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5 Mistakes People Make When Filing Old Tax Returns!








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5 Mistakes People Make When Filing Old Tax Returns!








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How Long Should I Keep My Tax Records?

While the IRS will not tell a taxpayer how long they need to keep their tax records, it’s prudent to keep them anyway.  But just what should you keep and for how long? As a general rule of thumb, if you “attempted’ to file your return correctly, then you will want to keep everything for 3 years.  However, take a look at the two tables shown below for further details and items only applicable to certain situations.

Supporting Tax Documentation To Keep

Item Supporting Record
Income Form(s) W-2
Form(s) 1099 (INT, DIV, Etc.)
Bank statements
Form(s) K-1
Expenses Canceled checks or other proof of payment
Invoices
Receipts
Home Closing statements/HUD-1
Purchase and sales invoices
Proof of payment
Insurance records
Investments Brokerage statements
Mutual fund statements
Form(s) 1099
Form(s) 2439

 

Length Of Time One Should Keep Their Tax Documentation

Situation Retention Period
Owed tax and the subsequent three situations do not apply to you 3 years
Did not report income that is more than 25% of the gross income shown on the return you filed 6 years
Filed a fraudulent return Indefinite
Do not file a return Indefinite
File a claim for credit/refund after you filed your return 3 years or 2 years after tax was paid (whichever is later)
File a claim for a loss from worthless securities 7 years

 

How were the lengths of time determined?  Most of them coincide the the various IRS Statute of Limitations.  This is the length of time the IRS has to assess additional tax against a taxpayer, request further information or subject a return to audit.  Needless to say, one wants to make sure they have their “proof” for at least the length of the statute.  However, it may be advisable to keep your support indefinite.

For example, if you make contributions to your IRA, you will want to probably keep all of your tax returns.  Why?  Well, when it comes time for you to make your withdrawals come retirement, those that represent a return of the money you contributed are tax free.  How will you know how much you contributed?  Exactly; you’ll need the originally filed tax returns!  So keep those tax records as long as you think you may need to; you never know when you may have to reference them to prove your case.

How To Find Your Prior Year E-File PIN

When you attempt to E-File your taxes, you will often times be prompted for your PIN.  What exactly is this?  It’s a 5 digit number located on the signature line of Income Tax Return.  This “E-File PIN” serves as your signature.  If you filed a return in the previous year, you will want to enter in the same number. What if you can’t find it? This post will discuss your options.

Identity Verification

When you E-File, the IRS wants to make sure that it is “really you” that is attempting to file the return.  They can do this by having you verify your prior year PIN or the prior year adjusted gross income (AGI) reflected on the return.  Without your PIN or AGI, you won’t be able to e-file the current return.

3 Ways to Find Your PIN

If you filed taxes last year, you can obtain your PIN, by doing one of the following:

Look at a copy of your Return. Contact whomever prepared your tax return last year for a copy. From that return, you’ll be able to see the PIN that was used on the signature line.  If you used tax software, you can contact the service provider as they should still have it on file.  Alternatively, they may have emailed it to you when you actually filed last year. As such, take a look in your email and see if it is there.

Use the IRS PIN tool. If locating a copy of the return isn’t an option,  you can use the IRS PIN Tool to retrive it.  It’s a useful and easy to use tool and only requires you to know your basic information (e.g. name, address, date of birth, social security number), along with the filing status used (single, married filing jointly, etc).  Then, within seconds (or minutes), the IRS website will provide your the PIN.

Call the IRS. You can always call the IRS directly at 1-800-829-1040 to obtain your PIN.

In closing, here are a few things to keep in mind:

  1. The one thing to keep in mind is that your E-File PIN IS NOT the same as an identity theft PIN.  You can read more about the process of dealing with tax identity theft and obtaining an ID Theft PIN in this post.
  2. If you make a “new” 5-digit E-File PIN for your taxes this year, make sure you write it down. Your current year  PIN will be used when filing your tax return next year.
  3. E-file PINs can be confusing, but you shouldn’t let that stop you from filing. If you’re confused about your PIN or have any other tax related issue, our team of xperts are standing by to assist you.  Just give us a call or shoot us an e-mail via the links at the top and bottom of this page!

Should I Amend My Tax Return?

Sometimes you will get a Form 1099 or Form K1 after you already filed your income tax return.  Sometimes you will “remember” that W2 or 1099-MISC that you should have gotten in the mail but didn’t (like when you move and don’t tell your old employer).  No matter what the reason is, sometimes you simply need to make some changes to your return.  But what changes require you to file an amendment and just how do you go about the whole thing?  Keep reading dear friend, keep reading.

When you should make changes.

Amend to correct errors.  You should file an amended tax return to correct errors or make changes that are needed to your original tax return. For example, you should amend to change your filing status, correct the amount of income reported, or fix erroneous/omitted deductions or credits.

Don’t amend for errors where the IRS also receives a form.  You normally won’t need to file an amended return to correct math errors where the IRS receives the same form. The IRS will typically correct those for you.  For example, if you failed to report $1,000 of interest reported on Form 1099-INT, the IRS will usually fix it and send you a letter telling you they did so.  But if you transposed the income number for your cash based vending machine business on Schedule C (i.e. $8,999 vs $9,899) then you’ll want to file an amendment to report the correct figure as the IRS will never know it is wrong.

How long do you have to file your amendment?

You usually have three years from the due date of your original tax return to file an amended return.  This is particularly true if you need to claim a refund. You can file it within two years from the date you paid the tax, if that date is later. For example, the last day for most people to file a 2011 claim for a refund was April 15, 2015 as the due date for that return was April 15, 2012.  For more information about this and other IRS statute of limitations, check out this post.

How do you file an amendment?

Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct your tax return.  Note that this form must be filed via paper as it can’t be e-filed. As such, check out this post on the IRS website for the address applicable to your state as to where it should be mailed.  It should also be noted that you will want to include the Form 1040X, the original schedules that you filed and then the amended or changed schedules.  This way the IRS will be able to see what was originally filed and what was changed.

Other helpful things to know.

Wait to file for a “second” refund.  If you are due a refund from your original return, wait to get that refund before filing and amended return to claim an “additional” refund.  Amended returns take up to 16 weeks to process so:

  1. you don’t want things to get crossed up in the IRS system by having two returns being simultaneously processed.
  2. expect to wait a while before you receive your money.  Amended refunds will come via check, even if you provide direct deposit information.

Pay additional tax as soon as you can.  If you owe more tax as a result of your amendment, pay the tax as soon as you can. This will stop interest and penalties from accruing unnecessarily. You can use IRS Direct Pay to pay this amount directly from your checking or savings account

Don’t amend to correct Form 1095-A errors.  Taxpayers who filed a 2014 tax return and claimed a premium tax credit using incorrect information generally do not have to file an amended return even if additional taxes would be owed. The IRS may contact you to ask for a copy of your corrected Form 1095-A to verify the information.

Track your amended return.  You can track the status of your amended tax return three weeks after it’s been filed with the IRS ‘Where’s My Amended Return?’ online tool or by calling 866-464-2050. The tool can track the status of an amended return for the current year and up to three years back.  If you have filed amended returns for multiple years, you can check each year one at a time.

Need help filing your amendment?

If you don’t want to go through the hassle of doing all those calculations, filling out the various forms and then trudging down to the post office to wait in line and mail them, why not give us a call?  We’d be happy to help you navigate the process and get the correct forms to the IRS ASAP.

How To File Old Tax Returns

Even in the dead of winter, we'll file your old taxes!

Even in the dead of winter, we’ll file your old taxes!

If you’ve missed the April 15th deadline but for whatever reason, you STILL need to file your tax return, you might be a little confused as to what to do.  Do you need to mail it?  Can you send it in via E-File?  Keep reading to find out your options.

Current Tax Year and Date Is BEFORE October 15th
If you missed the deadline but you are filing before October 15th, then you can still E-File your return.  The IRS shuts down the E-File system in October to get everything ready for the next filing season, so you only have until then to get your return transmitted.  Your options for doing this are to:

  1. Use IRS Free File or Fillable Forms. There are stipulations regarding these options which you can read more about here.
  2. Use Commercial Software.
  3. Find an Authorized E-File Provider. File Old Tax Returns is an authorized E-File Provider via Wilson Rogers & Company, Inc.  We can gladly help you in preparing, filing and transmitting your current year tax return.

Current OR Prior Tax Year and Date Is AFTER October 15th
Well, that means that you’ve missed the E-File window and your only option is to mail a paper copy of your return to the IRS.

The following are the steps you need to take to get your return prepared and ready for mailing:

  1. Gather your supporting documents. Look for your old tax documents, such as W-2s, 1099s, or 1098s. You will need these documents to file your return(s), as the IRS will expect you to report on your return what was reported to them via these forms.
  2. Request transcripts if necessary.  The most elusive documents for most clients are their wage and income forms.  The easiest way to obtain them is to contact your old company.  However, it’s never a sure bet that they’ll have the information on record, especially if it’s from several years ago.  Alternatively, you can always get copies directly from the IRS by requesting a “Wage and Income” transcript via the IRS Get Transcript Service.  If you can’t access the web service you can always use Form 4506-T, Request for Transcript of Tax Return
  3. Prepare your return(s). This is where the rubber meets the road.  The three steps that we outline under preparing your return before E-File shuts down apply here.  You can use the IRS fillable forms, find prior year software or hire a tax professional.  If you want to know how our process works, just download these instructions or give us a call at 844-TAXES88 (844-829-3788).
    • For filing back taxes, you should seriously consider hiring a tax professional. Since you are already late on filing, it would be in your best interest to file accurate returns the first time.  This way, you don’t have to worry about a bunch of back and forth with the IRS asking you to make corrections via dozens of letters to your house.
    • A tax professional can also help to ensure that all of the deductions and credits applicable to that year are applied to your return.  Remember, tax law changes each year and remember what was applicable in 2007 in 2015 might be a bit of a stretch.  But services such as ours always retain the applicable reference literature so that we can prepare an accurate return, not matter how many years late it is being filed.
  4. Mail In Your Return.  In this post we tell you the addresses where you can send your old tax return once you’ve finished preparing it. Note that you must send it to a different IRS Service Center depending on 1) if you are sending them money or not and 2) where you live.
  5. Address any balances owed.  This post from our sister site discusses how to deal with any outstanding balances.  Our basic recommendation is to 1) respond to any IRS or state correspondence, 2) assess what options are available to you and 3) enter into an appropriate resolution.  Once you’ve filed the returns and addressed the balances (if any) you are ready to move forward.  Just make sure that you remember to file your returns going forward or you’ll find yourself reading this post all over again!

How Does Form W4 Work?

After tax season, many people find themselves in the position where their tax preparer/accountant recommends that they change their withholdings.  This typically happens when a person has prepared their return and either has a large refund or balance due.  The rule of thumb most will use is that if either of the above is roughly 3% or more of your gross annual salary, you may need to make some changes.

How Form W4 Works
Form W4 is used to tell your payroll department how much you would like taken out of your pay for Federal Income Taxes. You will also have to fill out this form in you live in one of the 41 states that impose an income tax.  The simple way to think of this form is that every number listed on the form (called an allowance) is supposed to represent a member of your household.  So the greater the number of allowances on the W4, the smaller the amount of taxes withheld becomes.   The smaller the number is on the W4, the greater the amount of taxes taken out becomes.

What Are Allowances?
As mentioned above, a withholding allowance is generally meant to represent each member of your family that will be claimed on your tax return. Just you by yourself?  Claim 1 allowance. Are you married? Maybe you will claim 2, one for each spouse. Have 3 children? Then it could be 5, one for each spouse and 1 for each child.

Should I File Exempt From Withholding?
Generally speaking, there are very few individuals who should EVER claim that they are exempt from withholding. This is honestly one of the fastest was we see people get into trouble with the IRS and create mountains of tax debt.

The only people who should claim this status are 1) those who do not have a filing requirement and 2) those who were entitled to a full refund of ALL amounts withheld in the previous year. To learn more, take a look at Publication 505 and look at the section on  “Exemption From Withholding” and “Figure 1-A.”

What If I Am A Teenager?
If you are a student, you are not automatically exempt from having to pay taxes. If you work only part time or during the summer, you may qualify for exemption from withholding. Thus, if your total income was say $2,500 (which is less than your standard deduction) and you had $375 of income taxes withheld, it would be refunded to you. But if you earned say $8,500, you would have a filing requirement and want to have taxes taken out. At a minimum, you would probably claim 1 withholding allowance just to be safe.

How This All Comes Together At Pay Time and Tax Time
Every week that you are to be paid, your employer’s payroll department will use the number listed on your Form W4 to determine how much to take out. They do this via one of two methods listed in Publication 15, Employer’s Tax Guide.  If you go to the “How To Use the Income Tax Withholding Tables” you can see that the employer will take your withholding, look up the appropriate amount to take out based on your filing status, and then cut you a check for the rest.  Once again, the greater the number, the smaller the amount of taxes they will withhold.

Fast forward to income tax return time.  If you made $15,000 during the year and you were just fling for yourself, you would probably claim 1 exemption and the standard deduction.  For tax year 2014, the two amounts combined amounted to $10,150 with the exemption being $3,950.  Thus, you would have been taxed on $4,850.  But what if it was you and your two children?  Then your exemptions would have been $11,850.  Add this to your standard deduction (assuming the filing status is now head of household) and you would have been taxed on $0 ($15,000 income – $21,000 standard deduction and 3 exemptions).

As you can see, under the second scenario you would not have had a filing requirement.  Thus, if you only had 1 allowance on the W2, you would have had too much income tax taken out and it would have come back to you in the form of a refund.  This is why you would have possibly wanted to claim 3 allowances on the W4; so they would have taken less tax out based on the anticipated outcome on your income tax return.

Need Help?
If you need some assistance determining if you are having the correct amount of income taxes withheld, give us a call at the number in the upper right or shoot us an email via the link below.

You can also use the IRS Withholding Calculator to help you determine the correct number of allowances to claim.

Federal & State “Where’s My Refund” Pages

That was easy - for some!

That was easy – for some!

Many of our current year clients begin to get a little worried when their tax refund doesn’t come as quickly as they expect.  They often call us and ask us “Where’s my refund?”  To that question we usually reply that it can take anywhere between 7-21 days for one to receive their money.  If they have any concerns, they can continue to check the status of their refund’s processing via the IRS’ or states website.

Out in cyberspace, the various state tools are housed on each individual site.  This post aggregates them into one place for all to search.  So no matter if you filed in one, two or nine states, you now have a place where you can check them all via the links provided!

Locate your state below and click on its name to be taken to the applicable “Where’s My Refund” site.  If you need further assistance, the name of the appropriate taxing authority and their general phone number is listed.  We recommend that you have a copy of your return(s) handy when you visit the appropriate site as it will often want to verify things such as SSN, filing status, refund amount or Adjusted Gross Income (AGI).

Note that you will not find any links for the states of Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.  Why?  These nine states don’t have an income tax!

IRS “Where’s My Refund?” Use this link to check on the status of your Federal income tax refund.  If you need to speak to someone, feel free to call 1-800-829-1040.

Alabama Alabama Department of Revenue: 1-800-322-4106

Arizona Arizona Department of Revenue: 1-602-255-2060

Arkansas :  1-501-682-1100

California State of California Franchise Tax Board:  1-800-852-5711

Colorado Colorado Department of Revenue:  1-303-238-7378

Connecticut State of Connecticut Department of Revenue Services: 1-860-297-5962.

Delaware Delaware Department of Finance – Division of Revenue: 1-302-577-8200.

District of Columbia District of Columbia Office of Tax and Revenue: 1-202-727-4829

Georgia  Georgia Department of Revenue: 1-877-423-6711 option #2.

Hawaii Hawaii Department of Taxation: 1-800-222-3229.

Idaho Idaho Tax Commission:  1-888-228-5770

Illinois Illinois Department of Revenue:  1-800-732-8866

Indiana Indiana Department of Revenue:  1-317-232-2240

Iowa Iowa Department of Revenue: 1-515-281-4966.

Kansas Kansas Department of Revenue: 1-785-368-8222

Kentucky Kentucky Department of Revenue:  1-502-564-1600

Louisiana Louisiana Department of Revenue: 1-855-307-3893

Maine Main Revenue Services: 1-207-626-8475

Maryland Comptroller of Maryland Revenue: 1-410-260-7701 or 1-800-218-8160.

Massachusetts Massachusetts Department of Revenue:  1-617-887-6367

Michigan Michigan Department of Treasury:  1-517-373-3200

Minnesota Minnesota Department of Revenue:   1-651-296-4444

Mississippi Mississippi Department of Revenue:  1-601-923-7801

Missouri Missouri Department of Revenue:   1-573-526-8299

Montana Montana Department of Revenue:  1-866-859-2254

Nebraska Nebraska Department of Revenue:  1-402-471-5729

New Jersey New Jersey Division of Taxation: 1-609-826-4400

New Mexico New Mexico Taxation and Revenue Department:  1-505-827-0827.

New York  New York State Department of Taxation and Finance: 1-518-457-5149  

North Carolina North Carolina Department of Revenue: 1-877-252-3052 

North Dakota North Dakota Office of State Tax Commissioner: 1-701-328-1242.

Ohio Ohio Department of Taxation:  1-800-282-1784

Oklahoma Oklahoma Tax Commission: 1-405-521-3160

Oregon Oregon Department of Revenue: 1-503-378-4988

Pennsylvania Pennsylvania Department of Revenue: 1-717-787-8201  

Rhode Island State of Rhode Island Division of Taxation:  1-401-574-8829, option #3.

South Carolina South Carolina Department of Revenue: 1-803-898-5300

Vermont  Vermont Department of Taxes:  1-866-828-2865.

Virginia Virginia Department of Taxation: 1-804-367-2486

West Virginia Arizona Department of Revenue: 1-800-982-8297

Wisconsin Wisconsin Department of Revenue: 1-866-947-7363.

 

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Filing Taxes Without A W-2 or 1099

W2 1099

So you finally get around to filing that tax return that was due eons ago.  You know, the one with the job that you worked at 5 years ago.  The one where you think you were paying on your student loan.  But wasn’t there also that job where you worked as a “consultant” and they just paid you money and didn’t take taxes out?  Oh yeah, and then that one company that closed up shop a week after you bailed!  But wait, where are all those documents showing how much you earned?

It’s not uncommon when you are dealing with an “old” tax return for you to have “misplaced” some of those wage documents (e.g. Form W-2 or Form 1099-MISC).  If you need to obtain them so that you can file your tax return, here are some recommendations.

Contact The Employer
The best place to start with trying to obtain your W-2 is with your employer.  The copy they issue you will be the same as the one they provided to the IRS.  Furthermore, it will have the state details (i.e. amount of state tax withheld).  This is important when compared to getting your W-2 via the next option.

Request A Copy From The IRS
Every tax form that you receive from someone is typically also filed with the IRS.  W-2s are no exception to the rule.  Thus, if you can’t get a copy from your employer, the next best option is to request them from the IRS.  To do this, you want to request what is known as a Wage and Income Transcript.  You can do so online and get instant access or you can request that they be faxed to you by calling 1-800-829-1040 and asking for the above transcript.  The main downfall of an IRS transcript is that it will NOT have the state income tax withheld.  Thus, if you are trying to file your Federal and State Income Tax Returns, you’ll probably want to go  the first route.

Use Your Last Paystub and Form 4852
Sometimes you are trying to file your return for the current year OR the W-2 isn’t available via transcript just yet. In these instances file Form 4852, Substitute for Form W-2 Wage and Tax Statement, in place of the W-2. Use your last paystub to estimate your income and withholding taxes as accurately as possible.  Just be aware that the IRS may delay processing your return while it verifies your information.

If you need help in obtaining your W-2s or a transcript, feel free to give us a call or shoot us an email.  Also feel free to check out this page to see the many other ways we can assist you.

How To Pay Taxes Owed

If you find yourself in the undesirable predicament of owing the IRS, here are some things for you to keep in mind so that the situation doesn’t go from bad to worse:

Payment Methods & Tips

  • You can pay taxes electronically 24/7 on www.IRS.gov. Just click on the “Payments” tab near the top left of the home page for details.
  • Check out IRS Direct Pay to pay directly from your bank account. It’s secure and free and you’ll get instant confirmation that you have submitted your payment.
  • Pay in a single step by using your tax software when you e-file. If you use a tax preparer, ask them if they can make your payment electronically.
  • Whether you e-file your tax return or file on paper, you can choose to pay with a credit or debit card. One service that our clients often use is www.1040paytax.com.
  • If you enroll in the Electronic Federal Tax Payment System (EFTPS) you can pay your federal taxes electronically and directly to the government. You have a choice to pay using the Internet, or by phone using the EFTPS Voice Response System.
  • If you can’t pay electronically, you can still pay by a personal or cashier’s check or money order. Just make you check payable to the “U.S. Treasury” and be sure to write your name, address and daytime phone number on the front of your payment. Also, write the tax year, form number you are filing and your Social Security number. Use the SSN shown first if it’s a joint return.
  • If you pay by paper check, complete Form 1040-V, Payment Voucher. Mail it to the address listed in the instructions based on where you live.

Balance Owed On Prior Year Taxes

  • If you filed your return late, just know that the amount owed reflected on the return is incorrect. This is due to interest and penalties. Thus, once you file your return, the IRS will send you a notice indicating the correct amount to satisfy your liability.
  • If you have moved since you last filed a return with the IRS, make sure that you submit Form 8822 so that you can receive all future communications. The last thing you want is for the IRS to think you are ignoring you and then begin aggressive collection actions (e.g. liens, levies, wage garnishments, etc).

Inability To Pay Balance Off With One Payment

  • If you can’t pay off the balance with a single payment, it’s in your best interest to send in as much as you can to minimize the penalties and interest that will be assessed.
  • The IRS has many options for you to pay your balance off, including payment plans. This post on our sister site talks about setting up a guaranteed installment agreement and is well worth the read. 

Need assistance with your tax balance? Give us a call at 844-TAXES88 (844-829-3788) and we’d be happy to discuss you situation and tell you how we can be of service.

Can You E-File Old Tax Returns?

e-file_logoSo the April 15th deadline has come and gone, but for whatever reason, you STILL need to file your tax return.  What to do?  Do you need to mail it?  Can you send it in via E-File?  Keep reading to find out your options.

Current Tax Year and Date Is BEFORE October 15th
If you missed the deadline but you are filing before October 15th, then you can still E-File your return.  The IRS shuts down the E-File system in November/December to get everything ready for the next filing season, so you only have until then to get your return transmitted.

Current OR Prior Tax Year and Date Is AFTER October 15th
Well, that means that you’ve missed the E-File window and your only option is to mail a paper copy of your return to the IRS.  Check this post for addresses on where to mail it.

How To E-File Your Return
If you are still within the window of time where you can use E-File, here are your options:

  1. Use IRS Free File or Fillable Forms. There are stipulations regarding these options which you can read more about here.
  2. Use Commercial Software.  The thing to note with software is that it typically only supports the current year during the current E-File window.  Thus, if you need to E-File a previous year, take a look at the next option.
  3. Find an Authorized E-File Provider. File Old Tax Returns is an authorized E-File Provider via Wilson Rogers & Company, Inc.  We can gladly help you in preparing, filing and transmitting your current year tax return AND the two previous years (e.g. 2015-2013)!  Each one of the states is a little different so please consult with us.  Not dealing with the current or one of the two previous years?  We can still help.  To learn how, just download these instructions or give us a call at 844-TAXES88 (844-829-3788).

Where To Mail Past Tax Returns

Back in the day, when people listened to music on a Walkman or had to sit in front of a TV to catch their favorite show, the only way to file your tax return was to mail it to the IRS. Then technology took over and we became accustomed to e-filing our tax returns. But wait, what do you do when you have an old tax return or the IRS has shut down e-file? Well, you must mail it in my friend!

Shown below are the addresses where you can send your old tax return once you’ve finished preparing it. Note that you must send it to a different IRS Service Center depending on 1) if you are sending them money or not and 2) where you live. While the chart is pretty accurate, note that the IRS is always changing things.

As such, we advise you to check this handy map on the IRS site prior to sending in your return. You can also find the mailing addresses on the last few pages of Publication 17.

Where To File

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