Last Minute Tax Tips

As the end of the tax filing season approaches IRS Spokesman Mark Green “suggests taxpayers to be aware of some helpful tax information during the rush”.

The tax filing season is progressing smoothly. The IRS expects about 35 to 40 percent of the 3.8 million returns from Georgians to be filed during the last two weeks of the filing season.

Georgians are e-filing in record numbers this year. E-filing through home computer has increased 17 percent over last year.

Since April 15th is on a Saturday this year, the tax filing deadline is Monday, April 17th. This gives everyone a few extra days to work on their tax return.

The IRS estimates that over 252,000 Georgians will request an extension this year.

What are some tips for those who wait until the last minute?

If you haven’t filed your tax return yet, I encourage you to e-file. E-filing is fast and accurate. You get confirmation that IRS has received your return. And, you get your refund fast – in about 2 weeks if you have it directly deposited into your bank account.

If you are filing a paper return, use the pre-printed label. It speeds up the processing of your return. If needed, you can make pen and ink changes right on the label.

Double-check all names and social security numbers (SSNs) for yourself, spouse, and dependents. Incorrect or missing SSNs may result in disallowance of dependents, Child Care Credit, or Earned Income Tax Credit and could delay any refund.

Recheck all math entries and amounts pulled from the tax tables or Earned Income Tax Credit tables.

Make sure all W-2s and necessary schedules are attached to your return.

Don't forget to sign the return. For a joint return, both spouses must sign.

If you owe money:
Make checks payable to the "United States Treasury," and include your SSN, the tax year the payment is for (2005), and the type of tax (1040) in the memo section of the check; and
Complete and include Form 1040-V, Payment Voucher, when sending your payment and return to the IRS. This helps ensure that your payment is credited accurately; or
You can charge federal income taxes to an American Express, Discover, MasterCard, or VISA account by contacting one of the two companies authorized by the IRS to process credit card payments. Both companies will take charges by phone or through a web site. Phone numbers and directions are included in your tax package or on the IRS Web site at www.irs.gov.

Have your refund deposited directly into your bank account. It's faster and safer than waiting for a paper check and it is available whether you file a paper return or e-file. We have already seen a 5 percent increase in the number of people using direct deposit this year.

Remember, the deadline for 2002 refunds is fast approaching. If you have not yet filed your 2002 federal income tax return, you must file it by April 17, 2006, in order to get any refund that is due you. The IRS has more than $60 million in refunds for 59,000 Georgians who have not filed their 2002 tax returns – with half receiving a check for $532 or more.

Also, if you wish to amend your 2002 return, it also must be mailed by Monday, April 17th.

Q. What should I do if I can't file by April 17?

If you can’t get your 2005 tax return completed and mailed by April 17, 2006, you can request an extension. Your request for extension must be mailed or e-filed no later than April 17th. New this year, the extension will give you an automatic six additional months (until October 16, 2006) to file your 2005 tax return. Remember, this is an extension of time to file, not pay. You should pay any additional tax you owe with the extension to avoid interest and penalties. There are three ways to request an extension:

You can request an extension by mailing in Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to the Internal Revenue Service. Form 4868 is available on the IRS Web site at www.irs.gov.

You may e-file an extension request using tax preparation software on your own computer or through a tax preparer. You will get an acknowledgment that the IRS has received your request.

Or, if your preliminary calculations indicate you will owe money and you pay all or part of this estimate by using a credit card, you can also get/request an extension to file at the same time. This can be done by phone or over the Internet and you get a confirmation number when you’ve completed the transaction. More information is available in your tax package or on the IRS Web site.

Q: What are my options if I owe money and can't pay?

A: You should file your return and pay as much as you can by April 17 because the late filing penalty is 10 times greater than the late payment penalty. The late filing penalty is 5 percent per month (up to 25 percent) of the tax due. The late payment penalty is ½ of 1 percent per month. Paying as much as you can when you file your return will help reduce interest and penalty charges. The current interest rate is 7 percent.
If you can't pay everything you owe when you file your tax return, you can request to pay the taxes you owe in monthly installments by completing and attaching Form 9465, Installment Agreement Request, to your tax return. List the amount you propose to pay each month. You should receive a response from the IRS within 30 days, but if you filed after March 31, it may take longer for a reply. There is a $43 fee for entering into an installment agreement and interest and penalties will continue to accrue until the balance is paid in full. Check the IRS Web site at HYPERLINK "http://www.irs.gov" www.irs.gov or your tax package for more information.

Q: How do I get forms and publications this close to April 17?

A: There are several ways you can get the forms and publications you need to complete your tax return with “tax day” right around the corner.

Virtually all forms and publications can be downloaded from the IRS Web site at HYPERLINK "http://www.irs.gov" www.irs.gov (under the "Forms and Publications" link).

Many local libraries have forms or a reproducible forms package and most are open evenings and weekends.

The most commonly used forms are available at IRS Taxpayer Assistance Centers. You can call the IRS at 1-800-829-1040 or check the IRS Web site at HYPERLINK "http://www.irs.gov" www.irs.gov for the IRS location nearest you.

Q: I have some questions and need help with my tax return. Where can I go to get assistance?

A: Look in your tax package first. You can find answers to many of your questions. There is even a sample form with numbers referring you to specific pages for each line, along with tax tips that make filing easier.

TeleTax offers recorded tax information on over 150 topics. These topics are listed in your tax package. TeleTax is available 24 hours a day, 7 days a week from a touch-tone phone by calling 1-800-829-4477.

Tax information, forms and publications are available 24 hours a day on the IRS Web site at HYPERLINK "http://www.irs.gov" www.irs.gov. You can also check on the status of your refund or check out the IRS Free File program.

You can call the IRS toll-free assistance line at 1-800-829-1040. Assistance is available Monday through Friday, between 7 a.m. and 10 p.m.

Volunteer Income Tax Assistance (VITA), Tax Counseling for the Elderly (TCE) and AARP sites are available throughout the state to help low or limited income individuals and individuals age 60 or older. These sites are conveniently located at community centers, libraries and senior centers. Call the IRS at 1-800-829-1040 to find the site nearest you. For the location of AARP sites, you can also call AARP at 1-888-227-7669.
Assistance is available at many IRS offices. Call the IRS at 1-800-829-1040 or check the IRS Web site at HYPERLINK "http://www.irs.gov" www.irs.gov to find the office nearest you.

Q: What options do I have if I want to e-file my tax return?

A: IRS Free File – Over 1 million Georgians are eligible to electronically prepare and file their
federal tax returns for free this year using the IRS Free File program. The Free File process is easy and available to those with an AGI of $50,000 or less. Just access the Free File Web page from the IRS Web site at HYPERLINK "http://www.irs.gov" www.irs.gov. Click on “Start Now” and check out the eligibility requirements for each participating software company and select the company whose qualifications/criteria you meet. You’ll then find you’re at the software company’s Web site and ready to go.

Filing through Your PC—If you have a computer and a modem or Internet access, you can e-file from the comfort of your home using tax preparation software. To find out more information about e-filing from your personal computer, go to HYPERLINK "http://www.irs.gov" www.irs.gov and click on e-file.

Filing Through a Tax Professional—Many tax professionals are authorized by the IRS to electronically file returns for their clients. To find a tax professional near you that can e-file your return, go to HYPERLINK "http://www.irs.gov" www.irs.gov, click on the “e-file” link, then the “IRS e-file for Individual Taxpayers” section, then the “Authorized e-file Provider” link.

Are there ways I can electronically pay if I owe tax?

There are two electronic payment options available – electronic funds withdrawal and payment by credit card.

Electronic funds withdrawal is free and taxpayers decide when the tax payment is scheduled to be withdrawn from their bank account. Electronic funds withdrawal is available only to those who e-file. You can file early and, at the same time, schedule the electronic funds withdrawal as late as April 17, 2006.

Both electronic filers and those who file a paper return also have the option of charging federal income taxes to an American Express, Discover, MasterCard or VISA credit card by contacting one of the two companies authorized by the IRS to process credit card payments. Both companies will take charges by phone or through a web site. There is no IRS fee for credit card payments; however, the service providers do charge a convenience fee based on the amount charged. Once you’ve completed the transaction, be sure to write down the confirmation number and the amount of your tax payment. The two companies that process credit card payments are:

Link2Gov Corporation may be reached at 1-888-PAY-1040 (1-888-729-1040) or at HYPERLINK "http://www.PAY1040.com" www.PAY1040.com. Their Customer Service number is 1-888-658-5465.
Official Payments Corporation may be reached at 1-800-2PAY-TAX (1-800-272-9829) or at www.officialpayments.com. Their Customer Service number is 1-877-754-4413.

More information on electronic payment options can be found on the IRS web site at www.irs.gov under the "EFTPS – electronic payment options" link.

Q: How can I check on my refund?

You can check on the status of your refund through the IRS Web site at HYPERLINK "http://www.irs.gov/" www.irs.gov using the interactive “Where’s My Refund?” tool.

“Where’s My Refund?” is quick and easy and it’s available 24 hours a day. Simple on-line instructions guide you through a process that checks on the status of your refund after you provide identifying information from your return (your Social Security number, filing status, and the refund amount claimed from your tax return). You’ll be able to get information about the status of your return including:
Acknowledgement that your return was received and is in processing,
The mailing date or direct deposit date of your refund, and
Notice if your refund has been returned to the IRS because it could not be delivered.

If your refund check was undeliverable, you may be able to update your address while you are on-line.

If your check is lost, you can start the process of tracing the check while you are in the system.

The “Where’s My Refund?” service meets stringent IRS security and privacy certifications. Taxpayers enter identifying information that verifies the person is authorized to access that account.

You can also get information on the status of your refund by calling the IRS Refund Hotline at 1-800-829-1954 or by calling the IRS TeleTax system at 1-800-829-4477. You will need to provide your SSN, filing status and amount of refund.

Q: What should I do to plan for next year?

A: Now that your tax return is complete, be sure to keep a copy of it.

If you had to pay more than you expected or received a large refund, you may want to complete a new Form W-4 withholding statement for your employer. The Withholding Calculator on the IRS Web site simplifies this process. If your income is from self-employment or other sources without withholding, you may wish to recalculate your estimated taxes for the coming year. (Incidentally, the first payment of 2006 estimated taxes is due April 17.)

Start keeping records for 2006 now. If you don't have a record keeping system, now is a good time to start one. It can be as simple as file folders or a shoebox. Just put everything that relates to taxes in one place. You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year. There is no substitute for good records.

Tax records should usually be kept for at least three years. Records/documents reflecting home purchase or sale or stock transactions, for tax years where no return was filed or where a fraudulent return was filed, on bad debts, and on important assets should be kept longer.