The Internal Revenue Service today urged taxpayers who have a filing extension through Oct. 16 to check their returns for often-overlooked tax benefits. When they are ready to file, the IRS recommends they file their return electronically using IRS e-file or the Free File system. Both are still available for taxpayers who still need to file their return.
Although Oct. 16 is the last day for most people to file, some individuals -- such as members of the military serving in a combat zone -- are allowed more time to file. Typically, they have until 180 days after they leave the combat zone to both file their return and pay any taxes due.
In addition, taxpayers who have a valid extension and are in or affected by a federally declared disaster area may be allowed more time to file. Currently, taxpayers in parts of Michigan, West Virginia and those impacted by Hurricanes Harvey, Irma and Maria qualify for this relief. See the disaster relief page on IRS.gov for details.
Check for Tax Benefits
Before filing, the IRS encourages taxpayers to take a moment to see if they qualify for these and other significant credits and deductions:
- Benefits for low- and moderate-income workers and families, especially the Earned Income Tax Credit, can increase a taxpayer’s refund and lower the amount of taxes they pay. The EITC Assistant can help taxpayers see if they’re eligible.
- Savers credit, claimed on Form 8880, for low- and moderate-income workers who contributed to a retirement plan, such as an IRA or 401(k).
- American Opportunity Tax Credit, claimed on Form 8863, and other education tax benefits for parents and college students.
E-file and Free File
The IRS urges taxpayers to choose the speed and convenience of electronic filing and direct deposit for their refunds. Fast, accurate and secure, filing electronically is an ideal option for those rushing to meet the Oct. 16 deadline. The IRS verifies receipt of an e-filed return and people who file electronically make fewer mistakes. Of the 145.3 million returns received by the IRS so far this year, approximately 87.5 percent -- or 127.2 million -- have been e-filed.
Everyone can use Free File, either the brand-name software, offered by the IRS’s commercial partners to individuals and families with incomes of $64,000 or less, or online fillable forms, the electronic version of IRS paper forms available to taxpayers at all income levels. IRS Free File remains available either online at IRS.gov/FreeFile or through the mobile app, IRS2Go.
More than eight of 10 taxpayers enjoy the convenience of direct deposit. Taxpayers can choose to have their refunds deposited into as many as three accounts. See Form 8888 for details.
Free Tax Help
Free face-to-face tax help is still available across the country. The IRS sponsors free tax preparation assistance through the Volunteer Income Tax Assistance (VITA) program and the Tax Counseling for the Elderly (TCE) program. Both programs provide IRS-certified volunteers to prepare federal and state tax returns electronically for people with low- to-moderate income, seniors, disabled individuals or people who speak English as a second language. More information on available locations, times and what to bring can be found by typing “free tax preparation” in the search box on IRS.gov.
Quick and Easy Payment Options
IRS Direct Pay offers taxpayers a fast and easy way to pay what they owe. Direct Pay is free and allows individuals to securely pay their tax bills or make quarterly estimated tax payments online directly from checking or savings accounts without any fees or pre-registration.
Taxpayers can also pay by debit or credit card. While the IRS does not charge a fee for this service, the payment processer will. Other payment options include the Electronic Federal Tax Payment System (enrollment is required) and Electronic Funds Withdrawal which is available when e-filing. Taxpayers can also pay what they owe using the IRS2Go mobile app. All of the electronic payment options are quick, easy and secure and much faster than mailing in a check or money order. Those choosing to pay by check or money order should make the payment out to the “United States Treasury.”
Taxpayers with extensions should file their returns by Oct. 16, even if they can’t pay the full amount due. By doing so, taxpayers will avoid the late-filing penalty, normally 5% per month, that would otherwise apply to any unpaid balance after Oct. 16. However, interest, currently at the rate of 4% per year compounded daily, and late-payment penalties, normally .5% per month, will continue to accrue.
Help for Struggling Taxpayers
In many cases, those struggling to pay taxes qualify for one of several relief programs. Most people can set up a payment agreement with the IRS online 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.
Alternatively, taxpayers can request a payment agreement by filing Form 9465. This form can be downloaded from IRS.gov and mailed along with a tax return, bill or notice.
Some 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 owed. 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 make a determination regarding the taxpayer’s ability to pay. To help determine eligibility, use the Offer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.
Planning Ahead for 2018
Taxpayers can begin taking steps now to ensure smooth processing of their 2017 tax return next year. The IRS offers these reminders:
- All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
- Check withholding. If not enough tax is withheld, a taxpayer will owe tax and may have to pay interest and a penalty. If too much tax is withheld, a taxpayer loses the use of that money until they get their refund. A taxpayer can reduce the refund amount and boost take-home pay by claiming additional withholding allowances on the Form W-4 they give to their employer. Anyone who owes tax can have additional tax withheld or make quarterly estimated tax payments to the IRS. For help, use the Withholding Calculator on IRS.gov.
- Like last year, the IRS cautions taxpayers not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations. Although the IRS issues most refunds in less than 21 days, some returns are held for further review. Beginning in 2017, a new law approved by Congress requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit until mid-February. The IRS must hold the entire refund — even the portion not associated with the EITC and ACTC.
- Employers are required to file their copies of Forms W-2 and certain Forms 1099 with the federal government by Jan. 31. This change began last year. The Jan. 31 deadline has long applied to employers furnishing copies of these forms to their employees.