About one out of every four taxpayers, including nearly 4 million Californians, wait until the final week to do their taxes. If you’re one of them, here are a dozen things you need to know to help you meet the April 15 deadline.
1. Where can I get IRS forms and publications?
Click here for tax forms and publications that can be downloaded 24/7. Many libraries and post offices also provide free tax forms.
2. Can I get my taxes done for free?
Volunteer Income Tax Assistance, or VITA, sites help those making up to $42,000. VITA sites usually serve walk-in visitors on a first-come, first-served basis. AARP Tax Aide sites help seniors who have less complicated tax returns and usually require an appointment.
Days and times of service vary at these sites, and please understand that they’re very busy close to the deadline. For more information, call the IRS at 800.906.9887 or the American Association of Retired Persons at 888.227.7669.
In addition, the IRS operates Taxpayer Assistance Centers, from 8:30 a.m. to 4:30 p.m. Monday through Friday. TACs provide forms and publications, answer questions, and help arrange payment schedules regardless of a person’s income.
The IRS TACs in the region include:
» Santa Barbara, 1332 Anacapa St.
» Bakersfield, 4825 Coffee Road
» Camarillo, 751 Daily Drive
» El Monte, 9350 E. Flair Drive
» Long Beach, 501 W. Ocean Blvd.
» Los Angeles Downtown, 300 N. Los Angeles St.
» Santa Maria, 2384 Professional Parkway
» Van Nuys, 6230 Van Nuys Blvd.
3. What if you can’t get to a free tax prep site?
Click here for “Free File,” which is available to taxpayers with adjusted gross income of $56,000 or less. The IRS works with a group of 19 tax software companies whose programs lead you through an interview process on the computer to prepare and electronically file your federal taxes for free.
If you have income above $56,000, there’s a new “self-service” option this year called “Free File Fillable Tax Forms.” This option does not include an “interview” process like the other Free File offerings, but it lets you enter your tax data, perform basic math calculations, sign electronically, print your returns for recordkeeping, and e-file your returns. This “self-service” option may be right for you if you are comfortable with the tax law, know what forms you want to use, or don’t need assistance to complete your returns.
Both the Fillable-forms option and the “full service” Free File offerings are available only through IRS Web site. You can get your refund in as little as two weeks if you e-file and request the refund to be direct-deposited into your bank account.
4. What if you’re not comfortable with the computer or don’t have one?
Make an appointment with your local professional tax preparer as soon as possible. The IRS depends on these preparers to do about 60 percent of all tax returns. In California, all tax preparers who are not an attorney, a CPA or an enrolled agent (this last category comprises tax preparers who have passed an IRS test) are required to register with the California Tax Education Council, which ensures that its members meet educational requirements and are bonded.
5. What’s the difference between a tax “deduction” and a tax “credit”?
Tax deductions and tax credits can both save money, but they are different. A deduction lowers the income on which the tax is figured, while a credit actually lowers the tax itself. When you hear the term “credit” used in taxes, you want to be sure to look into whether you qualify.
6. What’s the Earned Income Tax Credit?
The earned income tax credit, or EITC, helps low- to moderate-income workers who earn under $42,000 a year. To claim it, you have to have Social Security numbers for yourself and your qualifying children. In California last year, nearly 2.5 million taxpayers received almost $5 billion in EITC (an average of $2,000), but the IRS estimates that only three out of four eligible taxpayers actually get the credit. The rules can be complicated so click here to use the IRS’ EITC assistant, which is available in English and in Spanish.
7. What about the Recovery Rebate Credit?
It’s a follow-up to last year’s economic stimulus payment, which some people called the tax rebate. It was up to $600 for a single person, $1,200 for married filing jointly, with an additional $300 for children under 17. But some people’s financial circumstances may have changed, making them eligible for the credit on their 2008 return. For instance, those who had a child born or who ceased being a dependent in 2008 may qualify for some or all of the new credit.
8. What’s the First-Time Homebuyer Credit?
Under a new law passed in February, taxpayers who purchase a home this year before Dec. 1 have a special option available for claiming the new tax credit of up to $8,000 — either on their 2008 tax returns or on their 2009 tax returns next year. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000 for a single person, $150,000 for joint filers. You’re considered to be a first-time homebuyer if you did not own any other main home during the three-year period ending on the date of purchase.
The new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500. The credit for these 2008 purchases is like an interest-free loan and must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.
9. What if you figure out your taxes and owe money, but don’t have enough to pay?
If you’re ready to file your return but owe money that you don’t have right now, don’t panic! File your return by April 15 and pay as much as you can. Request that the IRS put the remainder of what you owe on an installment agreement by submitting Form 9465 with your return. By doing this — filing your return even with a balance due — you avoid the costly “failure-to-file” penalty.
10. What if you just run out of time?
If you can’t get all your paperwork together, request an automatic six-month extension of time to file by submitting Form 4868. This extension only gives you more time to submit your tax return. You will still owe interest on any amount not paid by April 15, plus a possible “failure-to-pay” penalty. But this penalty is much smaller than the stiffer “failure-to-file” penalty that is charged if you don’t do anything at all. So, if you can’t get your tax return completed, file extension Form 4868 by April 15 but still pay as much as you can.
11. What about filing for an unclaimed refund?
More than 154,000 Californians who did not file an income tax return for the year 2005 are missing out on more than $144 million in unclaimed refunds. In some cases, individuals had taxes withheld from their wages (such as college students working during the summer or seniors having a part-time job), but they had too little income to actually require filing a tax return. To collect the money, they must file their 2005 returns with the IRS no later than April 15, 2009. If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury. Half of those Californians who could claim refunds would receive more than $537.
12. Have you received an e-mail or call from someone claiming to be from the IRS?
If you do and they ask you for your bank account or Social Security number and say that’s the only way to get a refund or credit, don’t believe it! Hang up the phone. Do not click on any links in the e-mail. These are scams. The IRS will not call or e-mail you for personal information. If you get a scam e-mail, please forward it to firstname.lastname@example.org so these identity thieves can be stopped.
— Victor Omelczenko is an Internal Revenue Service media relations specialist.