What do you need when filing taxes

what do you need when filing taxes

Find out if you’re at risk for an audit, and the quickest way to get your refund.

It’s that time of year, when tax forms start arriving in the mail and you know that one day soon you’re going to have to devote a Saturday to crunching some numbers for Uncle Sam. To make matters a little more bearable, we tracked down Eric Smith, IRS spokesman, for answers to your most pressing tax questions, some of which you sent us over Twitter. Excerpts from our conversation:

What is the easiest and cheapest way to file your taxes?

The best way to file a return is electronically. Seven in ten people file electronically, and that goes up every year. About six in ten people use a tax preparer, but a growing number of self-prepared taxes are also done electronically, through commercial software or the Free File system (available on the IRS website).

Do you have to earn below a certain income to be eligible for that?

If you earn $58,000 or less, then you can use the full-blown version (based on commercial software), and if you earn more than that, you can use a rudimentary version with fillable forms. It does some of the math for you, but essentially you’re filling out a form.

Do many people just skip doing their taxes altogether? What happens to them?

Yes, but not everyone needs to fill out a return. If you earn below a certain level, the law doesn’t require you to file a return. Some people may be facing a crisis in their life—a natural disaster, drug or alcohol problem, depression, or they might have lost their job or be getting divorced. There are people who are just in general having trouble taking care of their personal business, and filing returns is part of that personal business.

We try to tell people, if you’ve gotten behind, there’s no better time to get caught up than now. Yes, there might be charges, but it’s better if you come clean—if you contact us before we contact you. But lots of people are just hurting themselves by leaving refunds on the table.

Do you still get that refund if you’re late?

If you have a refund coming, then you get it in full for three years, as a general rule. So if you’re going to put it off, don’t put it off too long, because you can lose the opportunity to get that money. After three years, you lose your right to that refund, but you’re still required to file if your income meets the threshold.

What’s the quickest way to get your tax refund?

Filing electronically and then choosing direct deposit. The majority

of people who claim refunds are choosing direct deposit, and that’s true of paper filers, too. You can speed up your refund by at least a week by choosing direct deposit. We also launched a new smartphone app that lets people check the status of their refund within 72 hours of filing electronically. We’re going to add other features.

Who is most likely to be audited?

We try to identify returns that are most likely to be wrong. They might be innocent mistakes, or less innocent. If people are in business with a large amount of cash involved, that’s often a situation where people are unintentionally or purposely forgetting to report cash income. If it’s a complicated return, with lots of deductions and credits, we encourage you to claim them, but you need to keep good records of your expenses. There’s a greater chance we will want to take a look at those. If it’s a standard, straightforward return, then you probably won’t hear from us.

How should people respond when they receive a letter from the IRS? It can be a little scary.

Most letters people get from the IRS have nothing to do with audits. Maybe you made a math error, which are very common, even with computers and calculators. Everyone makes mistakes. You might have a refund that you didn’t receive, so it might be good news. (Editor’s note: Don’t fall for the fake IRS E-mail scam. The IRS never solicits personal information through E-mails or by phone.)

Any advice for people who earn a lot of their income in cash, such as through tips?

The most important thing is that the law requires you to report those tips to your employer, and then they withhold income tax and Social Security on those tips. It’s no different from any other earnings, and under law, it’s taxable just like the money you receive by check. Keep good records of the tips you are receiving.

What’s the most common mistake people make with their taxes?

When people fill out their return on paper, they might forget to sign it, or just one spouse signs it, or they forget to attach a W-2 form, or don’t use enough postage, or the name and address on the envelope isn’t legible. Take advantage of computer technology, and most of those mistakes go away.

Why can't you live web chat IRS employees?

We do have a number you can call (1-800-829-1040), and we do have Twitter feeds (@IRSNew s, @IRStaxpros ), but with our firewalls and security, I’m not sure we’re set up for web chats. But there are opportunities to ask questions, and we’re making use of new technology and social media.

Source: money.usnews.com

Category: Taxes

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