By Lavestia Gaston-Harper
As we count the days down to the end of Tax Season remember that e-file is a faster and more efficient way to file your taxes. Electronically filling your return helps to avoid making mistakes that could delay your refund. Avoid doing your taxes at the last minute. If you rush to make the filing deadline and file a tax return on paper, you may overlook tax savings. However, if you fall among the people who owe the government money, it’s time to get in gear and file your tax return as soon as pos- sible. Remember if you file your taxes late you’ll receive a 5 percent penalty on the amount you owe for every month you delay, up to a 25 percent cap. Fail to file completely, and the consequences become much worse.
If you are expecting an income tax re-fund, chances are you won’t get the same level of reprimanding from the Internal
Revenue Service that others who owe money can expect to receive. Delaying the reimbursement of your refund is like giving Uncle Sam an interest-free loan and giving up the ability to save or invest that money at a higher return. Also, don’t take the chance of the forfeiture of your tax refund. Just because you don’t owe the IRS money doesn’t mean you can keep your
refund on hold indefinitely.
When you’re owed a reimbursement from the government, its in no rush to pay you back. In fact, Uncle Sam will give you three long years after the tax year for which you filed to claim your back tax refund. After this generous window, however, the IRS will consider your unclaimed refund a generous “donation,” and you’ll be out of your rightful cash.
Don’t be a victim of the substitute tax return. Individuals who fail to submit their tax return by the deadline (or extension deadline, if applicable) aren’t in the clear yet. In fact, the IRS will attempt to contact delinquent tax filers repeatedly and remind them to file their tax returns.
If their efforts fail, the IRS reserves the right to file a substitute for the return on behalf of the filer. The form calculates the amount of taxes owed based on taxable income, plus any applicable penalties. Payments made to self-employed individuals are also used in SRF computations, as are dividends paid on investments.
A substitute return isn’t necessarily conducted in filers’ best interest. This course of action does not take into account tax credits and deductions that may reduce your taxable income, which means you may be overpaying on your taxes in the end. If you receive a bill from the IRS indicating that it performed an SRF, you can still file your tax return to claim your deductions and expenses. The IRS usually will make the appropriate corrections.