Tax-filing Extension Expires Oct. 15 for Millions of Taxpayers; Check Eligibility for Overlooked Tax Benefits
The Internal Revenue Service urged taxpayers whose tax-filing extension runs out on October 15 to double check their returns for often-overlooked tax benefits and file their returns electronically using IRS e-file or the Free File system.
About ¼ of the 13 million taxpayers who filed for an automatic six-month this year have yet to file their returns. Although Oct. 15 is the last day for most people, some still have more time, including members of the military and others serving in combat zone localities who typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes they owe.
“If you still need to file your tax returns, don’t forget that you can still file electronically through October 15,” said IRS Commissioner John Koskinen. “Many people may not realize they may be eligible to use Free File available on IRS.gov/freefile. Free File is free tax software that takes the guesswork out of return preparation. Even if you’re filing in the final days, e-filing remains easy, safe and the most accurate option to file your taxes.”
Check Out Tax Benefits
Before filing, the IRS encourages taxpayers to take another look to determine if they qualify for these and other often-overlooked items:
- Benefits for low-and moderate-income taxpayers and families, especially the Earned Income Tax Credit. The special EITC Assistantcan help taxpayers see if they’re eligible.
- Savers credit, claimed on Form 8880, for low-and moderate-income taxpayers who contributed to a retirement plan, such as an IRA or 401(k), or SEP-IRA.
- American Opportunity Tax Credit, claimed on Form 8863, and other education tax benefitsfor parents with college students.
Health Care Tax Reporting
While most taxpayers will need only to check a box on their tax return to indicate they had health coverage for all of 2014, there are also new lines on Forms on the tax form related to the health care law. Visit IRS.gov/aca for details on how the Affordable Care Act affects the 2014 return, which includes:
- Reporting health insurance coverage.
- Claiming an exemption from the coverage requirement.
- Making an individual shared responsibility payment.
- Claiming the premium tax credit.
Reconciling advance payments of the premium tax credit. See from 1095-A. Properly this can help maintain continued eligibility for insurance premium assistance in 2016. 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 who intend to claim the Health Coverage Tax Credit for 2014 must first file an original 2014 tax return without claiming the Health Coverage Tax Credit, even if they have no other filing requirement . They can then amend their return when the IRS issues further HCTC guidance. Visit irs.gov/hctc for updates.
E-file Now: It’s Fast, Easy and Often Free
The IRS urges taxpayers to choose the fast and convenience of e-filing. Fast, accurate and secure, e-filing is an ideal way for the taxpayers who approach October 15th deadline. The IRS verifies receipt of an e-filed return, and taxpayers who e-file make fewer mistakes as well. Of the nearly 144 million returns received by the IRS so far this year, about 86% or over 124 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 $60,000 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 quicker by e-filing and direct deposit. Taxpayers can choose to have their refunds deposited into as many as three accounts. See Form 8888 for details.
Quick and Easy Payment Options
The IRS Direct Pay system offers taxpayers the quickest and easiest way to pay the taxes they owe. Available through the Pay Your Tax Bill icon on IRS.gov, this free online system allows individuals to securely pay their tax bills or make quarterly estimated tax payments directly from their bank accounts without any fees. So far this year, more than 4.1 million tax payments of over $15 billion have been received from taxpayers through Direct Pay.
Taxpayers can also pay by debit card or credit card. While the IRS does not charge a fee for this service, the payment processing firms will. Other e-pay options include the Electronic Federal Tax Payment System (pre-registration is required) and Electronic Funds Withdrawal which is available when e-Filing. Taxpayers can even e-pay what they owe using, IRS2Go , the agency’s popular mobile phone app. All of the electronic payment options are fast, easy, secure and much faster than mailing in a check or money order. Those who choose to pay by check or money order should make check payable the “United States Treasury.”
Taxpayers with extensions should file their returns by Oct. 15, 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. 15. However, interest, currently at the rate of 3 percent per year compounded daily, and late-payment penalties, normally 0.5 percent per month, will continue to accrue.
Fresh Start for Struggling Taxpayers
In many cases, those struggling to pay taxes may 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. Taxpayers can also request a payment agreement by filing Form 9465. Alternatively, some taxpayers may 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 they owe. 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 makes a determination with respect to the taxpayer’s ability to pay.
Zaher Fallahi, Tax Attorney, CPA, advises taxpayers, with their IRS audit, IRS Offshore Voluntary Disclosure Program (OVDP), Report of Foreign Bank and Financial Accounts (FBAR), Foreign Account Tax Compliance Act (FATCA), Foreign Trust and Offer-in-Compromise. About 2% of the US lawyers are also CPAs, and we are proudly one of them. Telephones: (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), e-mail [email protected]