Syntagma Digital
Moneyizor
Money Finesse

Americans Unprepared for Tax Time

According to CNN Money, most Americans are clueless when it comes to taxes. 75% of people polled didn’t even know this year’s filing deadline date (it’s April 17).

Tax

As we reported earlier, many people are not claiming the telephone tax refund and of those who are, many are incorrectly filing for inflated refunds.

From misconceptions about the AMT (Alternative Minimum Tax) to being uninformed about standard deductions and exemptions, a lot of Americans are less prepared to do their own taxes than they think they are. The result could be receiving a lower refund than they are due or the unexpected arrival of a bill from the IRS.

If you have a complicated return, you may want to use a paid tax preparer who is familiar with the ever-changing tax code.

Do you have a view? Leave a Comment

Claim That Phone Tax Refund!

According to the IRS, about 30 percent of early filers did not ask for the telephone tax refund, and almost half of those omissions were made by paid tax preparers.

“We are surprised how many tax preparers are overlooking the telephone tax refund,” IRS Commissioner Mark W. Everson said. “We want all taxpayers entitled to this refund to get it, whether they are using a tax preparer or doing the return themselves.”

Refund

The Internal Revenue Service today urged taxpayers to check to see if they qualify for the telephone excise tax refund after more than 10 million early filers did not request the one-time refund. For people requesting the telephone tax refund, it adds $30 to $60 — or even more — onto a refund.

For information and help on requesting the telephone tax refund, visit the IRS website.

Do you have a view? Leave a Comment

Telephone Tax Refund Mistakes

Early returns received by the IRS indicate many taxpayers are making mistakes when requesting the telephone tax refund. The telephone tax was institued in 1898 as a “luxury tax” but was recently ruled to be unconstitutional. Taxpayers are entitled to a refund equalling three years of actual Telephone Excise Tax paid or may claim the standard amount on the IRS forms.

Refund

Early mistakes found on a sample of 2006 returns filed during January include:

* Filling out the Form 1040EZ-T, Request for Refund of Federal Telephone Excise Tax, incorrectly by failing to show a refund amount on Line 1a. Designed exclusively for requesting the telephone-tax refund, this simple form is for people who don’t need to file a regular income-tax return. Filing an incomplete form typically delays a refund and often leads to follow-up correspondence with the IRS. More than 10 million low-income people, many of them senior citizens, are expected to file this form.

* Failing to request the telephone tax refund on a regular federal income-tax return in situations where the taxpayer appears to qualify. More than one-third of early filers did not request the telephone tax refund. This includes filers on Forms 1040, 1040A, 1040EZ, 1040NR and 1040NR-EZ. About 136 million individuals and couples are expected to file one of these forms, and most will, likely, qualify for the telephone-tax refund. Anyone who files one of these forms cannot file Form 1040EZ-T.

* Filing duplicate requests. Usually, this involves filing both Form 1040EZ-T and a regular income-tax return. Anyone who files a regular return cannot file Form 1040EZ-T. Doing so will delay any refund for months and result in a phone call or letter from the IRS.

* Requesting a refund that appears to be based on the entire amount of the taxpayer’s phone bills, rather than just the three-percent tax on long-distance and bundled service.

* Requesting a refund in the thousands of dollars, suggesting that the taxpayer paid more for telephone service than they received in income.

The IRS is investigating potential abuses among early filers who requested large and apparently improper amounts for the telephone tax refund. They will take prompt action against taxpayers who request improper refund amounts and the return preparers who help them.

For help in filing for the telephone tax refund, see the IRS website.

Do you have a view? 1 Comment