Tax Refund Myths and Realities – Did You Know? (1/2)

Taxpayers who are owed a 2023 tax refund naturally want to know how quickly that refund will come. Unfortunately, a lot of myths and half-truths about IRS refunds circulate online, giving people false expectations or leading them to waste time on unnecessary steps. Here are two key facts you need to know to avoid falling for the rumors.

- Calling the IRS will generally not yield more information about your refund. You can get the most up-to-date information about your refund status nearly around the clock by using the online Where's My Refund tool (link below) or by calling the automated refund hotline at 800-829-1954.

- The Where's My Refund Tool cannot always give a refund date. Some taxpayers may believe something is wrong if this tool does not display a mailing or deposit date for their refunds. Although the IRS issues many refunds within 21 days, some returns take longer to process. You will get a refund date once the IRS finishes reviewing your return.

IRS Where's My Refund tool: www.irs.gov/refunds ... See MoreSee Less

Filing Extensions and Minimizing Penalties – Did You Know?

Taxpayers who request an extension to file their 2023 federal income tax returns have until October 15th, 2024. However, an IRS extension is only an extension to file tax returns, NOT an extension to pay any tax owed. Taxes not paid by the April 15th payment deadline may be subject to late penalties and interest charges.

Electronic payments may be made using the IRS online payment portal (link below). The IRS urges those who cannot pay what they owe at this time to pay whatever amount they can, and then apply for an installment plan to pay off the remaining balance.

If you are required to file, you should still file your taxes, even if you can't pay, as the failure-to-file penalty may be 10 times more than the failure-to-pay penalty.

IRS Online Payment Portal: www.irs.gov/payments ... See MoreSee Less

Tax Filing Misinformation and Scams – Did You Know?

Every filing season, the IRS sees a surge in tax-related scams, including widespread circulation of false statements about tax laws and refunds across the internet. Several currently trending myths encourage people to file IRS forms with bogus information, setting up unsuspecting readers to face IRS, civil or even criminal penalties.

For example, scammers recommend using software to fill out extra W-2 (Wage and Tax Statement) forms, with false income and withholding figures attributed to made-up employers. Other scams involve inventing fictitious household employees, then claiming that those employees were paid substantial medical leave benefits. The promoters of these fraudulent practices claim people can use the schemes to "legally" obtain large IRS refunds.

In reality, IRS personnel carefully check W-2s and other tax forms against information reported by employers and other entities and individuals. Submitting false documents to the IRS can trigger very serious consequences, even if the person who filed the forms believed they were following legitimate advice. To avoid getting lured in by scammers, seek tax guidance only from a trusted tax professional. ... See MoreSee Less

Tax Filing & Quarterly Installment Deadline on April 15

The tax filing and payment deadline is coming up on April 15, 2024 (April 17 in Maine and Massachusetts). Note, however, that some residents of regions affected by federally declared disasters have extended deadlines to pay their 2023 taxes. Check the IRS Disaster Relief page (link below) to see if you qualify for an extension.

If you are required to make quarterly installments, the first payments for the January 1 – March 31 quarter are also due on April 15th.

IRS Disaster Tax Relief Info: www.irs.gov/newsroom/tax-relief-in-disaster-situations ... See MoreSee Less

Tax Saving Opportunities for New Parents

If you welcomed a new child into your household in 2023, then you may qualify for one or more valuable tax credits that could significantly reduce your tax or increase your refund. In order to claim these benefits, you generally must first obtain a taxpayer ID number for your child. For most credits, that number must be a Social Security number (SSN), but in some cases you can use an individual taxpayer ID number (ITIN) or adoption taxpayer ID number (ATIN) instead.

Many people with children qualify for a Child Tax Credit (CTC) of up to $2,000 per child, of which up to $1,600 may be refundable as the Additional Child Tax Credit. Meanwhile, the fully refundable Earned Income Tax Credit (EITC) has significantly higher maximum credit amounts and income limits for people with children than for those with no children. Depending on your income level, the EITC could amount to thousands of dollars per child.

If you paid child care expenses in 2023 so that you could work or seek work, you may also be eligible for the nonrefundable Child and Dependent Care Credit. Other nonrefundable credits available to qualifying parents include the Credit for Other Dependents and the Adoption Tax Credit. A tax professional can help you find and claim all the tax benefits you qualify for, and file your return electronically to get your refund as quickly as possible. ... See MoreSee Less

IRS Online Account Setup Scams – Did You Know?

Each year, the IRS issues a list of the most prevalent scams that put taxpayers' identities and hard-earned money at risk. Some dangerous scams relate to IRS online accounts. Many taxpayers find that setting up an online account helps them stay on top of their taxes and make better planning decisions. Unfortunately, this IRS service has also drawn the attention of digital scammers.

In one common scheme, the scammer contacts a taxpayer, posing as a representative of a supposedly helpful service for people with limited computer skills. The scammer offers to help the taxpayer set up an online IRS account, asking for sensitive information like the taxpayer's address, photo ID, and Social Security number (SSN) or Individual Taxpayer Identification number (ITIN). The scammer then sells this information to criminals, who use it for tax fraud and other forms of identity theft.

The IRS warns taxpayers that ANY such offer is a scam. Most people can readily set up their own IRS online accounts by following the instructions at irs.gov. If you do need help, only seek it from a trusted person, like a family member or tax professional.

IRS Online Account: www.irs.gov/payments/your-online-account. ... See MoreSee Less

IRS Third Party Authorizations – Did You Know?

All U.S. taxpayers have the right to designate a third party to work with the IRS on their behalf. In order to exercise this right, taxpayers must formally grant permission to the third party to represent them. This authorization may take several different forms:

Oral Disclosure: This level of permission simply authorizes the IRS to share the taxpayer's tax information with another person present on a phone call or in a meeting.

Third-party Designee: On their tax returns, taxpayers may designate a third party to discuss the return with the IRS. This authorization is limited to that specific return and year.

Tax Information Authorization: Taxpayers may appoint a third party to receive and review their confidential tax information for a specific type of tax for a designated time period.

Power Of Attorney: This designation authorizes a person or firm to represent the taxpayer in federal tax matters. The person or firm must be certified to practice before the IRS.

Oral disclosure and third-party designee permissions expire automatically. Taxpayers have the right to revoke tax information or power of attorney authorizations at any time, either by notifying the IRS of the revocation, or simply by appointing a new representative. ... See MoreSee Less

Reducing Fees & Penalties - Did You Know?

If you are required to file your taxes, you should still file, even if you can't pay, as the failure-to-file penalty may be 10 times more than the failure-to-pay penalty. If you are unable to pay in full, try to file your tax return by the deadline of April 15th, 2024 and pay as much as you can. The IRS also has Installment Payment Plans available that you may qualify for.

In addition, April 15th is also the due date for Tax Year 2024 first quarter estimated tax payments for those making estimated payments. ... See MoreSee Less

Taxpayer Bill of Rights - Did You Know?

As a taxpayer, you have a set of ten fundamental rights that the IRS is obligated to protect:

1. The Right to be Informed.
2. The Right to Quality Service.
3. The Right to Pay No More Than the Correct Amount of Tax.
4. The Right to Challenge the IRS's Position and Be Heard.
5. The Right to Appeal an IRS Decision in an Independent Forum.
6. The Right to Finality.
7. The Right to Privacy.
8. The Right to Confidentiality.
9. The Right to Retain Representation.
10. The Right to a Fair and Just Tax System.

The Taxpayer Bill of Rights ensures that the IRS must fairly review any objections a taxpayer raises to an IRS decision. Before objecting to an IRS letter, taxpayers should remember that tax refunds may also be adjusted for a variety of non-tax reasons, such as past-due child support. If you feel strongly that an IRS adjustment to your tax return is incorrect or unfair, a tax professional can review your return with you to determine whether you may have a basis for appealing the decision.

More information can be found in IRS Publication 1: Your Rights as a Taxpayer, available here: www.irs.gov/pub/irs-pdf/p1.pdf. ... See MoreSee Less