IRS Offers Tips for Dealing with Notices

Each year, the IRS sends millions of letters and notices to taxpayers for a variety of reasons. Here are ten things you should know about IRS notices in case one shows up in your mailbox.

1. Don’t panic. Many of these letters require a simple response.

2. There are many reasons why the IRS sends correspondence. If you receive an IRS notice, it will typically cover a very specific issue about your account or tax return. Notices may require payment, notify you of changes to your account or ask you to provide more information.

3. Each notice offers specific instructions on what you need to do to satisfy the inquiry.

4. If you receive a notice advising you that the IRS has corrected your tax return, you should review the correspondence and compare it with the information on your return.

5. If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise.

6. If you do not agree with the correction the IRS made, it is important that you respond as requested. You should send a written explanation of why you disagree. Include any information and documents you want the IRS to consider with your response. Mail your reply with the bottom tear-off portion of the IRS letter to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

7. You should be able to resolve most notices that you receive without calling or visiting an IRS office. If you do have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the notice with you when you call. This will help the IRS answer your inquiry.

8. Remember to keep copies of any notices you receive with your other income tax records.

9. The IRS sends notices and letters by mail. The agency never contacts taxpayers about their tax account or tax return by email.

10. For more information about IRS notices and bills, visit IRS.gov. Click on the link ‘Responding to a Notice’ at the bottom left of the home page. Also, see Publication 594, The IRS Collection Process. The publication is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Responding to a Notice 
• Publication 594, The IRS Collection Process

Six Facts on Tax Refunds and Offsets

Certain financial debts from your past may affect your current federal tax refund. The law allows the use of part or all of your federal tax refund to pay other federal or state debts that you owe.

Here are six facts from the IRS that you should know about tax refund ‘offsets.’

1. A tax refund offset generally means the U.S. Treasury has reduced your federal tax refund to pay for certain unpaid debts.
2. The Treasury Department’s Financial Management Service is the agency that issues tax refunds and conducts the Treasury Offset Program.
3. If you have unpaid debts, such as overdue child support, state income tax or student loans, FMS may apply part or all of your tax refund to pay that debt.
4. You will receive a notice from FMS if an offset occurs. The notice will include the original tax refund amount and your offset amount. It will also include the agency receiving the offset payment and that agency’s contact information.
5. If you believe you do not owe the debt or you want to dispute the amount taken from your refund, you should contact the agency that received the offset amount, not the IRS or FMS. 
6. If you filed a joint tax return, you may be entitled to part or all of the refund offset. This rule applies if your spouse is solely responsible for the debt. To request your part of the refund, file Form 8379, Injured Spouse Allocation. Form 8379 is available on IRS.gov or by calling 1-800-829-3676.

Additional IRS Resources:

• Tax Topic 203 - Refund Offsets
• Form 8379, Injured Spouse Allocation 
• Treasury Offset Program - U.S. Treasury Financial Management Service website

Ten Facts on Filing an Amended Tax Return

What should you do if you already filed your federal tax return and then discover a mistake? Don’t worry; you have a chance to fix errors by filing an amended tax return. This year you can use the new IRS tool, ‘Where's My Amended Return?’ to easily track the status of your amended tax return. Here are 10 facts you should know about filing an amended tax return.

1. Use Form 1040X, Amended U.S. Individual Income Tax Return, to file an amended tax return. An amended return cannot be e-filed. You must file it on paper.

2. You should consider filing an amended tax return if there is a change in your filing status, income, deductions or credits.

3. You normally do not need to file an amended return to correct math errors. The IRS will automatically make those changes for you. Also, do not file an amended return because you forgot to attach tax forms, such as W-2s or schedules. The IRS normally will send a request asking for those.

4. Generally, you must file Form 1040X within three years from the date you filed your original tax return or within two years of the date you paid the tax, whichever is later. Be sure to enter the year of the return you are amending at the top of Form 1040X.

5. If you are amending more than one tax return, prepare a 1040X for each return and mail them to the IRS in separate envelopes. You will find the appropriate IRS address to mail your return to in the Form 1040X instructions.

6. If your changes involve the need for another schedule or form, you must attach that schedule or form to the amended return.

7. If you are filing an amended tax return to claim an additional refund, wait until you have received your original tax refund before filing Form 1040X. Amended returns take up to 12 weeks to process. You may cash your original refund check while waiting for the additional refund.

8. If you owe additional taxes with Form 1040X, file it and pay the tax as soon as possible to minimize interest and penalties.

9. You can track the status of your amended tax return three weeks after you file with the IRS’s new tool called, ‘Where’s My Amended Return?’ The automated tool is available on IRS.gov and by phone at 866-464-2050. The online and phone tools are available in English and Spanish. You can track the status of your amended return for the current year and up to three prior years.

10. To use either ‘Where’s My Amended Return’ tool, just enter your taxpayer identification number (usually your Social Security number), date of birth and zip code. If you have filed amended returns for more than one year, you can select each year individually to check the status of each. If you use the tool by phone, you will not need to call a different IRS phone number unless the tool tells you to do so.

Additional IRS Resources:

• Form 1040X, Amended U.S. Individual Income Tax Return
• Where's My Amended Return? tool
• Tax Topic 308 - Amended Returns
• Q&A about amended returns and Form 1040X

IRS Warns Donors about Charity Scams Following Recent Tragedies in Boston and Texas

It’s sad but true. Following major disasters and tragedies, scam artists impersonate charities to steal money or get private information from well-intentioned taxpayers. Fraudulent schemes involve solicitations by phone, social media, email or in-person.

Scam artists use a variety of tactics. Some operate bogus charities that contact people by telephone to solicit money or financial information. Others use emails to steer people to bogus websites to solicit funds, allegedly for the benefit of tragedy victims. The fraudulent websites often mimic the sites of legitimate charities or use names similar to legitimate charities. They may claim affiliation with legitimate charities to persuade members of the public to send money or provide personal financial information. Scammers then use that information to steal the identities or money of their victims.

The IRS offers the following tips to help taxpayers who wish to donate to victims of the recent tragedies at the Boston Marathon and a Texas fertilizer plant:

• Donate to qualified charities.  Use the Exempt Organizations Select Check tool at IRS.gov to find qualified charities. Only donations to qualified charitable organizations are tax-deductible. You can also find legitimate charities on the Federal Emergency Management Agency (FEMA) Web site at fema.gov.
• Be wary of charities with similar names.  Some phony charities use names that are similar to familiar or nationally known organizations. They may use names or websites that sound or look like those of legitimate organizations.
• Don’t give out personal financial information.  Do not give your Social Security number, credit card and bank account numbers and passwords to anyone who solicits a contribution from you. Scam artists use this information to steal your identity and money.
• Don’t give or send cash.  For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the donation.
• Report suspected fraud.  Taxpayers suspecting tax or charity-related fraud should visit IRS.gov and perform a search using the keywords “Report Phishing.”

More information about tax scams and schemes is available at IRS.gov using the keywords “scams and schemes.”

Additional IRS Resources:

• IRS Wants You to Know About Schemes, Scams and Cons
• Tax Scams - How to Report Them
• Reporting Phishing
• Identity Protection Tips
• Protect Yourself from the Dirty Dozen Tax Scams - Special Edition Tax Tip 2013-08
• Publication 526, Charitable Contributions

Did You Miss the April 15th Deadline for Filing Your Taxes?

If you missed the April 15th deadline for filing your personal income tax return(s), you are still responsible for filing the return(s). Many people are afraid to file their returns once they have missed the April 15th due date for the returns to be filed (not counting extensions) for fear that the IRS will hit them with stiff penalties and fines.

The IRS does not usually hit a taxpayer with late filing penalties or fines if the taxpayer is due a refund on their federal tax return. However, the IRS DOES hit taxpayers with fines and penalties if the taxpayer OWES money to the IRS with their tax return. The fines and penalties continue to accrue until the tax return is filed and the amount due is paid.

State laws vary from one state to another with regard to filings late tax returns, whether a refund is due or if taxes are due. However, this does not mean that taxpayers should not file their state tax return.

The best thing a taxpayer can do is to file their federal and state tax returns as soon as possible in order to minimize any penalties and fines that may be imposed due to the returns being filed late.

Fines and penalties may be abated if the taxpayer has a good reason why their return is filed late. The abatement is determined on a case-by-case basis.

If you have not filed your tax return yet, we are available to help you get your return(s) filed with the IRS and your state (if applicable). Don't hesitate to contact us if you need help preparing and filing your tax returns. Contact Ken Reid by email at mastertype@mabspc.com  or by phone at 773-792-1910.

Ten Helpful Tips for Paying Your Taxes

Are you making a payment with your federal tax return this year? If so, here are 10 important things the IRS wants you to know about correctly paying your federal income taxes.

1. Never send cash.

2. If you file electronically, you can file and pay in a single step with an electronic funds withdrawal. If you e-file by yourself you can use your tax preparation software to make the withdrawal. If you use a tax preparer to e-file, you can ask the preparer to make your tax payment electronically.

3. Whether you file a paper return or e-file your return, you can pay by phone or online with a credit or debit card. The company that processes your payment will charge a processing fee.

4. If you file Schedule A, Itemized Deductions, you may be able to deduct the credit or debit card processing fee on next year’s return. This is a miscellaneous itemized deduction subject to the 2 percent limit.

5. Electronic payment options provide another way to pay taxes by check or money order. You can make payments 24 hours a day, seven days a week. Visit IRS.gov and click on the ‘Payments’ tab near the top left of the home page for more details.

6. If you pay by check or money order, make sure it is payable to the “United States Treasury.”

7. Be sure to write your name, address and daytime phone number on the front of your payment. Also, write the tax year, form number you are filing and the first Social Security number listed on your tax return.

8. Complete Form 1040-V, Payment Voucher, and include it with your tax return and payment when mailing it to the IRS. Double-check the IRS mailing address. This will help the IRS process your payment accurately and efficiently. Go to IRS.gov to download and print this form.

9. Remember to enclose your payment with your return but do not staple it to any tax form.

10. For more information, call 800-829-4477 and select TeleTax Topic 158, Ensuring Proper Credit of Payments. You can also find out more in the Form 1040-V instructions available at IRS.gov.