Tax Tips For Last Minute Filers

If you’re trying to beat the tax deadline, there are several options for last-minute help:

• Receive a six-month extension of time to file using Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
• Payment options are available to taxpayers having trouble paying their tax bill.
• Download forms and publications at IRS.gov.

Filing an extension will give you extra time to get the paperwork to the IRS and avoids the late-filing penalty, but it does not extend the time you have to pay any tax due. You must estimate your tax liability when you apply for an extension.

You will owe interest on any amounts not paid by the April deadline, and you also will be charged a penalty for late payment unless at least 90 percent of your tax liability is paid by the regular due date of your tax return.

You can also e-file an extension request using tax preparation software on your own computer or by going to a tax preparer.

If your return is completed but you are unable to pay the tax due, do not request an extension. File your return on time and pay as much as you can. The IRS will send you a bill or notice for the balance due and will charge interest and penalties only on the unpaid balance.

If you cannot pay the full amount due with your return, you can ask to make monthly installment payments for the full or a partial amount. You can apply for an IRS installment agreement using our Web-based Online Payment Agreement application on IRS.gov. The Web-based application allows eligible taxpayers or their authorized representatives to self-qualify, apply for, and receive immediate notification of approval. You can also request an installment agreement by submitting a completed Form 9465, Installment Agreement Request, either when you file the return or when you later get a bill from the IRS.

For more information regarding extensions of time to file or installment agreements, including options for requesting an installment agreement online, visit the IRS Web site at IRS.gov and click on 1040 Central.

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

• Form 4868, Application for Extension of Time to File U.S. Individual Income Tax Return (PDF 76K)
• Form 9465, Installment Agreement Request (PDF 100K)

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Your Federal Tax Return And Filing Methods

Once you complete your 2007 federal tax return, you can either file it electronically or mail it to the IRS.

More than one-half of all taxpayers file electronically because they know that IRS e-file provides a fast, easy, accurate, secure and convenient way to file. Taxpayers who file electronically receive an acknowledgement that their return has been received and accepted for processing.

Electronic options include:

• Computer filing using an authorized IRS e-file tax professional
• Using your personal computer to file
• Free File is available at IRS.gov for many taxpayers as an option for filing their returns with no charge

If you choose to mail your return, you will find directions on where to send it on the back cover of your instruction booklet.

When mailing your return, whether enclosing a payment or not, use the envelope and the appropriate mailing label that came with your tax instruction booklet. If you moved during the year, check the tax package to find the mailing address of the appropriate IRS Center. The appropriate address depends on where you live and whether or not you are enclosing a check or money order. Checks or money orders should be payable to the “United States Treasury.”

For more information on where to file your tax return, check out the 1040 Central page on the IRS Web site at IRS.gov. Use the 1040 Central page as your one-stop guide to filing your 2007 federal income tax return.

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

• 1040 Central
• Where to File
• E-file for Individual Taxpayers

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Tips For Last Minute Tax Filers

With the tax filing deadline close at hand, the IRS offers some tips for those still working on their paper tax forms:

• Consider filing electronically instead of using paper tax forms
• Put all required Social Security numbers on the return
• Double-check your figures
• Sign your form
• Attach all required schedules
• Send your return or request an extension by the April filing deadline

Choosing to e-file your tax return instead of preparing a paper tax form is the best step you can take to ensure that your return is accurate and complete.

When you file a paper return, the numbers to check most carefully on the tax return are the identification numbers — usually Social Security numbers — for each person listed. This includes the taxpayer, spouse, dependents and persons listed in relation to claims for the Child and Dependent Care Credit or Earned Income Tax Credit. Missing, incorrect or illegible Social Security Numbers can delay or reduce a tax refund.

Taxpayers filing paper returns should also double-check that they have correctly figured the refund or balance due and have used the right figure from the tax table.

Taxpayers must sign and date their returns. Both spouses must sign a joint return, even if only one had income. Anyone paid to prepare a return must also sign it.

People sending a payment should make the check out to “United States Treasury” and should enclose it with, but not attach it to the tax return or the Form 1040-V, Payment Voucher, if used. The check should include the taxpayer’s Social Security number, daytime phone number, the tax year and the type of form filed.

By the April due date, taxpayers should either file a return or request an extension of time to file. Remember, the extension of time to file is not an extension of time to pay.

Forms and publications and helpful information on a variety of tax subjects are available around the clock on the IRS Web site at IRS.gov.

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

• Form 9465, Installment Agreement Request (PDF 100K)
• Form 1040-V, Payment Voucher (PDF 47K)
• Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return (PDF 50K)
• Official Payments Corporation
• Link2Gov

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Retirees, Veterans and Economic Stimulus Payments

IRS Sets March 29 as “Super Saturday” to Help Retirees, Veterans and Low-Income Workers Receive Economic Stimulus Payments

WASHINGTON — The Internal Revenue Service and scores of its partners nationwide will open hundreds of locations on Super Saturday, March 29, in an effort to reach those Americans who are eligible for the economic stimulus payment but who normally are not required to file an income tax return.

Approximately 320 IRS offices will be open on Super Saturday to prepare the simple Form 1040A for people who are filing a return solely to receive their stimulus payment. IRS partners such as AARP, United Way of America and dozens of others also are making special efforts on Super Saturday to reach out to those who normally are not required to file a tax return.

“We don’t want any Americans to miss out on their economic stimulus payment. For millions of Americans, filing a tax return is not routine. Their income is either too low or not taxable. But this year, filing a 2007 tax return is the only way to receive an economic stimulus payment. Super Saturday is one way the IRS and its partners are working to ensure everyone eligible receives a stimulus payment,” said IRS Commissioner Doug Shulman.

Super Saturday, part of an extensive outreach effort by the IRS, is a one-day event for which Americans can plan in advance. It also highlights the need for all taxpayers to file as soon as possible to avoid the April 15 rush.

Millions of Americans who do not pay federal income taxes may be eligible for a $300 payment ($600 for married couples) if they have at least $3,000 in qualifying income. Qualifying income is defined as any combination of earned income such as wages, nontaxable combat pay and certain benefits from Social Security, Veterans Affairs and Railroad Retirement. Many households also will be eligible for an additional $300 for each qualifying child younger than 17.

The IRS this week is mailing 20.5 million Social Security and Veterans Affairs recipients a Package 1040A-3 that contains all the information they need to file a return immediately. Railroad Retirement recipients, low-income individuals and military personnel with nontaxable combat pay also can use the package if they need to file solely to receive the payment.

The 320 IRS offices are located in all 50 states and the District of Columbia. Operating hours will be 9 a.m. to 3 p.m., although some may be open longer. IRS employees will help prepare the Form 1040A returns for low-income workers, retirees, disabled veterans and others. IRS field assistance personnel also will visit nursing homes and similar locations to prepare returns.

A list of IRS offices and partner sites providing assistance on Super Saturday is available at www.irs.gov or by calling the IRS Hotline, 1-800-906-9887, for free assistance locations. If taxpayers have economic stimulus questions on March 29, they can call 1-866-234-2942. These phone services are available on March 29 between 9 a.m. and 3 p.m. local time. (Alaska and Hawaii service is based on Pacific Time Zone.)

IRS partners are actively involved in reaching out to these people to help them receive their payments. Many are using innovative techniques to ensure eligible recipients who normally are not required to file a tax return receive the payment they are due. Here is just a brief sampling of partner activities and the complete list is still evolving:

• Sweetwater, Fla.: Miami-Dade County Mayor Carlos Alvarez will conduct a press conference at City of Sweetwater's Jorge Mas Canosa Youth Center free tax preparation site staffed by Florida International University students.
  • Baltimore, Md.: Baltimore Commission on Disability will help prepare returns for people with disabilities and others;
• Houston, Texas: Ripley Neighborhood Center will prepare returns for Social Security recipients and veterans;
• Manning, S.C.: Antioch Baptist Church will host a tax preparation day for Form 1040A filers;
• Boston, Mass.: Mayor Thomas Menino will open 10 locations throughout the city to prepare Form 1040A returns;
• Aurora, Col.: IRS partners printed Economic Stimulus Payment information in Vietnamese and will be available at two locations to assist the Vietnamese community;
• Fresno, Calif.: Hispanic Internal Revenue Employees (HIRE) chapter members have volunteered to prepare returns at the Fresno Veteran’s Hospital and the Aging Adult Center.

Starting in May, the IRS will issue economic stimulus payments of up to $600 ($1,200 for married couples) plus additional payments of $300 for each for qualifying child. Most Americans don’t need to do anything more than file their tax returns as they normally do. The maximum payments will begin to phase out at $75,000 in adjusted gross income ($150,000 for married couples).

The IRS encourages everyone who is required to file a tax return to do so prior to the April 15 deadline to enable the agency to process the return and to calculate stimulus payment eligibility and amounts. Taxpayers who already have filed a tax return can calculate their potential payment amounts by visiting www.irs.gov.

The IRS reminds taxpayers that they can get their stimulus payments faster by using direct deposit when they file their tax return.

In addition, the IRS urges taxpayers to file electronically. For people who normally are not required to file a tax return, the IRS and the Free File Alliance have a special program set up to allow for free electronic filing. For those with computer access, IRS Free File –Economic Stimulus Payment is available at IRS.gov.

Also, people should be wary of unsolicited e-mail or telephone calls from anyone claiming to be from the IRS. Don't click on any links. Instead, forward the email to phishing@irs.gov, and then delete it. Use the same email address to report unsolicited telephone calls. The only official IRS Web site is located at www.irs.gov.

Related Items:

• Super Saturday Locations for March 29
• Economic Stimulus Payment Information Center

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$1.2 Billion For For 2004 Tax Returns

IRS Has $1.2 Billion for People Who Have Not Filed a 2004 Tax Return

WASHINGTON — Unclaimed refunds totaling approximately $1.2 billion are awaiting about 1.3 million people who failed to file a federal income tax return for 2004, the Internal Revenue Service announced today. However, to collect the money, a return for 2004 must be filed with an IRS office no later than Tuesday, April 15, 2008.

Those due a refund who did not file a 2004 tax return could collect even more money by also filing a 2007 tax return to claim the economic stimulus payment. To receive a payment, taxpayers must have a valid Social Security number, $3,000 of qualifying income and file a 2007 federal tax return. Millions of retirees, disabled veterans and low-wage workers who usually are exempt from filing a tax return must do so this year in order to receive the stimulus payment. Eligible people will receive up to $600 ($1,200 for married couples), and parents will receive an additional $300 for each eligible child younger than 17.

The IRS estimates that half of those who could claim refunds for tax year 2004 would receive more than $552. In some cases, individuals had taxes withheld from their wages, or made payments against their taxes out of self-employed earnings, but had too little income to require filing a tax return. Some taxpayers may also be eligible for the refundable Earned Income Tax Credit.

In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury. For 2004 returns, the window closes on April 15, 2008. The law requires that the return be properly addressed, postmarked and mailed by that date. There is no penalty assessed by the IRS for filing a late return qualifying for a refund.

“Time is getting short for claiming the tax refund you may be entitled to,” said acting IRS Commissioner Linda E. Stiff. “But you can’t get it unless you file the tax return. Don't take a chance on losing your tax refund. And this year, remember that you need to file a 2007 tax return in order to receive an economic stimulus payment.”

The IRS reminds taxpayers seeking a 2004 refund that their checks will be held if they have not filed tax returns for 2005 or 2006. In addition, the refund will be applied to any amounts still owed to the IRS and may be used to satisfy unpaid child support or past due federal debts such as student loans.

By failing to file a return, individuals stand to lose more than refunds of taxes withheld or paid during 2004. Many low-income workers may not have claimed the Earned Income Tax Credit (EITC). Although eligible taxpayers may get a refund when their EITC is more than what they owe in tax, those who file returns more than three years late would be able only to apply it toward the taxes they owe (if any). They would not be able to receive a refund if the credit exceeded their tax.

Generally, unmarried individuals qualified for the EITC if in 2004 they earned less than $34,458 and had more than one qualifying child living with them, earned less than $30,338 with one qualifying child, or earned less than $11,490 and had no qualifying child. Limits are slightly higher for married individuals filing jointly.

Current and prior year tax forms and instructions are available on the Forms and Publications page of the IRS Web site at IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676). Information about the Earned Income Tax Credit and how to claim it is also available on the IRS Web site, IRS.gov. Taxpayers who need help also can call the toll-free IRS help line at 1-800-829-1040.

A state-by-state breakdown of estimates for individuals who failed to file a 2004 return with a refund due is attached.

Related Item: Economic Stimulus Payments Information Center

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The Selling Of Your Home

If you have a gain from the sale or exchange of your main home, you may be able to exclude all or part of the gain from your income.

Individuals may be able to exclude up to $250,000 of capital gain, and married taxpayers filing joint returns may be able to exclude up to $500,000 of gain each time you sell your main home, but generally no more frequently than once every two years.

To qualify for this exclusion of gain, you must meet ownership and use tests.

• Ownership Test: During the 5-year period ending on the date of the sale, you must have owned the home for at least 2 years.
• Use Test: During the 5-year period ending on the date of the sale, you must have lived in the home as your main home at least 2 years.

If you and your spouse file a joint return for the year of the sale, you can exclude the gain if either of you qualify for the exclusion. But both of you would have to meet the use test to claim the $500,000 maximum amount.

If you do not meet the ownership and use tests, you may be allowed to exclude a reduced maximum amount of the gain realized on the sale of your home if you sold your home because of health reasons, a change in place of employment, or certain unforeseen circumstances. Unforeseen circumstances include, for example, divorce or legal separation, natural or man-made disasters resulting in a casualty to your home, or an involuntary conversion of your home.

If you can exclude all the gain from the sale of your home, you do not report the gain on your federal tax return. If you cannot exclude all the gain from the sale of your home, or you choose not to, use Schedule D, Capital Gains and Losses, of the Form 1040 to report it.

For more details and information see IRS Publication 523, Selling Your Home, available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

• Publication 523, Selling Your Home (PDF 194K)
• Schedule D, Capital Gains and Losses (PDF 136K)
• Tax Topic 701 — Sale of Your Home

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How to Avoid Tax Time Problems

Are you looking for ways to avoid the last-minute rush for doing your taxes? Here are some stress-relieving ideas to help you.

• Don’t Procrastinate Resist the temptation to put off your taxes until the very last minute. Your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error.

• Visit the IRS Online In fiscal year 2007, there were more than 214 million visits to IRS.gov and 1.35 billion page views. Anyone with Internet access can find tax law information and answers to frequently asked tax questions.

• File Your Return Electronically Nearly 80 million taxpayers filed their returns electronically in fiscal year 2007. Aside from ease of filing, IRS e-file is the fastest and most accurate way to file a tax return. If you’re due a refund, the waiting time for e-filers is half that of paper filers.

• Don’t Panic if You Can’t Pay If you can’t immediately pay the taxes you owe, consider some stress-reducing alternatives. You can apply for an IRS installment agreement, using our new Web-based Online Payment Agreement application on IRS.gov. The Web-based application allows eligible taxpayers or their authorized representatives to self-qualify, apply for, and receive immediate notification of approval. You also have various options for charging your balance on a credit or debit card. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee. Electronic filers with a balance due can also file early and pay their taxes directly from their checking or savings account on the April due date with no service fee.

• Request an Extension of Time to File – But Pay on Time If the clock runs out, you can get an automatic six month extension of time to file to October 15. However, this extension of time to file does not give you more time to pay any taxes due. You will owe interest on any amount not paid by the April deadline, plus a late payment penalty if you have not paid at least 90 percent of your total tax by that date. See IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return for a variety of easy ways to apply for an extension. Form 4868 is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). Taxpayers needing Form 4868 should act soon to be sure they have the item in time to meet the April deadline.

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov .

Links:

• Official Payments Corporation
• Link2Gov Corporation
• Electronic filing
• Free File
• Electronic payment options
• Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return (PDF)

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Can You Use Schedule C-EZ?

Want to save time and trouble when filing taxes for your small business? You may be eligible to use the abbreviated Schedule C-EZ instead of the longer Schedule C when reporting business income and expenses on your 2007 Form 1040 federal income tax return. The maximum deductible business expense threshold for filing Schedule C-EZ is $5,000.

Schedule C-EZ, Net Profit from Business (Sole Proprietorship), is the simplified version of Schedule C, Profit or Loss from Business (Sole Proprietorship).

Schedule C-EZ:

• Has an instruction page and a one-page form with three short parts — General Information, Figure Your Net Profit, and Information on Your Vehicle.
• Includes a simple worksheet for figuring the amount of deductible expenses. If that amount does not exceed $5,000, and if your business did not have a net loss, you may be able to use the C-EZ instead of Schedule C. (Other restrictions apply; be sure to read the instructions carefully.

Schedule C:

• Is two pages long and is divided into five parts — Income, Expenses, Cost of Goods Sold, Information on Your Vehicle, and Other Expenses.
• Requires more detailed information than the C-EZ. The instruction package is 10 pages long.
• Must be used when deductible business expenses exceed $5,000 or when a business has a net loss.

Using Schedule C-EZ can save time and reduce paperwork burden for eligible businesses. More information about Schedule C-EZ and reporting net profit for sole proprietorships can be found on the IRS Web site at IRS.gov.

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Link – Publication 334, Tax Guide for Small Business (PDF 407K)

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Free Tax Filing Services

The preparation of tax documents and filing of tax returns is a complicated process and requires professional handling. Professional help is generally expensive and can burn the pockets of taxpayers if availed of. Taxpayers can also prepare tax files on their own but there are risks of committing errors when a large number of deductions and exemptions are taken into consideration. As a result, taxpayers seek professional help even though it is expensive. In recent times however, some tax experts and tax companies have started offering free tax filing services.

The principal means of filing taxes for free is through online websites of tax companies and use of software provided by them. These companies offer online tax preparation help and electronic filing through a partnership agreement with the IRS. Almost all the free tax filing companies offer services based on different sets of criteria to qualify taxpayers for the service. Companies offer free filing service for taxpayers whose gross annual income is below or equal to $50,000. There are also many age and area restrictions for free tax filing service. Some tax filing companies prepare and file taxes for people of only certain area codes and states.

Primarily, Form 1040EZ is used to file tax returns of these types of customers. The companies fill out the forms and prepare tax liabilities and file papers with IRS, abiding by certain rules and regulations as specified by the IRS. The IRS advises people to go through the IRS website and approach only listed companies for free tax filing. A majority of free tax filing companies provides quality feedback about the status of the filed papers. Nevertheless, there are some companies who may only offer sub standard services and may make the entire tax filing process slow and sluggish.

Free tax filing also existed over phone lines. However, they have now ceased to exist. Free tax filing is one of the best ways for people to seek professional help with tax payments at zero costs.

Tax Filing provides detailed information on Tax Filing, Online Tax Filing, Free Tax Filing, Filing Payroll Taxes and more. Tax Filing is affiliated with Tax Return Filing Preparations.

By: tax guy

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