Automation often makes life easier, until it doesn't. Some very surprised California taxpayers learned that lesson this week. So did the Internal Revenue Service. The IRS' automated notice issuance system sent most California taxpayers letters saying that they had missed their filing deadline and owed the U.S. Treasury. The IRS was wrong. The agency's mistake understandably freaked out Golden State residents whom the IRS previously granted a new Oct. 16 due date. The extra time was allotted so the taxpayers could deal with problems caused by widespread natural disaster across the state earlier this year. The IRS issued a mea... Read more →
Errors
Residents in 21 states got some good news from the Internal Revenue Service earlier this year. In 2022, they received general welfare, disaster, or stimulus payments from their state officials. These generally were referred to as refunds. Basic state tax refunds in some instances are taxable at the federal level. But the IRS announced on Feb. 10 that in most cases these special 2022 state payments were not. The affected taxpayers live in Alaska, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, South Carolina, and Virginia.... Read more →
Photo by Elisa Ventur on Unsplash When you make a mistake on your Form 1040, the best thing that could happen is the Internal Revenue Service will catch your relatively insignificant error, fix it, and send you a notice about the change. A worse outcome is the IRS changes reduce and/or delay the refund you're expecting. And the absolute worst tax error outcome is that your mistake isn't a minor one, and the IRS decides to take a longer, closer look at your filing. The only way to avoid these situations is to double check your return to ensure it's... Read more →
It's never fun having to re-do your taxes. But if it means you'll get a refund, or a larger amount than with your original filing, it's worth it. And now amended filers can have that refund amount sent straight to a financial account. The Internal Revenue Service announced today that people who e-file a Form 1040-X, Amended U.S. Individual Income Tax Return, now will be able to select direct deposit as the money's delivery method. More X filing going electronic: The IRS began accepting e-filed 1040-X forms in 2020. Most tax software programs have added the amended filing option to... Read more →
The Internal Revenue Service has its own Groundhog Day, but it's not limited to just one specific 24-hour period. Most often, this re-do of a tax return is when you find you made a mistake on your original Form 1040. The do-over is accomplished by filing Form 1040-X, an excerpt of which is shown below. See more tax forms and more about them at 2022's Talking Tax Forms and Tax Forms 2023. Fix errors: Nobody's perfect, and the annual filing season underscores that for many of us. When we do make a mistake on our taxes, filing an amended return... Read more →
Huell (right) and Patrick, henchmen for AMC's "criminal" criminal lawyer Saul Goodman, take a short break in a Breaking Bad episode to enjoy the comfort of a huge pile of ill-gotten cash. (Photo courtesy AMC TV) Remember earlier this summer when a South American worker got a paycheck of more than $165 million Chilean pesos, or nearly $184,000 in U.S. dollars? It was a mistake. And while the man reported the overpayment to his supervisors, he also decided to take the money and run. As far as I can tell by surfing the Google machine, the guy's still out there... Read more →
A group of Kentucky homeowners switched to a different, higher-rate tax district so their increased taxes would pay for things like street cleaning. A transcription error meant they got it and other services for free for eight years. (Photo by Kay Bell) Property tax bills are a major expense for homeowners. They also can be confusing. Here in Texas, most property tax money goes to the homeowners' local school districts. But there's usually more. Our real estate bill, for example, has collections for our independent school district, as well as five other taxing jurisdictions. That's why every tax bill recipient... Read more →
Photo by Jess Bailey Designs The only thing worse than getting a surprising high property tax appraisal — which, as one of April's tax tips advises, you definitely should protest for venting, as well as potential lower tax, purposes — is having your local tax collector tell you that your tax payment is overdue. That happened to 2,400 homeowners in upstate New York, according to LocalSYR.com. Tax rebate endangered: Technically, the property owners in Onondaga County didn't get a past due bill. Instead, they incorrectly received notice from the Empire State's Department of Taxation and Finance that they could lose... Read more →
One of the big selling points of taking your taxes electronic is that the Internal Revenue Service's turnaround is quicker. The tax agency has long touted that when taxpayers e-file and have their refunds direct deposited, the tax cash usually shows up within 21 days. Usually. The only thing certain about taxes is that they'll find a way to frustrate you. That's the case when e-filed refunds take longer. Here are six reasons, from the IRS and tax community, as to why your refund may be delayed. 1. Math errors: Yes, taxes are complicated. That's why most of us use... Read more →
Don't let filing your taxes scare you. Take that fear and turn it into awareness of common Form 1040 mistakes you need to avoid making. (Photo by Andrea Piacquadio from Pexels) The only thing worse than paying taxes is having to fill out the required paperwork every year. Just looking at a Form 1040, whether through the step-by-step Q&A lens of tax software or with the guiding hand of a tax pro, can send chills down the spines of most taxpayers, even those whose tax circumstances are relatively simple. There's that nagging fear that this is a test from Uncle... Read more →
Most folks right now are working on filing their 2021 tax returns for the first time. But since it's Groundhog Day — in case you missed it, Punxsutawney Phil saw his shadow, so we're looking at six more weeks of winter (boo!) — today seems like the perfect time to also look at amending a tax return. Taxes are complicated, so tax mistakes on 1040 forms are common. In situations where you've made a relatively minor common error on your return, such as transposing an amount that the Internal Revenue Service can correct using its copy of a third-party tax... Read more →
Photo by Kay Bell I'm married to a procrastinator. The most infuriating thing about it is not that he puts off things, but that occasionally he's right to not rush to finish projects. And yes, projects is a euphemism for tasks I've asked him to do. Sometimes situations change, making moot what originally looked like the right move. Other times, the delay prevents making what would have been a wrong action. And in a few cases, if a job was done on my timetable, the changed circumstances would have meant redoing it. So over the many years we've been together,... Read more →
UPDATE, Oct. 5 , 2021: Yes, you are experiencing tax déjà vu. But if you're one of the millions of taxpayers who got an extension to file your 2020 return back in May, and then put off doing so until now, literally just days until the final Oct. 15 due date, then you need this reminder. As you finally fill out your Form 1040, don't make any of these dozen tax filing mistakes. Every tax-filing season is different. One thing is constant, though. Taxpayers, and sometimes even the tax preparers they hire, make mistakes on 1040 forms. Hey, we're only... Read more →
The American Rescue Plan is now on its way to President Joe Biden. As soon as Biden signs it, millions of taxpayers can look forward to the third COVID-19 economic relief payment. And taxpayers who've already filed their 2020 returns and paid tax on unemployment benefits they received last year also can get ready to file amended returns. That's because during its consideration of the bill last week, the Senate included a provision that made the first $10,200 in unemployment benefits tax-free. UPDATE, Thursday, March 11, 2021: Biden signed the bill into law early in the afternoon today. He originally... Read more →
Just can't bring yourself to do your taxes? Don't worry. There's no rush (yet). And there are some good reasons to wait a bit before finishing your Form 1040. The 2021 tax filing season is finally underway. The Internal Revenue Service started processing returns on Friday, Feb. 12. A lot of the 1040 forms actually had been submitted electronically weeks earlier, and were just waiting for Uncle Sam to accept them. This is not unusual. Millions of taxpayers file as early as possible, with good reason, every year. But there's something to said for those of us who wait. Here... Read more →
We all should learn from our mistakes. That's especially true of tax mistakes. And now that learning — and correcting — process is getting easier. The Internal Revenue Service now will accept some electronically filed amended returns. There's just one hitch. This long-awaited electronic filing process, which the IRS promised earlier this summer, is available for making corrections only to tax year 2019 Form 1040 and Form 1040-SR returns. Those were the ones you filed (or got an extension file) this year by July 15. If you have an earlier filing you need to fix, you'll still have to use... Read more →
Mickey and Minnie Mouse in Hong Kong Disneyland, which features the internationally iconic Sleeping Beauty Castle. (Photo by PoonKaMing via Wikipedia Commons) Tax offices often are derided for being Mickey Mouse operations. Rhode Island's Office of the General Treasurer actually went there. The Ocean State's financial office late last month issued 176 business tax refund checks that were signed by Mickey Mouse and Walt Disney. Rhode Island's Department of Revenue said the entertainment industry signatures, which went where state treasurer Seth Magaziner and state controller Peter Keenan should have signed, were due to a technical glitch. This should have been... Read more →
Tax notices are among the pieces of mail delivered by the U.S. Postal Service in recent weeks. Due to COVID-19 complications, those documents detailing IRS questions about earlier filings have later due dates. The deadline for some is this Friday, July 10. It's the first full week of July 2020, meaning that the countdown clock over there in the ol' blog's right column (shameless plug) shows that we're just single digit days away from this year's July 15 filing deadline. And some folks have an even earlier due date. If you recently received an Internal Revenue Service notice, you might... Read more →
One of the reasons the Internal Revenue Service has called more of its staff back to their offices is so they can deal with the backlog of tax notices. When the agency sent most personnel home earlier this year as a coronavirus pandemic precaution, some previously-printed balance due notices didn't get mailed. Now with some IRS operations restarting across the county, these notices will be delivered to taxpayers by the U.S. Postal Service in the next few weeks. Original notices, old dates: These notices, however, won't be updated versions produced by staffers who now are back at their desks. They... Read more →
To err on tax returns is human. To forgive is Xtraordinary, and yes, the misspelling is intentional. Tax law lets us correct mistakes we make on our 1040s via another form, the 1040X. Most people file 1040X, which is known as amending your return, because they discovered they didn't claim a tax break that give them a (or a bigger) tax refund. Of course, since the Internal Revenue Service is involved, there are some rules and certain steps you must follow. Here are five key things to keep in mind if you discover you need to re-do a previously filed... Read more →