Tax Tip Tuesday: Need an Extension?

Apr 13, 2017, 01:29
Tax Tip Tuesday: Need an Extension?

Liberty Tax Preparer Jim Clark said there are procrastinators as usual, but this year there are a bit more. Kelley instructed several of her clients, who owed income taxes to the Internal Revenue Service (IRS), to write payment checks directly to her rather than to the IRS. Interest applies to any unpaid tax. And if you are someone that likes to save money by doing your own taxes there are many ways to do it yourself. Watch out! Criminals may pose as IRS agents to offer non-existent tax refunds. If you are approaching age 70 1/2 or past that age, required minimum distributions from your IRA create additional taxes.

Tax day is a week away! That is where you can file your tax return electronically for free. Once your return and refund have been approved, a payment date is scheduled. That could be a problem for those who didn't have the cash on hand.

But it hasn't happened as often this year, despite more people showing up for tax service. If you were married and only one of you was 65 or older in 2016, you can still use the 7.5 percent rule.

While the deal sounds very appealing, there are strings attached.

If you file your taxes more than 60 days late, you'll pay either $205 (adjusted for inflation) or what you still owe, whichever figure is smaller.

The IRS reminds seniors this tax season that they can easily identify when a supposed IRS caller is a fake.

The IRS phone call scam has already scored $29 million since 2013, according to the Treasury Inspector General for Tax Administration. "Thus, consumers can not comparison shop, or predict how much tax preparation will cost them". All cases are different and need individual attention. "I am reintroducing the Tax Filing Simplification Act to stand up to these companies and give all taxpayers the option of free, simple tax filing". These inaccuracies may be discovered during an employment tax audit.

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If you do get one of these letters, it's a good idea to pay close attention to your credit and bank account statements.

What can I do to speed up my refund?

The IRS also might let you off the hook if you can show "reasonable cause" for why you didn't pay on time - though you'll need to attach a written statement to your return.

If you are going to contribute to your retirement fund, it's always better to do it earlier in the contribution year to maximize the amount of tax-free interest growth - but if you have the available money and the space below the contribution limit, why not make the best of the situation and max out your 2016 contribution while you can?

If you do not owe taxes, fill out the "IRS Impersonation scam" form on TIGTA's website, www.tigta.gov or call TIGTA at 800-366-4484. Store them in a safe place.

Depending on your annual salary, some of these sites will allow you to file your state and federal taxes for free, but most people will have to pay some sort of fee. However, the voice response system, as well as the online tool will direct you to contact a call center representative if your refund is delayed for a specific reason. If you don't file, the penalty will be $50 a month.

"... the longer you wait, the more you increase the chance of making a mistake under pressure".