Add this to the usual reasons for not getting around to income tax filing: the weather is just too good to spend it organizing documents and filling out tax forms.
That excuse won’t work with the Internal Revenue Service, of course. But it’s better than “The dog chewed up my tax forms.”
Seriously, the time has arrived even for procrastinators to get this year’s tax filings out the door by April 15. About half of Washington’s approximately 2.7 million taxpayers have filed already, according to IRS numbers through March 6. If you’re among those who haven’t, chances are that you are among those who expect to pay the government this year, or do no better than break even. The expectation of a tax return is a powerful motivator for promptness.
All of us know the basic drill, made easier these days by electronic filing software. For those just jumping into 2014 taxes, the biggest change is in the area of health care. This is the first year the Affordable Care Act, dubbed Obamacare by some, makes its way into the IRS lexicon.
“The Obamacare individual mandate has been the new hot topic this year,” said Chris Harlow, a CPA at the investment advisory firm NW Tax & Wealth Advisory Group in Vancouver.
Harlow says that many people remain confused about the law and their responsibility to obtain insurance or pay a financial penalty. Detailed information is available at www.irs.gov/Affordable-Care-Act.
Harlow reminds those who owe taxes that the IRS allows deductions in calendar year 2014 taxes for Individual Retirement Account contributions made through April 15 of this year. It’s a good way to cut your tax bill while increasing savings, he notes.
While TurboTax and other tax filing tools are increasingly popular, they’re obviously dependent on the quality of information entered into their template. Harlow finds that some taxpayers with rental property or small business ownership miss out on deductions if they rely on the tax software.
“If you have anything more than just wages, you should have a professional involved in the preparation of return,” he said.
What follows are tips from the IRS on how to reduce risk of errors in tax filings, secure the deductions you’re owed, and avoid penalties.
We’ve included contact information on where to obtain free or inexpensive tax assistance.
Basic Information
o Getting started: Go to IRS.gov (www.irs.gov) and check out the IRS Services Guide (www.irs.gov/pub/irs-pdf/p5136.pdf) for a quick overview of online services and resources. It’s also the go-to place to check the status of a refund or get answers to tax questions day or night.
o Understanding tax law: An Interactive Tax Assistant (www.irs.gov/uac/Interactive-Tax-Assistant-(ITA)-1) guides taxpayers through a series of common questions. Other helpful tools are Publication 17, (www.irs.gov/pub/irs-pdf/p17.pdf) and the IRS Tax Map, (http://taxmap.ntis.gov/taxmap/) which allows search by topic or keyword for single-point access to tax law information by subject. Another option: TeleTax at 1-800-829-4477 for recorded information on general and business tax topics.
o Can’t pay the bill? The IRS Online Payment Agreement tool (http://www.irs.gov/Individuals/Online-Payment-Agreement-Application) lets you know if you qualify for an installment agreement with the IRS.
o Free tax preparation software: Free File, available at IRS.gov/FreeFile (www.irs.gov/uac/Free-File%3A-Do-Your-Federal-Taxes-for-Free), provides brand-name tax software products and electronic filing service to qualified low-income and senior taxpayers. If you earned $60,000 or less last year, you are eligible to choose from among products offered by the 14 tax software companies that form the Free File Alliance. Everyone is eligible for Free File fillable forms, the electronic version of IRS paper forms.
o Affordable Care Act: Most taxpayers just need to check a box confirming they have health insurance coverage. But taxpayers who obtain insurance through the Washington Healthplan Finder (wahealthplanfinder.org) will need to provide additional information. Go to IRS.gov (IRS.gov/aca) for answers to health care tax questions.
Avoiding Mistakes
o File electronically. IRS says electronic filing vastly reduces errors since the tax software does the calculations, flags common errors and prompts taxpayers for missing information. Paper filers should check IRS.gov (www.irs.gov/) or their form instructions for the appropriate filing address.
o Review figures and personal information. While software catches and prevents many errors on e-file returns, math errors remain common on paper returns. And double-check Social Security numbers and other personal information.
o Get the right routing and account numbers. Incorrect financial institution routing and account numbers can cause a refund to be delayed or deposited into the wrong account.
o Sign and date the return. If filing a joint return, both spouses must sign and date the return. E-filers may sign using a self-selected personal identification number (PIN).
o Attach all required forms. Paper filers need to attach W-2s and other forms to the front of their returns in the sequence number order shown in the upper right-hand corner.
o Keep a copy of the return. Once ready to be filed, taxpayers should make a copy of their signed return and all schedules for their records.
o Request a filing extension. Requesting a filing extension using Free File or Form 4868 (www.irs.gov/pub/irs-pdf/f4868.pdf) will prevent late filing penalties. But even with a filing extension, tax payments are still due April 15.
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Estimating taxes: The IRS Withholding Calculator (www.irs.gov/Individuals/IRS-Withholding-Calculator) helps employees make sure the amount of income tax taken out of their pay is neither too high nor too low. This tool can be particularly useful to taxpayers who, after filling out their tax returns, find that the refund or balance due was higher than expected.
o Paying taxes. Direct online payments can now be made using the Pay Your Tax Bill icon on IRS.gov (www.irs.gov/Payments). The service allows individuals to securely pay their tax bills or make quarterly estimated tax payments directly from checking or savings accounts without any fees or pre-registration.
Personal help
Taxpayers can drop in to the IRS tax assistance center at 500 W. 12th St. in Vancouver. Hours are 9 a.m. to 4:30 p.m. weekdays, with a closure for lunch hour from 12:45 to 1:45 p.m.
Another source of help is the AARP Tax-Aide program, a cooperative effort with the IRS. The 70 local Tax-Aide volunteers in Clark and Skamania counties have so far helped more than 2,000 residents and prepared over 1,300 federal tax returns. They’re trained to assist taxpayers with tax issues related to the Affordable Care Act, Health Savings Account and Earned Income Tax Credit. Photo ID is required for the taxpayer and a spouse, if both are present. Taxpayers should bring all tax records and last year’s return.
Walk-in services available at eight sites: the Fort Vancouver Regional Library District’s Three Creeks, Cascade Park, Vancouver Community, Battle Ground and Stevenson libraries; the Camas Public Library; Marshall Community Center and the Community Housing Resource Center.
Taxpayers can make appointments for tax assistance at the Camas Public Library, Three Creeks Community Library and at Community Housing Resource Center. Call 360-690-4496, extension 105, during business hours.
More information, including details on what to bring and hours at SW Washington AARP Tax-Aide website at aarp-tax-aide-sw-washington.org/sites.html.
