by Michael Lodge
There are credits and deductions that taxpayers miss. If you would like to sit down with a tax practitioner in our office or talk to one over the phone, call: 877.778.1770 and visit our website at: www.icontaxgroup.com
Check Out Tax Benefits
Before filing, the IRS encourages taxpayers to take a moment to see if they qualify for these and other often-overlooked credits and deductions:
- Benefits for low-and moderate-income workers and families, especially the Earned Income Tax Credit. The EITC Assistant can help taxpayers see if they’re eligible.
- Savers credit, claimed on Form 8880, for low-and moderate-income workers who contributed to a retirement plan, such as an IRA or 401(k).
- American Opportunity Tax Credit, claimed on Form 8863, and other education tax benefits for parents and college students.
The health care law includes the individual shared responsibility provision and the premium tax credit that may affect a taxpayer’s return.
Most taxpayers simply need to check a box on their tax return to indicate they had health coverage for all of 2015. For any month that the taxpayer or anyone in their family did not have minimum essential coverage, they need to either claim or report a coverage exemption or make a shared responsibility payment when they file their tax return.
Taxpayers who enrolled in health coverage through the Health Insurance Marketplace may be eligible for the premium tax credit. Taxpayers who benefited from advance payments of the premium tax credit must file a federal income tax return to reconcile their advance credit payments, even if they’re otherwise not required to file. Failing to file will prevent a taxpayer from receiving advance credit payments in future years.
The Interactive Tax Assistant tool can also help determine if a taxpayer qualifies for an exemption, needs to make a payment or is eligible for the premium tax credit. Taxpayers can visit IRS.gov/aca for additional information on how the Affordable Care Act affects their return.
Some taxpayers also qualify for the Health Coverage Tax Credit. See the HCTC page on IRS.gov for details.
E-file Now: It’s Fast, Easy and Often Free
The IRS urges taxpayers to choose the speed and convenience of electronic filing. Fast, accurate and secure, filing electronically is an ideal option for those rushing to meet the Oct. 17 deadline. The IRS verifies receipt of an e-filed return, and people who file electronically make fewer mistakes. Of the 147 million returns received by the IRS so far this year, about 87 percent or 128 million have been e-filed.
Taxpayers who purchase their own software can also choose to e-file, and most paid tax preparers are now required to file their clients’ returns electronically.
Everyone can use Free File, either the brand-name software, offered by the IRS’s commercial partners to individuals and families with incomes of $62,000 or less, or online fillable forms, the electronic version of IRS paper forms available to taxpayers at all income levels.
Join the eight in 10 taxpayers who get their refunds faster by using direct deposit and e-file. Taxpayers can choose to have their refunds deposited into as many as three accounts. See Form 8888 for details.
Quick and Easy Payment Options
IRS Direct Pay offers taxpayers a fast and easy way to pay what they owe. Available through the Pay Your Tax Bill icon on IRS.gov, Direct Pay is free and allows individuals to securely pay their tax bills or make quarterly estimated tax payments online directly from checking or savings accounts without any fees or pre-registration. So far this year, more than 6 million tax payments totaling over $23 billion have been received from individual taxpayers through Direct Pay.
Taxpayers can also pay by debit or credit card. While the IRS does not charge a fee for this service, the payment processer will. Other payment options include the Electronic Federal Tax Payment System (enrollment is required) and Electronic Funds Withdrawal which is available when e-filing. Taxpayers can pay what they owe using, the IRS2Go, mobile app. All of the electronic payment options are quick, easy and secure and much faster than mailing in a check or money order. Those choosing to pay by check or money order should make the payment out to the “United States Treasury.”
Taxpayers with extensions should file their returns by Oct. 17, even if they can’t pay the full amount due. By doing so, taxpayers will avoid the late-filing penalty, normally five percent per month, that would otherwise apply to any unpaid balance after Oct. 17. However, interest, currently at the rate of four percent per year compounded daily, and late-payment penalties, normally one-half a percent per month, will continue to accrue.
Help for Struggling Taxpayers
In many cases, those struggling to pay taxes qualify for one of several relief programs. Most people can set up a payment agreement with the IRS on line in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to 72 months or request a short-term payment plan. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS.
Alternatively, taxpayers can request a payment agreement by filing Form 9465. This form can be downloaded from IRS.gov and mailed along with a tax return, bill or notice.
Some struggling taxpayers qualify for an Offer-in-Compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, an offer will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay. Work with a tax firm to help you with the offer and compromise and represent you to the IRS.
Contact our office if you need tax help. Call us at: 877.778.1770