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LOOKING FOR YOUR REFUND?

Now comes the reward for those hours spent figuring out 1040s and calculating M1s!

Many Minnesota tax filers already might have their direct deposit refunds waiting in their bank accounts. At the same time, if they sent in their 2014 income tax returns close to the April 15 deadline, those refunded dollars might not have appeared yet, and that’s no reason to worry yet.

The Internal Revenue Service offers an online tracking system called “Where’s My Refund?” to check as soon as 24 hours after return hits its computers. Locate it online through http://www.irs.gov/Refunds. It allows taxpayers to follow the return through three stages: When it is received, when a refund is approved, and when the refund has been sent.

That’s helpful. But if the refund hasn’t arrived, it isn’t time to panic yet. The IRS tells taxpayers to wait for at least 21 days – or the end of the first full week in May – before starting to hunt for a “missing” refund from an electronically filed return. (In fact, IRS phone reps can’t even help you look within those first three weeks.) Nine out of 10 refunds are issued within 21 days, the agency assures.

Taxpayers who filed paper returns must wait six weeks before launching a search for a refund with the IRS.

Minnesota also offers a refund tracker online for its taxpayers, and it also is named “Where’s My Refund?” With a few identifying details, Minnesota’s Department of Revenue will tell taxpayers the status of a refund from an income tax return filed within the last 12 months. Find that service at https://www.mndor.state.mn.us/tp/refund/_/.

Minnesota’s tracking service also includes state property tax refunds. This year, taxpayers who filed paper returns for property tax refunds may not be able to track them until after July 1, Minnesota Revenue says.

If you’re not in a hurry to claim your refunds, here’s when the clock expires. Minnesota law says a refund can be requested within 3½ years from the normal filing deadline (usually April 15) or from an extended deadline.

EricJohn Ltd. can advise taxpayer on income tax and their refunds. As an enrolled agent, owner Eric Buechler also represents taxpayers directly in tax matters before the IRS.

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DOWN-TO-THE -WIRE TAX ACTION

If you won’t have your federal (and state) tax returns ready by the end of the day on Wednesday (April 15), it’s probably time to join the millions of taxpayers asking for an extension.

The extension adds another six months to the deadline, making it Oct. 15. The IRS won’t ask you why you need it. BUT – and it can be a big “but” – the IRS still expects you to estimate income and pay any taxes by the normal deadline.

You accomplish that on Form 4868 or “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.” The extension generally is automatic. For a copy, see http://www.irs.gov/pub/irs-pdf/f4868.pdf.

The clock is ticking with this. Whether you’re sending it electronically or by “snail mail,” it must be recorded or postmarked by the end of the day on April 15 to avoid penalties.

Now, from a technical standpoint, if you are absolutely certain that you will not owe any income taxes, you don’t need to file Form 4868. You can file your normal 1040 return later in order to capture your refund.

However, to be safe, we at EricJohn Ltd. advise filing the application for extension, whether or not you think you need it. Miscalculations can happen, and there is a late filing penalty in addition to late payment penalties for any unpaid tax.

WHAT THE IRS WANTS
In a nutshell, an extension is not valid unless your tax liability is estimated properly, using available information. Don’t break out in a sweat just yet! You can come up with a reasonable estimate. As a starting point, did you make more or less money than a year ago?

If you have some figures, work with that information, even if you are missing some income or expenses. Then make a good faith estimate of what you owe. Spending the time to pull together realistic figures could save you hundreds – maybe even thousands – in tax penalties.

Next, send a tax payment based on your estimate! You can do that electronically at the IRS web site (www.irs.gov) or enclose a check in the envelope. But don’t omit that step, even if your estimate is shaky.

Finally, don’t forget any state taxes you owe. In Minnesota, you don’t have to file an extension form. BUT – just as with the federal return – you must pay tax due to avoid penalties.

Minnesota Department of Revenue also accepts tax payments through its Web site. Here’s a pointer about extensions and payments: http://www.revenue.state.mn.us/individuals/individ_income/Pages/Filing_Extensions.aspx.

We at EricJohn Ltd. wish you easy and accurate filings for Tax Day!

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DETAILS, DETAILS, DETAILS!

It’s just days, maybe hours, until the filing deadline for federal and Minnesota income taxes. What can we taxpayers do to beat the clock and make sure we get our due, too?

The Minnesota Department of Revenue offers some tips on avoiding errors. The hints make Revenue’s job easier; at the same time, some also can speed up refunds. And some are common sense:

o Use official names shown on Social Security cards. This is not the place to abbreviate “David John” to “D.J.” The computers that process returns aren’t amused by nicknames. Speaking of accuracy, don’t take your W-2s for granted just because they came from your employer.

o Check and re-check Social Security numbers and account numbers for direct deposit of refunds. Come to think of it check all the numbers on your federal 1040 or state M1 returns – especially if you calculated by hand. We all make mistakes, and they can be costly on a tax return.

o File some type of return or ask for an extension by April 15, and pay as much of what you owe as possible. This is a situation in which something is a much better than nothing! The paperwork might linger with an extension, but the taxes are due.

o Minnesota Revenue advises you to pay your taxes electronically, if possible. Both state and federal governments both have been urging online payments because they are quicker and easier to process. If you’re expecting a refund, choose direct deposit to one of your bank accounts. Going direct makes it easier on Revenue and faster for you.

o If you’ve moved into or out of Minnesota, make sure your tax refund or other letter notices will follow. In Minnesota, place an X in the “New Address” box. Revenue’s processing machines might not pick up an address change if that box isn’t checked. In fact, it’s a good idea to tell the tax people where you are immediately after a move.

A tax preparer typically will check on details like these; it’s one advantage of dealing with a pro. If you’re not quite prepared for Tax Day, give us a shout at EricJohn Ltd. We can help in the rush!

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PRESIDENT, CONGRESS HONOR SLAIN POLICE OFFICERS WITH TAX BENEFIT

Taxpayers who wish to donate to the families of two New York City police detectives killed in December will be able to deduct contributions made early this year on their 2014 tax returns.

Under a new law signed by President Obama this week, donors making cash gifts between Jan. 1 and April 15 this year can claim the charitable contribution for tax purposes as if they had occurred in 2014.

The Slain Officer Family Support Act of 2015 also provides that a telephone bill showing the name of a tax exempt organization accepting the donation, as well as the amount and the date of the gift, will satisfy recordkeeping requirement.

New York Detectives Wenjian Liu and Rafael Ramos were sitting in a marked police car in the afternoon on Dec. 20 when a gunman approached and shot both at close range.

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AT LEAST YOUR REFUND IS NOT LOST

An inquiry letter now going out from the Internal Revenue Service may make you cringe a bit, but you’ll want to read it closely before you panic.

Verification Letter 4464c confirms that you filed your taxes, but – and here’s the cringe – it also says the IRS is holding up any refund to make a thorough review of some type of information on your tax return.

“Typically, the IRS checks with a third party, such as the employer, to verify information on the return,” writes TaxPro Weekly, a newsletter for the accounting profession.

The letter does not announce an audit. However, it is telling you not to expect any refund to arrive for another 60 days. What should you do? Typically, taxpayers should do nothing but wait for the entire 60 days. If a refund hasn’t arrived by then, the taxpayer can call an IRS phone number to check on it.

With millions of 2014 income tax returns flooding into its computers, the Internal Revenue Service is trying to filter out bogus returns before taxpayers get bilked. Letter 4464c comes from the Integrity & Verifications Operations Office, which is charged with preventing fraudulent refunds.

Send an email or make a phone call to us at EricJohn Ltd. to find out more about Letter 4464c notices.

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BEWARE OF TAX PREPARERS ASKING FOR OBAMACARE PAYMENTS.

We passed along a warning last month about identity thieves trolling for personal information from taxpayers with email deceptions and phishing schemes.

Now the Internal Revenue Service is worried about unscrupulous tax preparers who have devised a way to pick clients’ pockets using the new health insurance reporting rules from the Affordable Care Act or “Obamacare.”

This latest scam revolves around the “shared responsibility payment,” which some – but definitely not most – taxpayers owe to the government. It’s basically a fee levied on those who did not have health insurance for part or all of 2014 and it is declared on income tax returns.

Some crooked tax preparers are telling clients to make the shared responsibility payment directly to them. They might claim it is necessary because of \the client’s immigration status or they might offer a discount on the fee. In some cases, they seek payment from taxpayers who are exempt under law and do not owe the fee at all.

The IRS says no one should write a check for a shared responsibility payment directly to a tax preparer. The fee is calculated as part of the 2014 tax return. So, if it does apply, the fee is figured in with any other taxes owed to the government on the return.

What precautions can you take? On its Web site, the agency offers a directory of tax preparers for people who would like to check for credentials. See http://irs.treasury.gov/rpo/rpo.jsf. The IRS also offers an online questionnaire to determine if you need to pay a shared responsibility fee in the first place.

There’s still time before April 15! We at EricJohn Ltd. can help you satisfy the health insurance reporting requirements on your 2014 tax return professionally and accurately.

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MISSING SOMETHING? HINT: IT’S GREEN AND SPENDABLE.

This is a big number: $1,041,576,000.

That $1 billion is the amount the U.S. government owes to more than 1.1 million taxpayers who did not file federal tax returns for 2011.

You have to file a return – even if you don’t owe any taxes – in order to claim a refund. “People could be missing out on a substantial refund,” Internal Revenue Service Commissioner John Koskinen said.

The IRS figures the half of the refunds nationwide exceed $698. In Minnesota, about 16,500 taxpayers are missing more than $14.1 million. That’s an average refund of $857, with half of the refunds worth at least $632.

There’s some urgency here. The time to file a 2011 return and claim a refund ends on April 15, 2015, three years after the return was due. If a 2011 refund isn’t claimed by then, it goes into the U.S. Treasury’s vault, according to federal tax law.

Why would taxpayers leave their refunds on the table for the government to grab? Well, some simply might not have made much money in 2011 and were not required to file a return that year. So, they ignored it.

Perhaps others feared a late filing penalty. However, the IRS is clear. Late filing penalties do not apply if a taxpayer qualifies for a refund.

We at EricJohn Ltd. can help you retrieve those 2011 tax refunds – as well as any missing refunds from 2012 and 2013 tax years. We also look for tax credits that can increase your refunds. Until April 15, there’s no need to leave 2011 dollars in government hands for lack of a tax return!

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“61” – REMEMBER THAT NUMBER.

If there’s one new line to notice on the federal tax return this year, it’s 61. Let’s call it the “Obama box,” short for the president’s signature claim to fame, the Affordable Care Act or “Obamacare.”

Line 61 on the federal 1040 return is where taxpayers testify that they are covered by some type of health insurance, whether it’s through a private source, Medicare/Medicaid or the Health Insurance Marketplace(s) created by Obamacare. (On the 1040A, see Line 38 and on the 1040EZ, it’s Line 11.)

If you and your dependents were covered by insurance for all of 2014, reporting on Line 61 is easy. Check the box and leave the space beside it blank.

If you were not covered for a month or more during the year, reporting can be much more complicated. You’ll need to claim an exemption from having insurance or you’ll need to make a “shared responsibility payment,” which is a fee for not having coverage. Both of those situations require new IRS Form 8965, which is called “Health Coverage Exemptions.” Be sure to obtain the instructions, too; you’ll need them.

Some taxpayers will find help further down on the 1040. If you bought insurance through a government-sponsored Marketplace (including MNSure in Minnesota), you will want to check Line 69. You might be able to take advantage of a tax credit for premiums you paid. There are several qualifications and you have to fill out another IRS Form, numbered 8962, but it’s worth a good look. By the way, this is where you use Form 1095-A , which the Marketplace should have sent by now.

Let us mention one more twist to the new health insurance reporting. During 2014, the government distributed advance payments of tax credits to assist some folks in paying premiums to Marketplace insurance companies. The Marketplace tells you about those advance payments on the 1095-A statement. Obviously, those early payments affect the amount of tax credits that you can claim on your return.

Recently, the system was disrupted when 800,000 taxpayers received incorrect information that could affect calculation of the premium tax credit. The government promised to send a corrected 1095-A statement to them this month. (March).

If you’d like a guide to help you through the new health insurance reporting, call or email us at EricJohn Ltd.

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A 3-HOUR WINDOW TO AVOID

Minnesotans in the throes of tax preparation should scratch off the evening of March 11 for any computer work using the state’s online systems.

The Minnesota Department of Revenue announced that its e-Services systems will be taken offline for maintenance between 5 p.m. and 8 p.m. on that day.

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WARNING: TAX SEASON PREDATORS NOW ON THE PROWL

The Internal Revenue Service and the Minnesota Department of Revenue are warning taxpayers about identity theft scams circulating through emails and text messages.

Both tax collection agencies say they know of phishing schemes, which use unsolicited notifications to steal personal or financial information. The bogus notices typically try to lure taxpayers to fake Web sites or email addresses, where thieves actually steal the information.

“The IRS won’t send you an email about a bill or refund out of the blue,” IRS Commissioner John Koskinen warned in an announcement.

Minnesota Revenue said one new phishing fraud now is coming through text messages. The messages refer to filing a return with the “Minnesota state tax office.” Be wary of texts from tax preparation services or tax software companies – especially those that you have not used to file a return, the agency said.

One recent phishing scam tried to trick tax preparers into revealing user names and passwords used to enter the IRS’s electronic filing and services system. An email asked them to update their individual IDs with the agency, the IRS said.

In another scheme last fall, taxpayers received phone calls from identity thieves posing as IRS workers. They gave out fake IRS badge numbers and altered caller IDs to make it appear that it was an IRS call.

The IRS has opened an email address for tax pros and taxpayers to report phishing scams. It is [email protected].

Here are some other signs of a scam. The IRS says it will NOT:

o Call or email to demand immediate payment, or call about any taxes owed without first sending a bill.
o Require prepaid debit cards or any other specific type of payment.
o Ask for debit or credit card numbers on the phone.
o Threaten to bring in local police to arrest you for not paying taxes.

EricJohn Ltd. is ready to file safe, online returns for you or your business!

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