“Will my refund be delayed this year” is becoming an all too common refrain these days. Delayed e-filing dates, IRS not accepting tax forms & documents not being mailed out on time have all occurred over the last few years and have caused refund delays. However for the 2017 tax filing season (2016 tax year), it looks like we will get hit with all three of these scenarios at once:
Electronic Filing Date Delayed
This tax year, E-filing will begin January 23rd, 2017. Electronic filing has historically began around January 15th. However, over the past few years, these dates have been pushed back from a couple of days to a couple of weeks, so this is becoming common practice by the IRS. Returns may be filed before this date, however the IRS will not process them until 1/23/17.
IRS Delaying Processing of Popular Tax Credits
The IRS has announced that the following tax credit forms will not be accepted for processing until February 15th, 2017:
Earned Income Tax Credit (EITC)
Additional Child Tax Credit (ACTC)
The American Opportunity Credit (AOTC).
This is a nationwide law change required by Congress in the Protecting Americans from Tax Hikes (PATH) Act; this is not a company or state change. If you normally file your taxes around this time (2/15/17), this delay should have a minimal impact on you. However, if you tend to file early and/or have plans for your tax refund in advance, R&G Brenner suggests that you prepare yourself accordingly. If you are unable to save funds, don’t worry, you can apply for R&G Brenner’s refund advances & referral rewards for CASH! (below).
R&G Brenner Refund Advances
If you rely on your refund, and these delays will seriously affect you, don’t worry; R&G Brenner has multiple refund advances for qualified R&G Brenner clients:
Taxes may never be fun, but they are rewarding with R&G Brenner on your team. Last year we paid out over $100,000 in CASH for client referrals. Get $50 CASH for every new client you refer to R&G Brenner; NO LIMIT! Click here to start earning today!
While we can’t control IRS delays, we can offer our clients a little relief from these delays. Become an R&G Brenner client and receive the benefits. Schedule an appointment today for a FREE estimate or call us toll free at (888) APRIL-15.
The 2016 tax season has officially begun as the IRS is currently accepting tax returns for electronic filing. Many employers are mailing their wage documents earlier and/or are offering ways for employees to download their documents. As such, we are seeing a noticeable increase in client volume at many of our R&G Brenner offices. If you’d like to make an appointment for an early appointment, we ask that you do so as soon as you are able so we can accommodate your preferred meeting dates & times.
Furthermore, R&G Brenner is offering a slew of new products and promotions. They have been so popular, we have already extended the deadlines for some. Our current promotions are*:
$100 Cash Early Bird Special: Come to any participating R&G Brenner office, and all qualifying applicants can walk out with $100 Cash as an advance on their refund. No Fees or Interest Apply!
$750 “Easy Advance” Refund Advance: Qualifying applicants who file their return as a Refund Anticipation Check (RAC) can also get a larger no-fee, no-interest $750 advance on their refund from our bank provider: Republic Bank & Trust.
$50 CASH For Referrals: We’ve updated our Client Rewards this year by more than doubling our cash payments for new clients referred to R&G Brenner: We will pay you $50 Cash for every new client your refer! Plus, your cash will be available as soon as your referral files their taxes with us. There is no limit to the amount of Cash you can earn! Click here for more info.
FREE Secure File Transfer: Due to the explosion of identity theft as it relates to the IRS and filing taxes, all R&G Brenner professionals are now equipped with Dropbox accounts to securely receive confidential tax information. Click here for more info.
R&G Brenner offices are all currently opened and staffed with highly trained CPAs, EAs, RTRPs & other professionals. If you have any questions about the above promotions, any R&G Brenner service and/or have tax related questions, please feel free to contact us. Have a very happy & profitable New Year!
*All promotions have individual rules, qualifications & restrictions. Click here for a list of all our promotions and click on the individual promotion for all related rules.
Nothing brings on the cold sweats like an official letter from the Government; particularly the IRS. Like being pulled over by the police while driving, thoughts of everything you have ever done (or may have done) wrong begin to flood your mind. There are two different classes of IRS Audits: Correspondence Audits & Desk Audits.
A Correspondence Audit is by far the most common type of audit the IRS issues to Taxpayers. These are generally the lowest level of an audit and usually involve small amounts of money. Verification of income & expenses are done almost completely by Mail or Fax and you may never even speak to your auditor. Conversely, A Desk Audit–or Office Audit–is when the IRS directs a taxpayer to an IRS office for an in-person interview. These generally involve larger amounts of money.
Regardless of what type of Audit a taxpayer receives, thoughts of asset seizures and/or jail time are common worries. However, being locked up or having your bank account seized are very rare. Usually, the punishment is simply the difference in tax calculated in the IRS’ favor, accompanied by a late payment penalty and interest. If a taxpayer can’t pay the penalties and taxes immediately, the IRS will usually accept a payment plan; as long as payments are made there is no need to worry that bank accounts will be raided or assets liquidated. Nevertheless, the stress and burden of the taxpayer to produce the documentation if very real. If fact, the Taxpayer Advocate wrote that Correspondence audits are not necessarily less work for the taxpayer. While there is no sure fire way to eliminate your chances to being audited (the IRS & States issue many random audits a year), there are many Red Flags a taxpayer can avoid to reduce their chances of being audited:
1. Not Reporting All Of Your Income: The IRS cross checks your income sources with 1099s and W-2s. If your income has dropped, that may be a red flag. Do not under report your income, no matter how tempting. If you have some self-employed income, report it and then use every deduction or write off you can find.
2. Claiming Large Charitable Deductions: The IRS calculated what the average donation is for a person in your income bracket. So if indeed you made a large donation last year be sure to have proper documentation. A cancelled check will do if the amount is under $250. Over that amount, you will need a letter from the charity.
3. Earning A Bunch Of Money: Over $100,000. You are 5 times more likely to be audited if you make the big bucks so be sure to document all of your deductions and income.
4. Taking Higher Than The Average Deductions: If the deductions on your return are disproportionately large compared to your income, the IRS audit formulas will go “tilt”. So if you have large medical deductions be sure you can prove them if need be.
5. Home Office Deduction: The IRS is always interested in this deduction, because history has shown that many people who claim a home office should not. If you work out of your bedroom or dining room, the deduction may be invalid.
6. Business Meals, Travel And Entertainment: Schedule C is filled with tax deductions for the self-employed individual. And the IRS has figured out that often some self-employed individuals tend to claim excessive deductions. They then make the assumption that all such individuals may cheat so Schedule C will get a review.
7. Claiming 100% Use Of Your Car For Business: If you are self-employed and use your car for business be honest with how much you actually use the car for business. Keep very good records of the miles you drive. I know it’s a nuisance, but necessary.
8. Cash Businesses: If you have a cash-intensive business like an antique shop, junk shop, car wash, a bar, a hair salon, or a restaurant you are probably on the IRS’ short list! Whenever a lot of cash is involved, the assumption is someone is slipping some under the table!
9. Large Cash Transactions: The IRS requires reports to be filed for cash transactions in excess of $10,000 involving banks, casinos, car dealers and other businesses.
10. Math Errors: If you do your tax return in long hand, check your math and be sure to sign the return and put in the correct social security numbers. A sloppy return can trigger an audit.
It’s one of the worst tax time scenarios: You discover while doing your taxes — or you just know without even doing them —that you owe taxes, and you don’t have the cash. What should you do?
You may be tempted to ignore the problem. Don’t do it. The worst thing you can do is put off filing your return because you’re afraid of the bill. The Internal Revenue Service (IRS) penalties for not filing are more punitive than the ones for not paying.
The failure-to-file penalty runs to 5.0 percent a month that your return is late, up to 25 percent, with a minimum penalty of $135. The failure-to-pay penalty is just a fraction of that, at 0.5 percent a month of the unpaid tax at April 17, and even that is cut in half for taxpayers who set up a formal installment plan with the IRS. Either way, you’ll also owe interest, currently at a modest 3.0 percent a year.
Consider the case of a taxpayer who owes $2,000 and won’t have the money until the end of June. If she files a return or an extension by April 17, the total penalties and interest due would be just $43…But if she puts off filing until June 30, and pays then, those penalties and interest would multiply to $314…The longer this taxpayer waits to file, the more those fees would balloon.
“That’s a lot of money for late filing,” says Allison Shipley, a partner at PricewaterhouseCoopers in Miami. “And, in my experience with clients who have had a difference with the IRS, they tend to be more lenient if you’ve always filed your returns on time.”
So the first step to consider if you’re not ready to file is the simplest: File for a six-month extension, using Form 4868. As long as you’ve paid 90 percent of the taxes you owe by April 17, you will not owe the late-payment penalty. You will, however, still owe interest on any unpaid taxes.
If you have the cash, but have run out of time to deal with the paperwork, you can send in an estimated amount to avoid some or all of that interest. Similarly, if you owe taxes, but can’t pay all that you owe, you could send in a partial payment to cut the interest and penalties due.
The IRS does offer a few hardship breaks for cash-poor filers. The big one in effect this year is called Fresh Start, and lets those who were unemployed request a six-month extension to pay this year’s tax bill without being charged any penalties.
You would qualify if you did not have a job for 30 straight days in 2011 or in 2012 until April 17, or if you were self-employed and saw your income drop by at least 25 percent in 2011 due to the economy. You would file Form 1127, and automatically get until October 15 to pay. While you would get out of the penalties for six months, you would still owe interest.
Those who have survived a natural disaster or who are on active military duty may also qualify for penalty-free extensions for varying amounts of time.
FINDING THE CASH
If you are not in one of these special categories, and you owe more than you have, you may want to weigh your various options for finding the money you need. You could: (1) put your tax bill on your credit card; (2) Use a home-equity line of credit; (3) just pay late and swallow the penalties and interest; or (4) ask the IRS to accept a formal installment agreement.
While the standard advice is to pay the IRS first, that may not make sense this year. IRS rates are so low, compared to credit card rates, that it may make more sense to deal with the tax agency directly. A tax installment payment plan, even with penalties, costs around 6.0 percent a year.
“This is an interesting time for strategy because of those low rates,” says Larry McKoy, a certified public accountant at Dickson Hughes Goodman in Glen Allen, Virginia.
Not only is the average rate on credit cards currently 15 percent, according to CreditCard.com, but when you pay taxes on a credit card you also have to pay an added “convenience fee” that could add as much as 2.0 percent to your transaction. That’s because the IRS is prohibited from paying the interchange fees most retailers pay on card transactions.
If you have access to a home equity line of credit, it may be worth tapping that because the rate is likely lower and you do not have to worry about those taxes hanging over your head, says Gregg Wind, a certified public account with Wind & Stern in Los Angeles.
INSTALLMENT PLAN COMPEXITITES
There’s no hard-and-fast rule for when to do an installment plan, but the higher the amount [you] owe and the longer it will take you to pay it, the better off you are to request one rather than simply paying late. An installment plan will put your payments on a monthly schedule and cut your penalty on unpaid taxes in half, to 0.25 percent.
To set one up, you will file Form 9465 and pay an application fee of between $43 and $105, depending on your income level and whether you are willing to pay through automatic deductions from your checking account or paycheck…
The IRS can reject an installment agreement, but usually does not, unless filers owe an astronomical sum or request a overly lengthy payment period. In fact, acceptance is guaranteed if you owe less than $10,000, request a payment period of three years or less, you have paid all your taxes for the last five years and the “the IRS determines that you cannot pay the tax owed in full when it is due,” according to the IRS’s rules on installment agreements.
For larger tax liabilities, the process gets more complex, though there is a streamlined application process for those who owe no more than $50,000. Taxpayers who owe larger amounts must file Form 9465-FS.
“If it’s under $50,000 you are not going to be asked to file a lot of financial information,” says Wind. “A lot of people are overwhelmed by the thought of compiling a lot of financial information, but they don’t need to be.”
Better to fill out a few extra forms than get stuck paying 5 percent a month, every month, for not filing them.