one or more refund checks that could not be delivered because of mailing address errors.

“We want to make sure taxpayers get the money owed to them,” said IRS Commissioner Doug Shulman. “If you think you are missing a refund, the sooner you update your address information, the quicker you can get your money.”

A taxpayer only needs to update his or her address once for the IRS to send out all checks due. Undelivered refund checks average $1,471 this year, compared to $1,148 last year. Some taxpayers are due more than one check.

The average dollar amount for returned refunds rose by just over 28 percent this year, possibly due to recent changes in tax law which introduced new credits or expanded existing tax credits, such as the Earned Income Tax Credit.

 

IRS Holding $164.6 Million in Undelivered Tax Refund Checks

If a refund check is returned to the IRS as undelivered, taxpayers can generally update their addresses with the “ Where’s my refund?” tool. The tool also enables taxpayers to check the status of their refunds. A taxpayer must submit his or her Social Security number, filing status and amount of refund shown on their 2009 return. The tool will provide the status of their refund and, in some cases, instructions on how to resolve delivery problems.

“If you think you are missing a refund, the sooner you update your address information, the quicker you can get your money.”

Taxpayers checking on a refund over the phone will receive instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.

While only a small percentage of checks mailed out by the IRS are returned as undelivered, taxpayers can put an end to lost, stolen or undelivered checks by choosing direct deposit when they file either paper or electronic returns. Taxpayers can receive refunds directly into their bank, split a tax refund into two or three financial accounts or even buy a savings bond.

The IRS also recommends that taxpayers file their tax returns electronically, because e-file eliminates the risk of lost paper returns. E-file also reduces errors on tax returns and speeds up refunds. E-file combined with direct deposit is the best option for taxpayers; it’s easy, fast and safe.

The public should be aware that the IRS does not contact taxpayers by e-mail to alert them of pending refunds and that such messages are common identity theft scams. The agency urges taxpayers not to release any personal information, reply, open any attachments or click on any links to avoid malicious code that will infect their computers. The best way for an individual to verify if she or he has a pending refund is by using the “ Where’s my refund?” tool.

identity theft

Nine Things You Should Know about Tax Penalties

The tax filing deadline is approaching. If you don’t file your return and pay your tax by the due date you may have to pay a penalty.

 

Nine Things You Should Know about Tax Penalties

Here are nine things you should know about the two different penalties you may face if you do not pay or file your taxes on time.

  1. If you do not file by the deadline, you might face a failure-to-file penalty.
  2. If you do not pay by the due date, you could face a failure-to-pay penalty.
  3. The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return and explore other payment options in the meantime.
  4. The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.
  5. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
  6. You will have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.
  7. If you filed an extension and you paid at least 90 percent of your actual tax liability by the due date, you will not be faced with a failure-to-pay penalty if the remaining balance is paid by the extended due date.
  8. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.
  9. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.

Link: Avoiding Penalties and the Tax Gap

EITC Awareness Day

An expanded Earned Income Tax Credit (EITC) means larger families will qualify for a larger credit, offering greater relief for people who struggled through difficult financial times last year, the Internal Revenue Service said today.

The IRS and the Treasury Department marked EITC Awareness Day as their partners nationwide worked to highlight the availability of this important tax credit. EITC, which is in its thirty-fifth year, is one of the federal government’s largest benefit programs for working families and individuals. Last year, nearly 24 million people received $50 Billion in benefits. The average credit was more than $2,000.

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“As part of the economic recovery efforts, there have been important changes to expand EITC to benefit taxpayers,” said IRS Commissioner Doug Shulman. “Today, more than ever, hard-working individuals and families can use a little extra help. EITC can make the lives of working people a little easier.”

 

EITC Awareness Day

Eligibility for EITC depends on earned income and family size, among other tests. However, single people and childless workers also are eligible, although for smaller amounts. For tax years 2009 and 2010, the American Recovery and Reinvestment Act created a new category for families with three or more children and expanded the maximum benefit for this category.

To qualify for the EITC, earned income and adjusted gross income (AGI) for individuals must each be less than:

  • $43,279 ($48,279 married filing jointly) with three or more qualifying children
  • $40,295 ($45,295 married filing jointly) with two qualifying children
  • $35,463 ($40,463 married filing jointly) with one qualifying child
  • $13,440 ($18,440 married filing jointly) with no qualifying children

The maximum credit for tax year 2009 is:

  • $5,657 with three or more qualifying children
  • $5,028 with two qualifying children
  • $3,043 with one qualifying child
  • $457 with no qualifying children

The maximum amount of investment income is $3,100 for tax year 2009. For families, there are also certain requirements for child residency and relationship that must be met. Additional eligibility information is available in FS-2010-11 and on the Web at IRS.gov/EITC.

Another new provision adds to the definition of a “qualifying child:” The child must be younger than the person claiming the child unless the child is totally and permanently disabled any time during the year. The child cannot have filed a joint return other than to claim a refund. Also new for 2009, if a qualifying child can be claimed by either a parent or another person, the other person must have an AGI higher than the parent in order to claim the child for EITC purposes.

Historically, one in four eligible taxpayers fails to claim the EITC, which is why the IRS and its free tax preparation partners host an annual EITC Awareness Day. This year, there are 68 news conferences being held around the country. Community coalitions and IRS partners nationwide also are also issuing 128 news releases, writing letters to the editor and using social media tools to spread the word about EITC.

Typically, people who fail to claim the EITC include workers without qualifying children, people whose earned income falls below the threshold required to file a tax return, farmers, rural residents, people with disabilities and nontraditional families such as grandparents raising grandchildren. People must file a tax return to claim the EITC.

EITC-eligible taxpayers also can seek assistance at the 400 IRS Taxpayer Assistance Centers nationwide. To assist EITC taxpayers, 167 IRS assistance centers will offer Saturday service on Jan. 30, Feb. 6 and Feb. 20.

There is an online EITC Assistant also available on IRS.gov which can help taxpayers and tax preparers determine eligibility.

More than 65 percent of EIC returns are prepared by a third party. The IRS urges taxpayers to choose a reputable tax preparer to avoid problems that come with an inaccurate tax return. The agency also urges tax preparers to follow due diligence requirements when preparing an EIC tax return.

Filing Season Opens on Time Except for Certain…

Filing Season Opens on Time Except for Certain Taxpayers Potentially Affected by AMT Patch

WASHINGTON — The Internal Revenue Service announced today that the upcoming tax season is expected to start on time for everyone except certain taxpayers potentially affected by late enactment of the Alternative Minimum Tax “patch.”

Following extensive work in recent weeks, the IRS expects to be able to begin processing returns for the vast majority of taxpayers in mid-January. However, as many as 13.5 million taxpayers using five forms related to the Alternative Minimum Tax (AMT) legislation will have to wait to file tax returns until the IRS completes the reprogramming of its systems for the new law.

The IRS has targeted Feb. 11, as the potential starting date for taxpayers to begin submitting the five AMT-related returns affected by the legislation. The February date allows the IRS enough time to update and test its systems to accommodate the AMT changes without major disruptions to other operations related to the tax season. As the IRS has said previously, it will take approximately seven weeks after the AMT patch was approved to update IRS processing systems completely.

Filing Season Opens on Time Except for Certain…

Although as many as 13.5 million taxpayers will not be able to file their returns until Feb. 11, the effect of the delay may be lessened by the fact that under previous filing patterns only between 3 million to 4 million taxpayers file returns with the five affected forms during these early weeks in the filing season.

“We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund,” said Linda Stiff, Acting IRS Commissioner. “We’ve taken extraordinary steps to figure out a way that we can start the filing season on time for most taxpayers, including some using AMT-related forms. Our goal has always been to make sure we can accurately process tax returns while getting refunds to taxpayers as quickly as possible.”

The February delay caused by the AMT patch will affect taxpayers using these five forms:

  • Form 8863, Education Credits
  • Form 5695, Residential Energy Credits
  • Form 1040A’s Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers
  • Form 8396, Mortgage Interest Credit
  • Form 8859, District of Columbia First-Time Homebuyer Credit

While these five forms require significant additional reprogramming due to the AMT patch, the IRS has been able to reprogram its systems to begin processing seven other AMT-related forms, including Form 6251, Alternative Minimum Tax – Individuals. Taxpayers filing these seven forms should not experience delays in filing, and the IRS expects to begin processing those returns starting on Jan. 14.

Electronic returns involving those five forms will not be accepted until systems are updated in February; similarly, paper filers should wait to file as well. All other e-file and paper returns will be accepted starting in January. The IRS urges affected taxpayers to file electronically in order to reduce wait times for their refunds. E-file with direct deposit gets refunds in as little as 10 days, while paper returns take four to six weeks.

Efile is a great option for everyone, especially if they are affected by the AMT,” said Richard Spires, IRS Deputy Commissioner for Operations Support. “Filing electronically will get people their refunds faster, and e-file greatly reduces the chances for making an error on the AMT or other tax issues.”

In addition to filing electronically, the IRS urges taxpayers to take simple steps to avoid problems:

Taxpayers filing electronically should make sure to update their tax software in order to get the latest AMT updates.

Taxpayers with $54,000 or less in Adjusted Gross Income can use Free File to electronically file their returns for free. Free File will only be available by visiting the official IRS web site at IRS.gov. In all, 90 million taxpayers qualify for this free service.

Taxpayers who use tax software to print out paper copies of tax forms should make sure they update their software before printing out forms. Taxpayers using paper forms can also visit IRS.gov to get updated copies of AMT forms.

The IRS has created a special section on IRS.gov to provide taxpayers with additional information and copies of updated forms affected by the AMT. In recent days, the IRS has posted updated copies of all forms affected by the late enactment of the AMT patch by Congress.

The IRS also reminds taxpayers that printed tax packages, which will begin arriving in the mail around New Year’s, went to the printer in November before the AMT changes were enacted. The packages reflect the law in effect at the time of printing. The tax packages include cautionary language to taxpayers that late legislation was pending.

The IRS is also working closely with tax professionals and the tax preparation software community to make sure they can help taxpayers with all of the latest developments on the enactment of the AMT patch and other tax changes.

“The IRS is going to continue to do everything it can to make this a fully successful filing season for the nation’s taxpayers,” Stiff said. “We will continue to work to keep taxpayers up to date and make this situation as easy as possible for everyone.”

Some Tax Refunds To Be Delayed

Over 3 million refunds will be delayed until february due to congress’ late fix to the AMT bill, according to the IRS late thursday.

We regret the inconvenience the delay will mean for million of early tax filers, especially those expecting a refund,” acting IRS Commissioner Linda Stiff said.

Will my refund be delayed?

The majority of tax returns will not be affected by this delay. If you didn’t have to pay the AMT last year then you probably won’t have to this year, unless your financial situation has changed.

If you are affected by this, we can help you. Just file your taxes as usual with FileYourTaxesnow.com and we will walk you through the process. Going to a brick and mortar tax preparer won’t speed this process up, all those effected by the AMT have to wait, no matter how the forms are filed. Efile is still the fastest way to file your taxes.

Some Tax Refunds To Be Delayed

If you efile taxes online then you are using the best way to file your taxes.

The five forms affected by the delay are:

  • Form 8863, Education Credits.
  • Form 5695, Residential Energy Credits.
  • Form 1040A’s Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers.
  • Form 8396, Mortgage Interest Credit and
  • Form 8859, District of Columbia First-Time Homebuyer Credit.

Any taxpayer using those tax forms will have to wait until February to file their taxes, the IRS said. The IRS will begin processing those forms on Feb. 11, and the first tax refunds for those people who efile taxes online will start going out 10 to 14 days later and those who file with paper tax forms can expect a wait of as long as six weeks.

Tax refunds face a delay

WASHINGTON – President Bush on Monday pushed Congress to pass a one-year fix to the alternative minimum tax, which threatens to hit 23 million federal tax filers, warning that failure to do so could delay tax refunds next year.

The alternative minimum tax, or AMT, is calculated alongside the income tax, with the taxpayer paying the higher of the two calculations.

The AMT was passed in 1969 in a bid to close tax shelters for filers with incomes above $200,000, the equivalent of $1.2 million today. But it wasn’t indexed to rise with inflation, so what was a fortune then is upper-middle income today in expensive parts of the nation.

Congress typically freezes the number of AMT payers at 4 million by passing annual legislation to “patch” the AMT. Absent the fix, about 70 percent of tax filers with incomes between $75,000 and $100,000 could face the AMT.

But “patching” the AMT deprives the treasury of about $50 billion that the AMT would otherwise raise, and that complicates Congress’ effort to reduce budget deficits.

 

Tax refunds face a delay

The Democrats running Congress are feuding over the AMT patch. The House wants to offset the lost AMT revenue with taxes on private equity firms and other businesses. But Senate Democrats favor passing a fix that wouldn’t offset the lost revenue and thus would add $50 billion to the federal deficit.

Bush warned Monday that “the longer they delay, the more likely it is that there’s $75 billion of refund checks that will be late” in arriving. That’s because tax forms can’t be printed and prepared until Congress finishes changing the tax law. The Internal Revenue Service won’t be able to process the refunds of Americans who file mortgage interest credits or any one of the 11 forms and deductions used in calculating the AMT.

Q: Why are $75 billion in refund checks at stake?

A: The IRS says it needs up to seven weeks from the passage of any AMT fix to finish changing electronic and paper tax forms. Bush’s numbers imply that the tax filing season, which normally begins on Jan. 13, wouldn’t start before Feb. 18.

Q: Will Congress pass a fix this year?

A: There’s no guarantee, but House and Senate leaders pledge to do so before they recess this weekend for the holidays.

Q: If they succeed, when will the tax season begin?

A: Seven weeks from the end of this week would be the second week in February. That would be a four-week delay from the scheduled Jan. 13 start of tax filing. But Democrats insist that by law, companies have until Jan. 31 to send employees their W-2 forms. So technically, they say, the delay is really only about two weeks.

Q: Will the IRS extend the April 15 deadline to file taxes because of the AMT delay?

A: Right now, there’s no discussion of that. The IRS is ramping up computer systems and manpower to make up for the delay in its ability to process tax filings. The agency historically gets refunds to electronic filers more quickly than to paper filers.

Q: Who gets hurt by the delay?

A: The IRA Oversight Board estimated in late November that if tax filing season began on Feb. 4, it would result in delays for 15.5 million tax refunds out of about 130 million tax filings. Almost 12 percent of all tax filers could see their refunds delayed, totaling about $39 billion.

Q: Will electronic filers be spared delays?

A: No. The IRS said that by last Feb. 16, it had received 38 million tax returns, and almost 32 million were owed refunds. About 80 percent of these were filed electronically. That suggests that electronic filers will be delayed in greater numbers than paper filers.

Q: Which 12 forms are affected by the AMT delay?

A: According to the IRS Oversight Board of the House Ways and Means Committee, they are Form 6251 – AMT form; Form 1040, Schedule R – credit for the elderly or disabled; Form 1040-A, Schedule 2 – child and dependent care credit; Form 1116 – Foreign Tax Credit; Form 2441 – Child and Dependent Care Credit; Form 5695 – Residential Energy Credits; Form 8396 – Mortgage Interest Credit; Form 8839 – Qualified Adoption Expenses; Form 8859 – District of Columbia’s First-Time Homebuyer Credit; Form 8863 – Education Credits; Form 8880 – Credit for Qualified Retirement Savings Contributions; Form 8801 – Credit for Prior Year AMT.

Source: The Sacromento Bee
About the writer:
Call Kevin G. Hall, McClatchy Washington Bureau, (202) 383-6038.

How to efile taxes online

How to efile taxes online?

Step 1 – Get all your tax information together! – You’ll save time and won’t have to stop in the middle of preparing your current year tax return to find a missing document.

Here is what you will need to eFile a Tax Return Online with the IRS using online software to prepare taxes:

  • Social Security numbers for yourself, your spouse, and any dependents.
  • Forms W-2 from all employers are required for yourself and your spouse.
  • Forms 1099 for Dividends, Retirement, or other income, or any Forms 1099 with Income Tax Withholding.
  • Receipts for expenses for Itemized Deductions (Schedule A).
  • Receipts and records for other income or expenses.
  • Bank Account numbers (for a fast refund, or to pay electronically).
  • Prior year Adjusted Gross Income amount or prior year PIN if using a Self-Select PIN as your signature.
  • Complete information on what records you need, and how long to keep your records.

Step 2 – Choose the method of e-filing that works for you:

  • Tax Professional
  • Personal Computer

Step 3 – e-file it!

Paid Preparer – If using a Tax Preparer, be sure to take all your information with you, and don’t forget to ask for IRS e-file!
Personal Computer – Those filing taxes online, just answer the simple questions in our tax preparation software here at File Your Taxes Now, and the software will do the rest for you. For faster refunds, or to pay when YOU want to, have your bank account number handy.

 

Common Features of Software and Online Products that Allow for eFile:

  • Easy-to-understand online interview
  • No income restrictions
  • Supports every filing status
  • Selects the right federal income tax form for you: 1040EZ, 1040A, 1040
  • Calculates capital gain distributions
  • Claim tax credits
  • Claim deductions for IRA contributions, student loan interest, school tuition and fees, etc.
  • Claim itemized deductions
  • Detects and calculates Child Tax Credit
  • Detects and calculates Earned Income Credit (EIC)
  • Report self-employment income
  • Report small business income
  • Report income from sale of a property
  • Error and omission checking (100% accuracy guaranteed)
  • Fast direct bank refund deposit (requires bank account)
  • Pay later – deduct fee from refund (small fee applies)
  • efile for an extension by April 15, 2015
  • Print your completed and IRS accepted return

There is no need for you to select a tax form; it’s all done by the efile.com online tax preparation software. If you need a tax form that is not currently accepted online by the IRS, you can still complete and efile your federal tax return.  Relax. You’re done. Now SHARE – tell a family member or friend IRS e-file is the smart way to electronically file their federal and state income tax returns!