April 27, 2015

Tax filing errors that can prompt an audit

The first goal for many Nebraskans today is to get their income taxes filed before the deadline at midnight. For some, after the sigh of relief comes the fear of an audit by the Internal Revenue Service.  Berger and O’Toole CPA Bob Berger says there are a few red flags the IRS looks for when reviewing filings.

Berger says the IRS uses what they call a discriminate income function as a score. That helps the IRS identify taxpayers that have variances from the norm. Berger says, “Those are the ones that are under-reporting income. You forget about the 1099 or a W-2, you leave it off by mistake. The IRS gets that information so they will target you for an audit.”

Berger says they also look for math errors but those are few and far between. He says they also look for high income tax payers. He says, “If you have a year you made a lot of money, you are in a higher tax bracket and the odds of you making a material error or something that is going to generate revenue for them is much higher.”

If you can’t get your taxes filed by the deadline, Berger says request that six month extension. This really only benefits those receiving a refund because all taxes owed are still due today.

Tax procrastinators need not panic; just file an extension

IRS LogoFederal tax returns are due by midnight tonight and officials with the Internal Revenue Service expect more than 48,000 Nebraskans will request an extension this year.

IRS spokesman Bill Brunson says you can go the antiquated route, filling out a paper form that needs to be put in an envelope, stamped and postmarked before midnight, or speed up the process with a few clicks on the agency’s website.

Brunson says, “All you need to do is go to IRS.gov and click on the Free File icon where you can choose to request an extension automatically for an additional six months online at no charge.”

You have until midnight to make the request, which will push your federal tax deadline back to October 15th.

While it used to be a circus-like atmosphere on April 15th, with procrastinators rushing to the post office late at night, most of those offices now keep regular business hours on tax deadline day.

Brunson notes e-filing has all but eliminated that urgency and Nebraska is one of the nation’s e-filing leaders.

“You’re looking at approximately 901,000 returns to be submitted to the IRS for the 2014 tax period and of that number, some 826,000 Nebraskans are projected to electronically file,” Brunson says. “That’s a rate of 91%.”

E-filers also have until midnight to complete the tax task, which Brunson says is more accurate, since the program won’t let you make a math error. He touts another benefit:

“Your electronic return is secure in the sense that, if you have a refund coming, you can choose to have it directly deposited in your savings or checking account, and that item won’t get lost or stolen like an old-fashioned paper check,” Brunson says. “You can expect to get a refund from the Internal Revenue Service in 21 days or less.”

E-filing saves the IRS a bundle. Processing a paper return costs $3.54 on average, while an e-filed return costs more like 18-cents.

IRS owes millions to Nebraskans who skipped 2011 tax returns

IRS LogoApril 15th is the deadline to file your federal taxes, but it’s not just a deadline to get all the information in for 2014.

Internal Revenue Service spokesman Bill Brunson says the clock is also ticking for those who are still owed money from previous years.

Brunson says you have three years from the tax year to file for a refund, so that puts those Nebraskans who haven’t filed 2011 returns on the deadline this year.

“The IRS is looking for about 5,700 Nebraskans who have more than $5-million on the books,” Brunson says, “and the average or median refund for that group is $683.”

He says some of the refunds could be due to people who are eligible for the Earned Income Tax Credit not filing to take advantage as they didn’t realize they had to file, or part-time workers who mistakenly thought they didn’t make enough money to get a refund.

“They could have been going through a divorce, there could have been a death in the family, they may’ve just had other things that caused them to postpone the filing and here it is 2015. Well, if you haven’t filed for 2011, you still have time to do something about it,” Brunson says.

Brunson says you need to file the 2011 forms to claim any refund for that year.

“They can get the information off of www.irs.gov, that prior year return and the instruction booklet is available online,” Brunson says. “And if you don’t have your W2’s or 1099’s from that year, if it has been reported to the Internal Revenue Service by that third party payer, the IRS would then have that information and can provide it to you for free.”

There is no penalty for filing a late return that qualifies for a refund.

 

Property tax deadline for some Nebraskans is March 31

An important tax deadline for Nebraskans in three counties is March 31.  Douglas County Treasurer John Ewing says that is the deadline to pay the first half of 2014 personal property taxes.

Ewing says, “Unfortunately with the state statutes that are in place for people who don’t pay the property taxes that interest accrues at 14% interest.”

This deadline is only for those who live in counties with populations greater than 100,000 and that include three counties in Nebraska, Lancaster, Douglas and Sarpy.

Ewing says residents of those counties can pay by mail, if it is received by midnight on March 31st. Other options include paying in person, by phone or online.

IRS: Tax credit could save Nebraskans a bundle

IRS LogoNow that it’s February, all Nebraskans should have their W-2s and other tax information they’ll need from their employers to fill out their returns.

The Internal Revenue Service is again trying to make sure everyone who is eligible for the Earned Income Tax Credit is taking advantage of it.

IRS spokeswoman Jodi Patterson says the tax credit is based on several factors.

“There are income limits, it depends on the number of children to determine how much you will get,” Patterson says. “I would encourage anyone who makes $53,000 or less to go to www.irs.gov. We have a calculator called the EITC Assistant that will help everybody determine whether or not they are eligible for this credit.”

The EITC provided more than $66-billion to almost 28-million households last year, but Patterson says there were still those who missed out.

“Every year, a third of the population of those who are eligible move in and out, people get different jobs, they lose their jobs, and so a lot of people are not aware of it. They will eligible for the first time,” Patterson says. “Four out of five people do claim the credit, but that means 20% of the people aren’t getting it.”

Many Nebraskans do take advantage of the credit. About 136,000 Nebraska taxpayers claimed the EITC in 2014 for a total of $310-million.

The average credit paid in 2013 was $2,400 dollars and for the 2014 tax year, the credit could be as much as $6,143 dollars for a family with three or more children.

Patterson says often, people qualify but they don’t make enough money to even be required to file a tax return, so they don’t know they are eligible — and you have to file a tax return in order to get it. She says you don’t have to spend anything to file for the benefit as the agency offers a Free File program on its website.