Tag Archives: Internal Revenue Service

Filing your taxes for free

money angle Tax time is agonizing for many as they try to navigate the maze of rules and forms that is the Internal Revenue Service. Computer programs have made it much easier to calculate your taxes for cheap. Before you pickup a program at the store or consider hiring a CPA or tax professional, check to see if you can get  your taxes done for free.

The IRS offers a service called VITA or Volunteer Income Tax Assistance for anyone making $51,000 or less. I used it when I first started in this business and made peanuts. While it’s a good service, you need to be careful. Most of the tax returns these volunteers prepare are simple. However, if you freelance as I did back then to make some extra money be careful. My taxes were done wrong, and then I was stuck fixing the mistakes by myself years later when they were spotted. The volunteer didn’t fully compute the business tax properly for independent contractors and I ended up owing a few dollars more. It wasn’t much money, but it was a headache to fix the mistake.

I still saved money with the volunteers because I got my taxes done for free, but I spent hours fixing their mistakes that were duplicated for a few years.

That was back in the days when people filed paper returns. Now, that computers do the hard work for you those mistakes are less likely to happen. The IRS also has Free File programs which allow you to prepare your taxes for free with online software if you make $57,000 or less. While it’s called Free File, you need to read the fine print on the individual company you choose. It’s only free to file your federal return, and some sites charge you a high fee to file your state return.

Check a few sites before you decide on a company. You should be able to get your state taxes filed for under $20.


Tuesday dedicated to charitable giving and green gifts

We’ve spent money for days shopping for those on our holiday wish list and perhaps ourselves as well. Now, it’s time to give back to our communities on “Giving Tuesday.” The holidays are about self-reflection and giving thanks for what you have and giving back to others. There are simple steps you can take to make sure your money is well spent.

If you’re not into giving back to others, how about giving a gift that is kind to the environment? Tuesday is also Green Tuesday, a day to promote green gift buying.

1. See how independent groups rank the charity
Charity Navigator – star system
Charity Guide from the Better Business Bureau

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Stopping taxpayer identity theft is a daunting task

The tax deadline is looming, but some taxpayers won’t get their refund anytime soon because an identity thief stole their identity and refund. I first reported on this issue last year for NewsChannel 5. Often the consumers have no idea how their identity was stolen. Knowing a thief has your social security number and money financially paralyzes you. Now, an Ohio Senator is pushing for change.

Senator Sherrod Brown (D-Ohio) is supporting legislation that would increase penalties for criminals. That’s needed, but there’s also a manpower issue. The IRS admits very few cases lead to a criminal investigation.

Identity theft cases are time-consuming to investigate. Like most federal investigations, the authorities go after the big fish who file multiple fraudulent returns.

Brown also wants to give authorities more tools to fight fraud. Perhaps the IRS needs to get local authorities involved so some of the smaller fish are caught and more consumers are helped.

The IRS also needs tighter security screening. The Commissioner said at at Congressional subcommittee meeting last year that it’s impossible to compare every return from year to year because it would cause lengthy delays.

However, the IRS admits it needs to do better and even apologized to the victims. Some who waited a year or more to get the tax money they were due that someone else stole.

The IRS is also testing a six-digit PIN with some fraud victims. The PIN changes every year for three years and is being analzyed to see if it increases security. There’s the still the issue of getting your PIN. Mail is not exactly the safest means for doing it. Frankly, I’m surprised W-2 forms are still mailed. A thief simply needs to intercept a W-2 to steal your identity.

Until there are answers and better protection, you need to take every precaution to ensure your identity is safe. Check your credit report for free at Annual Credit Report. There are three credit reporting agencies, and you can check each agency’s report once a year for free. To keep tabs on your credit year round, check one report every four months.

Also, shred everything. It’s time-consuming, but can save you time from unraveling an ID theft case.

Also, there are 10 consumer reports you should get every year that contain your personal information. They’re free to obtain, and help you keep tabs on your good name. Click here to read more about these 10 reports.

Finally, Google your name every once in awhile. I did a story with a woman who searched her name online and found her full credit card number that someone stole. Protect your good name.

Free tax preparation

Filing your taxes doesn’t have to cost a fortune. Many filers can do it for free through the IRS Free File program. The government teams up with software providers to give you access to the online programs that make filing easy without breaking the bank.

The Free File program is available to anyone whose adjusted gross income is $57,000 or less.  While it’s a good program, there are strings attached so choose the software provider carefully. For example, some companies offer Free File if your AGI is $57,000 or less, you’re less than 25, over 65, or active military. Some even specify a state.  You can read through all the qualifications here to find the program for you.

While it’s free to file the federal return, be careful. There are often fees attached with filing a state return, and sometimes the fees are hefty.  They are not disclosed on the IRS site. You have to go to the individual site to find the fees for state filing, and sometimes they are not obvious. Look carefully.

Don’t let all the if’s, and’s, or but’s dissuade you from trying the Free File program. It really can save you money. In tests I’ve done comparing the programs, taxpayers with a simple return really can do their own taxes. Click here for the video results of my test last year for NewsChannel 5.

Don’t want to read through all the fine print to find the program that will cost you the least amount of money? Click here for a breakdown of all last year’s fees. Use this as a starting point in your research, as some of the fees may have gone up or down.

It just takes a little research. Invest 15 minutes finding the best software provider for your situation, and you could save hundreds of dollars on tax preparation fees.

If you file your own taxes, do it securely. Be careful emailing it to yourself, as you’ll create a footprint for that tax return. Don’t believe me. Watch this story.

Finally, go to your browser’s settings and make sure it’s set to private browsing so you don’t leave a digital footprint online.

Click here for private browsing instructions with Internet Explorer

Click here for private browsing instructions with Google Chrome

Click here for private browsing instructions with Firefox

Click here for private browsing instructions with Safari

Adoptive parents still waiting for tax refunds

Seal of the Internal Revenue Service

Image via Wikipedia

Tax season ended months ago, but some adoptive parents are still waiting for their tax refund. Adoptive parents can apply for up to $13,170 in a refundable credit if they meet qualifications.

The adoption credit is the largest refundable credit, and joins a long list of credits like the first time homebuyer credit and child tax credit. There were delays with the homebuyer credit, and the IRS says this is all a result of the agency trying to deal with this new phenomenon of refundable tax credits.

The adoption credit is an incentive to adopt, but these long delays led some parents to worry it will be sway would-be parents away from adoption. The IRS says it’s working on the problem, but simply has to sort through all the paperwork. These refunds require documentation and a paper return at a time when the IRS is moving away from paper.

Complicating matters, the Inspector General says it told the IRS to make changes to speed up processing time but adds that the IRS chose not to make those recommended changes. For more on that part of the story, watch my investigation for NewsChannel 5.

Airlines won’t refund federal taxes

In the midst of the rollercoaster ride on Wall Street, Congress made a major decision about those federal aviation taxes. It received little fanfare given the other problems facing the nation, and now consumers are confused wondering if they’ll get a refund for those aviation taxes.

Last Friday, Congress reinstated the federal aviation taxes retroactively. This means consumers will not get a refund if they paid for the tax and traveled while it was expired.

So, the statements by the IRS and airlines that refunds would be issued are no longer accurate statements. They were made before Congress decided to make the tax retroactive.

Add this to the long list of frustrations for air travelers.

Watch the story I did for NewsChannel 5 explaining this issue, and why a public outcry from consumers probably won’t lead to Congress overturning their decision.

IRS offers guidance on airline refunds

Seal of the Internal Revenue Service

Image via Wikipedia

The IRS is finally announcing guidelines for tax refunds related to the expiration of federal excise taxes on airline tickets. This comes just days after JetBlue announced a plan to offer refunds.

The IRS is asking the airlines to issue the refunds since they have all the details on the passenger’s itinerary, fees paid, and credit information to issue a refund.

If you can’t get a refund from your airline, passengers can request one from the IRS. You’ll have to submit proof of your travel dates and fees paid, but the guidelines for requesting a refund this way are still in development by the IRS. So, it looks like your best bet is to request the refund from the airline or you may be waiting awhile for the IRS.

The expiration of the excise tax means you’ll receive more than 7.5% of the ticket price in the form of a refund. The 7.5% tax is gone, the segment tax of $3.70 per person per segment, international tax of $16.30 per person for flights that begin or end in the U.S., $8.20 charge for person for a flight that begins or ends in Hawaii or Alaska, and the 6.25% tax for transporting property by air is also eliminated until this tax issue is resolved.

While many taxes are gone, most passengers are not seeing lower fares even on international flights. Many of the airlines are not passing the savings onto the consumer.

At this time, most of the airlines have not issued statements on their refund policies or procedures. For now, you can wait until a plan is set or call Customer Service.

JetBlue offering refunds for federal taxes – will others follow?

JetBlue plane at JFK

Image via Wikipedia

JetBlue is stepping up and offering customers a refund for the extra taxes they paid for their airline ticket. Will others follow?

On July 22nd, the Federal Excise Tax expired. If you bought your ticket before July 22nd for travel after July 22, you may be entitled to a refund.

JetBlue detailed the refund process on its blog, BlueTales, and there’s a “Travel Alert” on the company’s main website. Both posts explain how to get a refund for the expired federal excise tax if you have a trip planned in the next seven days. The refund will be for the Federal Excise Tax and other federal taxes travellers paid when they bought their tickets.

JetBlue says to send an email to: dearjetblue@jetblue.com with your name and confirmation number for travel in the next seven days. In the subject line, include “Expired Tax Refund Request.”

JetBlue doesn’t guarantee a timeframe for the refund adding that it will process the request on a first come first serve basis and based on the guidance provided by the Feds.

Of course those of you travelling outside the seven day timeframe are asking what about me? JetBlue says you need to wait. Jet Blue will update you when it has an answer.

American Airlines also has an alert on their main page, but AA is telling consumers to contact the IRS regarding a potential refund for tickets bought before July 22nd for travel after the 22nd.

While AA is sending consumers to the Internal Revenue Service, the tax agency says it doesn’t have a refund policy at this time.

The following statement was issued by the IRS, “The laws authorizing the airline ticket tax and other aviation-related taxes expired at midnight on Friday, July 22. The IRS continues to monitor pending legislation related to this issue. The IRS will continue to work with the airline industry to address issues relating to the collection and payment of the taxes involved. Taxpayers do not need to take any action at this time. The IRS will provide further guidance on this issue in the near future.”

Right now, it’s wait and see for most consumers.

American Airlines does point out that travellers who already began their travel before July 22nd, but still had a leg scheduled after the 22nd are not eligible for a refund. That’s really the only detail in the AA post.

It would be nice to see every airline offer consumers a refund, although refunds are not something consumers are used to with the airline industry. The airlines almost never issue refunds.  Usually it’s the consumer paying lots of extra money in fees to the airline if they want to change their ticket. My message for airlines: renew our faith in air travel and issue refunds. Do the right thing.

Tracking your tax refund

The tax season got off to a late start because of changes the IRS had to make to its system to reflect the tax breaks that were passed in late 2010.  Tens of thousands of people in just Ohio waited until the last two weeks to file. If this is you, no matter where you live, you can check the status of your refund.

If you e-filed and selected direct deposit, your refund should arrive within 7-10 days of filing your return. The date on mine was a lot closer to 10 days.  If you e-filed and selected a paper check your wait will be three weeks.  If you filed a paper return and selected a paper check, your refund will take six weeks.  If you filed an amended return, expect your refund in 8-12 weeks.

If you want to verify that timeline, you can check the status of your refund on the IRS website. Click on “Where’s My Refund” to track your money.  You need to enter your social security number and the amount of your refund, so make sure you are browsing in “private mode.” Click here for tips to browse privately.

If you don’t have a computer, you can call the IRS Refund Hotline at 1-800-829-1954.

There’s also an app for smartphone users.  IRS2GO allows you to check the status of your refund.  Again, be concerned about privacy.

Tax filing for less than $20

People spend hundreds to file their taxes, but you can file them for less than $20. It’s hard to believe, but it’s possible. There are dozens of software programs out there that make it easy to file even if you’re not a tax pro.

We put two programs to the test, and what we found surprised a Certified Public Accountant and our consumer.

If you want to find a cheap program to file your taxes, I read all the fine print to let you know how much they truly cost. Click here to see the easy to follow guide on NewsChannel 5.