As the the clock approaches midnight on the 2015 tax season, many taxpayers still haven’t filed their tax return yet. While procrastination is common for many when it come to filing taxes, this year we are seeing a higher number of last minute filers. The winter was brutal on the east coast; extreme cold & snow produced more tax hibernators than in years past. Wage documents like W2s & 1099s were issued extremely late (And when they were finally issued, many were issued incorrectly), and the uncertainty around reporting health insurance on tax returns for the first time has produced even more confusion. But have no fear! There is still time to tackle your individual tax situation. And even if you already filed, below is a definitive list of last minute tax tips everyone should be aware of:
Many taxpayers know the deadline is April 15th, but the majority of taxpayers do not know that the deadline only applies to those that owe money to taxing authorities. If you are expecting a refund, you have an additional 3 years to file or amend a filed 2014 tax return. No extension is necessary to file if you are expecting a refund. Again, extensions must be filed by the deadline only for those that owe taxes, but are not ready to file their final tax return. However, an extension is only an extension to file a final tax return, NOT to pay your taxes. If you are filing an extension, you must send your tax payment along with it. If you do not know your final tax liability, overestimate. Any overpayment will be refunded to you or applied to future tax liabilities. Any underestimated taxes are subject to penalties & interest that are not paid by the deadline.
Even with the deadline approaching, you can still reduce your tax liability by making contributions to the following:
Contributing to any of these accounts (or opening a new account) before filing your tax return will reduce the taxes you owe. However, each contribution has limits, so consult your tax professional or financial advisor to find out what those limits are. These contributions must be made before you file your final tax return (filing an tax extension also allows you to contribute later as well).
As stated above, taxpayers have 3 years to file or amend tax returns if they are due refunds. This year’s April 15th deadline will be the final day taxpayers can file or amend a 2011 tax return. The IRS has over $1 Billion in unclaimed refunds for those that have not filed a 2011 tax return. According to IRS Commissioner John Koskinen. “People could be missing out on a substantial refund, especially students or part-time workers. Some people may not have filed because they didn’t make much money, but they may still be entitled to a refund.” Most of these taxpayers fall into the category where they did not break the threshold in dollars earned requiring them to file a tax return. However, taxes were withheld from their paychecks, and that money should be refunded. Any 2011 refund not claimed become the properly of the U.S. Government. Half of the uncollected refunds for 2011 tax returns exceed $698! This is your money. Don’t let the Government keep it!
The Affordable Care Act (ACA) has drastically reduced the number of insured since going into effect in 2014. Subsidies to off-set the cost of insurance is a major reason why. However, many taxpayers this year were shocked to see that their refunds were significantly reduced from years past. This is because ACA subsidies are calculated using an estimate of a taxpayer’s yearly income. If you get a promotion mid-year, a newer higher paying job or simply just underestimate you annual income, you may no longer qualify for the subsidy you’ve already received…and “they” want it back. Therefore, if you’ve received a subsidy this year for health insurance acquired on the exchanges, it is important to report any significant differences in estimated income to your health insurance provider and/or broker. While you may have to pay a higher monthly premium, you won’t have any surprises come tax time.
So you filed your return. Now “Where’s my Refund”?. This is a question that’s hard to answer specifically. In general, the earlier you file, the better chance you have of getting your refund in the IRS’ allotted time: approximately 2-3 weeks if you’ve electronically filed (even faster if you opted for a direct deposit) and 6-8 weeks if you filed a paper tax return. However, many factors can delay your refund. First and foremost, before you start trying to track down your refund, be sure that your return was filed and accepted by the IRS. Click here to check the status for your return on line. If you filed your return late (between late March & the April 15th deadline) expect to tack on about a week or so. The IRS’ budget has been slashed and they are grossly understaffed. If you need to speak to an IRS agent, good luck. The IRS is only able to answer about 60% of the calls made to the agency. The rest either get tired of waiting for hours or get a “Courtesy Disconnect” (i.e. being hung up on). The key is not to give up. If you keep pestering the IRS, eventually you will make progress. Remember, many states (including NY) have been issuing “pre-refund letters” for the last 4-5 years. Sometimes they ask for something as simple as a copy of your W-2; information they are supposed to have already! These letters are simply designed to delay your refund, they are not “Audits”. If you get one of these “pre-refund letters”, address them immediately. The sooner you send them the information they are requesting (no matter how trivial or ridiculous) the sooner you can get your refund “they” are collecting interest on (and they keep that interest) .
Remember, its never too late to get a tax professional on your team. Contact an R&G Brenner tax pro today, and we’ll take care of the rest. Happy April 15th!