WASHINGTON — The Internal Revenue Service today urged taxpayers who have a filing extension through Oct. 16 to check their returns for often-overlooked tax benefits. When they are ready to file, the IRS recommends they file their return electronically using IRS e-file or the Free File system. Both are still available for taxpayers who still need to file their return.
Check for Tax Benefits
Before filing, the IRS encourages taxpayers to take a moment to see if they qualify for these and other significant credits and deductions:
- Benefits for low- and moderate-income workers and families, especially the Earned Income Tax Credit, can increase a taxpayer’s refund and lower the amount of taxes they pay. The EITC Assistant can help taxpayers see if they’re eligible.
- Savers credit, claimed on Form 8880, for low- and moderate-income workers who contributed to a retirement plan, such as an IRA or 401(k).
- American Opportunity Tax Credit, claimed on Form 8863, and other education tax benefits for parents and college students.
E-file and Free File
The IRS urges taxpayers to choose the speed and convenience of electronic filing and direct deposit for their refunds. Fast, accurate and secure, filing electronically is an ideal option for those rushing to meet the Oct. 16 deadline. The IRS verifies receipt of an e-filed return and people who file electronically make fewer mistakes. Of the 145.3 million returns received by the IRS so far this year, approximately 87.5 percent — or 127.2 million — have been e-filed.
Everyone can use Free File, either the brand-name software, offered by the IRS’s commercial partners to individuals and families with incomes of $64,000 or less, or online fillable forms, the electronic version of IRS paper forms available to taxpayers at all income levels. IRS Free File remains available either online at IRS.gov/FreeFile or through the mobile app, IRS2Go.
More than eight of 10 taxpayers enjoy the convenience of direct deposit. Taxpayers can choose to have their refunds deposited into as many as three accounts. See Form 8888 for details.
Taxpayers with extensions should file their returns by Oct. 16, even if they can’t pay the full amount due. By doing so, taxpayers will avoid the late-filing penalty, normally 5% per month, that would otherwise apply to any unpaid balance after Oct. 16. However, interest, currently at the rate of 4% per year compounded daily, and late-payment penalties, normally .5% per month, will continue to accrue.
Planning Ahead for 2018Taxpayers can begin taking steps now to ensure smooth processing of their 2017 tax return next year. The IRS offers these reminders:
- All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
- Check withholding. If not enough tax is withheld, a taxpayer will owe tax and may have to pay interest and a penalty. If too much tax is withheld, a taxpayer loses the use of that money until they get their refund. A taxpayer can reduce the refund amount and boost take-home pay by claiming additional withholding allowances on the Form W-4 they give to their employer. Anyone who owes tax can have additional tax withheld or make quarterly estimated tax payments to the IRS. For help, use the Withholding Calculator on IRS.gov.
- Like last year, the IRS cautions taxpayers not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations. Although the IRS issues most refunds in less than 21 days, some returns are held for further review. Beginning in 2017, a new law approved by Congress requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit until mid-February. The IRS must hold the entire refund — even the portion not associated with the EITC and ACTC.
- Employers are required to file their copies of Forms W-2 and certain Forms 1099 with the federal government by Jan. 31. This change began last year. The Jan. 31 deadline has long applied to employers furnishing copies of these forms to their employees.