Start Planning Now for Next Year’s Taxes

You may be tempted to forget all about your taxes once you’ve filed your tax return. Do not give in to that temptation. If you start your tax planning now, you may avoid a tax surprise when you file next year. Now is a good time to set up a system so you can keep your tax records safe and easy to find. Here are some IRS tips to give you a leg up on next year’s taxes:

• Take action when life changes occur.  Some life events can change the amount of tax you pay. Some examples that can do that include a change in marital status or the birth of a child. When they happen, you may need to change the amount of tax withheld from your pay. To do that, file a new Form W-4, Employee's Withholding Allowance Certificate, with your employer. Use the IRS Withholding Calculator tool on IRS.gov to help you fill out the form.
• Report changes in circumstances to the Health Insurance Marketplace.  If you enroll in insurance coverage through the Health Insurance Marketplace in 2015, you should report changes in circumstances to the Marketplace when they happen. Report events such as changes in your income or family size. Doing so will help you avoid getting too much or too little financial assistance in advance.
• Keep records safe.  Put your 2014 tax return and supporting records in a safe place. If you ever need your tax return or records, it will be easy for you to get them. For example, you may need a copy of your tax return if you apply for a home loan or financial aid. You should use your tax return as a guide when you do your taxes next year.
• Stay organized.  Make tax time easier. Have your family put tax records in the same place during the year. That way you won’t have to search for misplaced records when you file next year.
• Shop for a tax preparer.  If you want to hire a tax preparer to help you with tax planning, start your search now. Choose your tax preparer wisely. Use the Directory of Tax Return Preparers tool on IRS.gov to find tax preparers in your area with the credentials and qualifications that you prefer.
• Think about itemizing.  If you claim a standard deduction on your tax return, you may be able to lower your taxes if you itemize deductions instead. A donation to charity could mean some tax savings. See the instructions for Schedule A, Itemized Deductions, for a list of deductions.
• Stay informed.  Subscribe to IRS Tax Tips to get emails about tax law changes, how to save money and much more. You can also get Tax Tips on IRS.gov or IRS2Go, the IRS mobile app. You’ll receive Tips each weekday in the tax filing season and three days a week in summer. You will also get Special Edition Tax Tips at other times during the year.

Planning now can pay off with savings at tax time next year.

Additional IRS Resources:

• Publication 505,Tax Withholding and Estimated Tax
• Publication 5152, Report changes to the Marketplace as they happen
• Publication 17, Your Federal Income Tax, see Chapter 1, under “What Records Should I Keep?”

Determine if You Should File an Amended Tax Return After Receiving a Corrected Form 1095-A

If you enrolled in qualifying Marketplace health coverage, you have probably filed a tax return based on a Form 1095-A that you received from the Marketplace. Your Marketplace may have subsequently told you that your original Form 1095-A contained an error, and sent a corrected Form 1095-A,

You do not need to file an amended return based on your corrected Form 1095-A.  This is true even if additional taxes would be owed based on the new information.  Nonetheless, you may choose to file an amended return.  Comparing the forms can help you determine whether you are likely to benefit from filing an amended tax return.

Specifically, you are likely to receive a larger refund or owe a smaller tax payment using the corrected Form 1095-A if the two Forms 1095-A generally show the same information but any one of the five scenarios below is true on the corrected form.

1.    Second Lowest Cost Silver Plan Premium is Larger: The monthly premium amounts of the second lowest cost silver plan, shown in Part III, column B, lines 21-32, are greater on the corrected form than on the original form.

2.    Monthly Premium Amounts are Larger: The monthly premium amounts of the plan in which you enrolled, shown in Part III, column A, lines 21-32, are greater on the corrected form than on the original form.

3.    Advance Payment of the Premium Tax Credit Amounts are Lower: The monthly amounts of advance payment of the premium tax credit shown in Part III, column C, lines 21-32 are smaller on the corrected form than on the original form.

4.    More Months of Coverage: Your corrected Form 1095-A lists more months of coverage and your situation meets all the following conditions:

• The corrected form shows more months of coverage than the original form. This means that the corrected form shows positive values in more of the rows under Part III than the original form.   
• The values are the same on the corrected form for the months that the original form showed coverage.
• On your original tax return, you claimed a net premium tax credit, meaning you entered a value on line 26 of the Form 8962 you filed.

5.    Fewer Months of Coverage: Your corrected From 1095-A lists fewer months of coverage and your situation meets all the following conditions:

• The corrected form shows fewer months of coverage than the original form. This means that the corrected form shows positive values in fewer of the rows under Part III than the original form.   
• The values are the same on the original form for the months that the corrected form shows coverage.
• On your original tax return, you reported owing a repayment of excess APTC, meaning you entered a value on line 29 of the Form 8962 you filed. 

If there were multiple differences between your original and the corrected forms or you are not sure if you would benefit from amending, you may want to consult with a tax preparer:

For more information, see our Questions and Answers - Incorrect Forms 1095-A and the Premium Tax Credit.

How Does the Taxpayer Advocate Service Work for You?

The Taxpayer Advocate Service is an independent organization within the Internal Revenue Service. We protect taxpayers’ rights by ensuring that all taxpayers receive fair treatment. We can also help you to know and understand your rights under the Taxpayer Bill of Rights.

What is the Taxpayer Bill of Rights?

The Taxpayer Bill of Rights describes ten basic rights that all taxpayers have when dealing with the IRS. Our taxpayer rights webpage can help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them.

Our site at taxpayeradvocate.irs.gov also can help you with common tax issues and situations: what to do if you made a mistake on your tax return, if you got a notice from the IRS or you’re thinking about hiring a tax preparer.

What can a Taxpayer Advocate do for you?

We can help you resolve problems that you can’t resolve with the IRS. And our service is free. Always try to resolve your problem with the IRS first, but if you can’t, then come to the Taxpayer Advocate Service. The best thing you can do is act now!

• We help individuals, businesses, and exempt organizations. If you qualify for our help, your advocate will be with you at every turn and do everything possible.
• You may be eligible for our help if your IRS problem is causing financial difficulty or you believe an IRS procedure just isn't working as it should.
• We have offices in every state, the District of Columbia, and Puerto Rico. Your local advocate’s number is in your local directory and at taxpayeradvocate.irs.gov. You can also call us at 1-877-777-4778.  

We also handle large-scale problems that affect many taxpayers. If you know of one of these broad issues, please report it to us at irs.gov/sams.

The Taxpayer Advocate Service is your voice at the IRS. For more information, visit us at taxpayeradvocate.irs.gov.

Revised Tax Credit Certification Form Now Available; Eligible Employers Have Until April 30 to Request Required Certification

WASHINGTON — Businesses and tax-exempt organizations planning to claim the  work opportunity tax credit (WOTC) for eligible workers hired during 2014 have until April 30 to request the certification required for these workers, according to the Internal Revenue Service.

Newly revised Form 8850, now available on IRS.gov, is used by employers to request certification from their state workforce agency. The Tax Increase Prevention Act, enacted Dec. 19, 2014, retroactively extended this credit for one year through the end of 2014.

The work opportunity tax credit offers tax savings to businesses that hired workers who meet various eligibility criteria including certain veterans, people ages 18 to 39 living in designated communities in various parts of the country, recipients of various types of public assistance and certain summer youth workers and ex-felons. The credit is also available to tax-exempt organizations who hired qualifying veterans during 2014. The instructions to Form 8850 detail the requirements that apply to eligible new hires.

Normally, an employer must file Form 8850 with the state workforce agency within 28 days after the eligible worker begins work. But due to the late enactment of the legislation extending the WOTC, the IRS is giving employers extra time, until April 30, 2015, to make this request. Details are in Notice 2015-13 available on IRS.gov.

Top 10 Tips to Know if You Get a Letter from the IRS

The IRS mails millions of notices and letters to taxpayers each year. There are a variety of reasons why we might send you a notice. Here are the top 10 tips to know in case you get one.

1.    Don’t panic. You often can take care of a notice simply by responding to it.

2.    An IRS notice typically will be about your federal tax return or tax account. It will be about a specific issue, such as changes to your account. It may ask you for more information. It could also explain that you owe tax and that you need to pay the amount that is due.

3.    Each notice has specific instructions, so read it carefully. It will tell you what you need to do.

4.    You may get a notice that states the IRS has made a change or correction to your tax return. If you do, review the information and compare it with your original return.

5.    If you agree with the notice, you usually don’t need to reply unless it gives you other instructions or you need to make a payment.

6.    If you do not agree with the notice, it’s important for you to respond. You should write a letter to explain why you disagree. Include any information and documents you want the IRS to consider. Mail your reply with the bottom tear-off portion of the notice. Send it to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

7.    You won’t need to call the IRS or visit an IRS office for most notices. If you do have questions, call the phone 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 questions.

8.    Always keep copies of any notices you receive with your other tax records.

9.    Be alert for tax scams. The IRS sends letters and notices by mail. The IRS does not contact people by email or social media to ask for personal or financial information.

10.    For more on this topic 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. You can get it on IRS.gov/forms at any time.

If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media. You can also subscribe to IRS Tax Tips or any of our e-news subscriptions.

Additional IRS Resources:

• Tax Topic 651 – Notices – What to Do
• Tax Topic 653 – IRS Notices and Bills, Penalties and Interest Charges 
• Understanding Your CP2000 Notice