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Sat, Sep 20, 2014

The taxman cometh

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The taxman cometh | Taxes, IRS, Business, Finance, Economy

(File photo)
With the tax filing deadline quickly approaching, the Internal Revenue Service is reminding taxpayers that quick and easy solutions are available if they can’t file their returns or pay their taxes on time, and they can even request relief online.

The IRS expects more than 600,000 Tennesseans to file tax returns in the next two weeks and about 170,000 to request filing extensions.

“Don’t panic, but be sure to act by the April 17 deadline,” IRS spokesman Dan Boone urges. “The IRS offers tax-filing extensions and payment options for those who need more time to file or to pay.”

The fastest and easiest way to get the extra time to file is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic six-month filing extension on Form 4868. The filing extension does not offer more time to pay, according to an IRS press release.

Taxpayers who are having trouble paying what they owe usually qualify for payment plans and other relief. Last month, for example, the IRS, as part of its Fresh Start initiative announced penalty relief for unemployed taxpayers and self-employed individuals whose income has dropped.

Either way, Boone said, taxpayers will avoid stiff penalties if they file either a regular income tax return or a request for a tax-filing extension by this year’s April 17 deadline. Taxpayers should file, even if they can’t pay the full amount due.

For people who find taxes a little too taxing, the IRS has a program that can help. It’s called Free File. You can use free software to do your taxes and e-file for free. Get started at IRS.gov/freefile. There is a free option for everyone. People who make $57,000 or less, which includes most Americans, can use the Free File software.

As Tax Day approaches, Jackson Hewitt Tax Service reminds last-minute filers of the most common mistakes to avoid when filing their tax returns, as well as what they need to know about filing a six-month extension.

“Each year, there are many who wait until the final days to file their taxes,” said Mark Steber, chief tax officer with Jackson Hewitt Tax Service Inc. “With the last minute rush, it is important to carefully check your tax return prior to filing because even the simplest of mistakes can cause delays in the issuance of a refund.”

Steber listed the top five most common mistakes made when filing a return:

1. Incorrect Filing Status – Choosing a filing status is usually one of the first steps when preparing a tax return, but it can also be a confusing decision that leads many to choose an incorrect status. The wrong filing status can significantly impact the amount of a tax refund or tax liability, so speaking with a knowledgeable local tax preparer about your situation can help guide you in selecting the correct status;

2. Providing Incorrect Information – Another common mistake is when taxpayers misspell a name or incorrectly record their Social Security numbers. It is vital to clearly record the correct name, Social Security number and address (including zip code) directly on the return. Names and Social Security numbers for a spouse, dependents and qualifying children should be documented exactly as they appear on their respective Social Security cards. For those who changed their name due to getting married or divorced, or for any other reason, make sure the name used on the return is your legal name;

3. Mathematical Errors – Another error on tax returns is bad math, which remains common on paper returns. Making mathematical miscalculations can greatly impact your tax return by reducing your expected refund or positioning you to owe more money than you actually do;

4. Claiming Ineligible Exemptions – With so many complex rules, taxpayers often claim exemptions for which they are not eligible. Some examples include claiming a grown child who no longer qualifies as a dependent or claiming an exemption for a live-in significant other. A local tax preparer can help you properly claim eligible exemptions; and,

5. Forgetting to Claim Items – In the rush to file, forgetting to claim certain items is a mistake that is made all too often. For example, certain charitable contributions, medical expenses and IRA contributions can all be claimed on a return, if you have the proper documentation.
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