Last-minute income tax filing tips
Add comment April 4th, 2008
It’s no secret: The deadline for filing your federal income tax return is April 15. In case you still haven’t started, here are some tips and observations from the IRS office in Chicago.
First of all, you’re not alone. During the last few weeks of the tax filing season, the IRS expects Illinois residents to file about 2 million federal tax returns and an estimated 299,000 extension requests.
Tips to avoid stress at the eleventh hour:
Prepare Now—Make sure you have all the documents you need to file your tax return. Gather together your Forms W-2 (earnings statements) and 1099 (interest/dividend statements). If you own a home, you will need Form 1098 to get the amount of mortgage interest and real estate taxes you paid. If you itemize, make sure you have the receipts for all your deductions such as charitable donations and medical expenses. You will also need a Social Security number (SSN) for yourself, spouse and any dependents listed on the return. If you don’t e-file, check all math and data entries—including SSNs—to ensure they are correct and legible. Inaccurate or missing information could delay your refund.
“If you’re filing a paper return, allow yourself enough time to review the return after it’s finished,” said Sue Hales, IRS spokeswoman for Illinois, in a press release. “Double-check the accuracy of all math entries and Social Security numbers, attach all W-2s and appropriate schedules, and sign the tax return.”
Stimulus Payment—Don’t miss out on the economic stimulus payments. Payments will start going out the beginning of May to more than 130 million households nationwide. To receive a stimulus payment, you must file a 2007 tax return. Many seniors, veterans, and lower-wage workers are not required to file a tax return, but need to this year to claim the stimulus payment. They may be eligible for a stimulus payment if they had at least $3,000 in qualifying income from Social Security, Railroad Retirement or Veterans Affairs benefits or earned income such as wages, tips and self-employment.
“The only thing you need to do to get a stimulus payment is to file your 2007 tax return,” said Hales. “The IRS will do the rest. We’ll determine eligibility and calculate the amount of your payment.”
File Electronically – Even If You Owe—There’s no need to hold on to your return because you owe money. You can file electronically now and set your automatic payment for April 15th. You can e-file through a tax preparer, personal computer and tax preparation software or using the IRS Free File program. The IRS Free File program offers free tax return preparation and free e-filing to individuals with an AGI of $54,000 or less through a partnership with software companies. To Free File, go to the IRS Web site at www.irs.gov, click on Free File then Start Now, and select a software company with criteria that meets your needs and financial situation. Remember, you must access all Free File software companies through the IRS Web site.
Electronic filing has many benefits. E-filing offers faster refunds, more accurate returns, paperless filing, and confirmation within 48 hours that IRS has accepted your tax return.
“If you are due a refund, e-filing and having your refund directly deposited into your bank account is the way to go,” Hales said. “You should get your refund in 10 to 14 days.”
File for an Extension—Need more time to file your 2007 tax return? Request an extension and get an additional six months—until October 15th—to file your tax return. To get an extension, you must file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Form 4868 can be mailed to the IRS or e-filed. All extension requests must be filed no later than April 15, 2008. Form 4868 is available on the IRS Web site at www.irs.gov.
“Extensions only provide additional time to file your return—not to pay,” Hales said “Estimate your tax liability and pay any balance due by April 15th.”
File Your Tax Return Even If You Can’t Pay—Even if you can’t pay the taxes you owe, you should file your return on time to avoid the late filing penalty. The late filing penalty (at five percent per month) is 10 times greater than the late payment penalty. Paying as much as you can with your return will help reduce interest and penalty charges. You can then request to pay the remaining balance in monthly installments by submitting Form 9465, Installment Agreement Request, with your return or when you get a notice from the IRS. Also, you have the option of using the IRS online installment agreement program available on the IRS Web site at IRS.gov. List the amount you propose to pay each month. The IRS will let you know if the request was accepted. There is a one-time $105 fee for entering into an installment agreement. The fee is $52 when payments are deducted directly from your bank account.
Check to See If You Qualify for the Earned Income Tax Credit (EITC)—You may be eligible to get money back from the IRS. If you worked during 2007 and your income was under $39,783, you might qualify for the EITC. This credit could mean up to $4,716 in extra cash for eligible individuals and families. The EITC Assistant on the IRS Web site at www.irs.gov can help you determine if you are qualified.
Unclaimed Refunds—More than 50 thousand Illinoisans who haven’t filed a tax return for 2004 are missing out on more than $53 million in unclaimed refunds. To collect these refunds, 2004 tax returns must be filed with the IRS no later than April 15, 2008. Half of these unclaimed refunds would be for more than $608.
Need Tax Help or Forms? —The IRS has several options available for tax help and forms. Go to the IRS Web site at www.irs.gov to get tax forms and publications as well as tax information. Some local libraries and post offices have forms and are open evenings and weekends. Recorded tax information (on 150 different topics) is available by calling 1-800-829-4477. Toll-free telephone assistance is available by calling the IRS at 1-800-829-1040. Free tax help is as near as a community center or local library for thousands of Illinoisans this year. Volunteers are on-site at 450 locations statewide and are ready to offer free tax return preparation and, at many sites, free electronic filing. Help is also available at some IRS offices. Call the IRS at 1-800-829-1040 to get the locations of the volunteer sites nearest you and check out the IRS Web site at www.irs.gov or call 1-800-829-1040 for IRS office locations and hours.
