IRS Has $1 Billion for People Who Have Not Filed a 2008 Income Tax Return

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Haven’t Filed a Tax Return in Years?: English | Spanish | ASL

WASHINGTON — Refunds totaling more than $1 billion may be waiting for one million people who did not file a federal income tax return for 2008, the Internal Revenue Service announced today. However, to collect the money, a return for 2008 must be filed with the IRS no later than Tuesday, April 17, 2012.

The IRS estimates that half of these potential 2008 refunds are $637 or more.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

For 2008 returns, the window closes on April 17, 2012. The law requires that the return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return qualifying for a refund.

The IRS reminds taxpayers seeking a 2008 refund that their checks may be held if they have not filed tax returns for 2009 and 2010. In addition, the refund will be applied to any amounts still owed to the IRS, and may be used to offset unpaid child support or past due federal debts such as student loans.

By failing to file a return, people stand to lose more than refunds of taxes withheld or paid during 2008. Some people, especially those who did not receive an economic stimulus payment in 2008, may qualify for the Recovery Rebate Credit. In addition, many low-and moderate-income workers may not have claimed the Earned Income Tax Credit (EITC). The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2008 were:

• $38,646 ($41,646 if married filing jointly) for those with two or more qualifying children,
• $33,995 ($36,995 if married filing jointly) for people with one qualifying child, and
• $12,880 ($15,880 if married filing jointly) for those with no qualifying children.

For more information, visit the EITC Home Page on IRS.gov.

Current and prior year tax forms and instructions are available on the Forms and Publications page of IRS.gov or by calling toll-free 800-TAX-FORM (800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for 2008, 2009 or 2010 should request copies from their employer, bank or other payer. If these efforts are unsuccessful, taxpayers can get a free transcript showing information from these year-end documents by ordering it on IRS.gov, filing Form 4506-T, or by calling 800-908-9946.

Individuals Who Did Not File a 2008 Return with a Potential Refund

*Excluding the Earned Income Tax Credit and other credits.

1099-K = Gross amount of income from credit card transactions when using a payment platform (Niteflirt, Keen etc). You deduct the fees on your tax return.

1099-Misc = Net amount of what you were actually paid by the company itself (Papillon, 121 etc.). If this is wrong, you need to take it up with your company. If they won’t help you, you can always deduct those fees from your income on your tax return. It is better that you report what the 1099 says than to under report it as that creates a ‘red flag’ with the IRS.

Why does the amount on the form include the fees etc. that I paid already?

Companies are required to file the gross amount of payments that a contractor received (income that includes all fees that were taken out before payment). This is the amount that includes the fees, bids etc. that is withdrawn before a payment is made to the contractor.

How do I deal with this form on my tax return?

You report the gross amount exactly as it is stated on your 1099-K form. If you have kept accurate records of your income and expenses, it will be easy to pull out the fees, bids or any other amount that you have already paid before you received each check from the processing company. These amounts are deducted on your tax return just like any other expense.

I’m not sure what that means. IRS Won’t Require Reconciling 1099-K Reports on Credit Card Payments with Gross Receipts  Tax Domme, does this mean no more 1099-K or a change to how earnings are reported on the 1099-K?

To ‘reconcile’ in accounting means to balance payments and earnings. You reconcile your checkbook at the end of the month to match the checks that you’ve written, deposits made and other transactions with what your bank statement says to make sure that they balance. Same thing here. The IRS is saying that taxpayers do not need to show their records to match the gross earnings (gross means all income without taking out fees and expenses paid) reported on the 1099-K. This means that you need to accept what the 1099-K states, report that amount on your tax return and then deduct any amount that pertains to fees etc. from that income on your tax return.

It is still a good idea to keep accurate records though regardless of what the IRS says. In the case of an audit, you would still have to show support of your expenses paid.

ASL Version (via  on YouTube)

Spanish Version (via  on YouTube)

For the IRS interactive program to determine if you need to file, please click on this link: http://www.irs.gov/ita/article/0,,id=219890,00.html

You are required to file a federal income tax return if your income is above a certain level, which varies depending on your filing status, age and the type of income you receive. However, the Internal Revenue Service reminds taxpayers that some people should file even if they aren’t required to because they may get a refund if they had taxes withheld or they may qualify for refundable credits.

To find out if you need to file, check the Individuals section of the IRS website at www.irs.gov or consult the instructions for Form 1040, 1040A or 1040EZ for specific details that may help you determine if you need to file a tax return with the IRS this year. You can also use the Interactive Tax Assistant available on the IRS website. The ITA tool is a tax law resource that takes you through a series of questions and provides you with responses to tax law questions.

Even if you don’t have to file for 2011, here are six reasons why you may want to:

1. Federal Income Tax Withheld You should file to get money back if your employer withheld federal income tax from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.

2. Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund. To get the credit you must file a return and claim it.

3. Additional Child Tax Credit This refundable credit may be available if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.

4. American Opportunity Credit Students in their first four years of postsecondary education may qualify for as much as $2,500 through this credit. Forty percent of the credit is refundable so even those who owe no tax can get up to $1,000 of the credit as cash back for each eligible student.

5. Adoption Credit You may be able to claim a refundable tax credit for qualified expenses you paid to adopt an eligible child.

6. Health Coverage Tax Credit Certain individuals who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a 2011 Health Coverage Tax Credit.

Eligible individuals can claim a significant portion of their payments made for qualified health insurance premiums.

For more information about filing requirements and your eligibility to receive tax credits, visit www.irs.gov.

E-filing officially begins January 17, 2012

The filing Season deadline for 1040 tax returns and extensions is Tuesday, April 17, 2012

Taxpayers requesting an extension will have until Oct. 15 to file their 2012 tax returns.

New IRS rule says that no tax return shall be e-filed until the taxpayer has received all of their expected tax forms (eg. W-2, 1099 etc). The deadline for issuers to send the forms is January 31st. Therefore, taxpayers may not receive their forms until February.

Dec. 16, 2011

WASHINGTON — Low- and moderate-income workers can take steps now to save for retirement and earn a special tax credit in 2011 and the years ahead, according to the Internal Revenue Service.

The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.

Eligible workers still have time to make qualifying retirement contributions and get the saver’s credit on their 2011 tax return. People have until April 17, 2012, to set up a new individual retirement arrangement or add money to an existing IRA and still get credit for 2011. However, elective deferrals must be made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, and the Thrift Savings Plan for federal employees. Employees who are unable to set aside money for this year may want to schedule their 2012 contributions soon so their employer can begin withholding them in January.

The saver’s credit can be claimed by:

• Married couples filing jointly with incomes up to $56,500 in 2011 or $57,500 in 2012;
• Heads of Household with incomes up to $42,375 in 2011 or $43,125 in 2012; and
• Married individuals filing separately and singles with incomes up to $28,250 in 2011 or $28,750 in 2012.

Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed. Though the maximum saver’s credit is $1,000, $2,000 for married couples, the IRS cautioned that it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers.

A taxpayer’s credit amount is based on his or her filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs. Form 8880 is used to claim the saver’s credit, and its instructions have details on figuring the credit correctly.

In tax-year 2009, the most recent year for which complete figures are available, saver’s credits totaling just over $1 billion were claimed on just over 6.25 million individual income tax returns. Saver’s credits claimed on these returns averaged $202 for joint filers, $159 for heads of household and $121 for single filers.

The saver’s credit supplements other tax benefits available to people who set money aside for retirement. For example, most workers may deduct their contributions to a traditional IRA. Though Roth IRA contributions are not deductible, qualifying withdrawals, usually after retirement, are tax-free. Normally, contributions to 401(k) and similar workplace plans are not taxed until withdrawn.

Other special rules that apply to the saver’s credit include the following:

• Eligible taxpayers must be at least 18 years of age.
• Anyone claimed as a dependent on someone else’s return cannot take the credit.
• A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.
• Certain retirement plan distributions reduce the contribution amount used to figure the credit. For 2011, this rule applies to distributions received after 2008 and before the due date, including extensions, of the 2011 return. Form 8880 and its instructions have details on making this computation.
• Begun in 2002 as a temporary provision, the saver’s credit was made a permanent part of the tax code in legislation enacted in 2006. To help preserve the value of the credit, income limits are now adjusted annually to keep pace with inflation. More information about the credit is on IRS.gov.

• Standard mileage rates:
  • The 2011 rate for business use of your car is 51 cents a mile for miles driven before July 1, 2011, and 55 ½ cents a mile for miles driven after June 30, 2011.
  • The 2011 rate for use of your car to get medical care is 19 cents a mile for miles driven before July 1, 2011, and 23 ½ cents a mile for miles driven after June 30, 2011.
  • The 2011 rate for use of your car to move is 19 cents a mile for miles driven before July 1, 2011, and 23 ½ cents a mile for miles driven after June 30, 2011. See Publication 521, Moving Expenses.
• The standard deduction has increased.
• The amount you can deduct for each exemption has increased.
• Alternative minimum tax (AMT) exemption amount has increased.
• Health savings accounts (HSAs) and Archer MSAs:
  • For distributions after 2010, the additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses has increased to 20%.
  • Also beginning in 2011, amounts paid for medicine or a drug are qualified medical expenses only if the medicine or drug is a prescribed drug or is insulin.
• Roth IRAs: If you converted or rolled over an amount to a Roth IRA in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.
• Designated Roth accounts. If you rolled over an amount from a 401(k) or 403(b) plan to a designated Roth account in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.
• Alternative motor vehicle credit. You cannot claim the alternative motor vehicle credit for a vehicle you bought in 2011, unless the vehicle is a new fuel cell motor vehicle.
• First-time homebuyer credit: To claim the first-time homebuyer credit for 2011, you (or your spouse if married) must have been a member of the uniformed services or Foreign Service or an employee of the intelligence community on qualified official extended duty outside the United States for at least 90 days during the period beginning after December 31, 2008, and ending before May 1, 2010.
• Repayment of first-time homebuyer credit. If you have to repay the credit, you may be able to do so without attaching Form 5405.
• Nonbusiness energy property credit. This credit is figured differently for 2011 than it was for 2010.
• Health coverage tax credit. This credit has been extended, and the amount has changed.
• Schedule L. Schedule L is no longer in use. You do not need it to figure your 2011 standard deduction.
• The making work pay credit has expired. You cannot claim it on your 2011 return. Schedule M is no longer in use.
• Mailing your return. If you are filing a paper return, you may be mailing it to a different address this year because the IRS has changed the filing location for several areas. Where to file

Use the 1040EZ if:

• Your taxable income is below $100,000
• Your filing status is single or married filing jointly
• You are not claiming any dependents
• Your interest income is $1,500 or less

Use the 1040A if:

• Your taxable income is below $100,000
• You have capital gain distributions
• You claim certain tax credits
• You claim adjustments to income for IRA contributions and student loan interest

If you cannot use the 1040EZ or the 1040A, you’ll probably need to file using the 1040. Among the reasons you must use the 1040 are:

• Your taxable income is $100,000 or more
• You claim itemized deductions
• You are reporting self-employment income
• You are reporting income from sale of property

There is potential for a government shutdown after midnight on Friday due to a lack of budget approval. If this occurs, the IRS has stated that the April 18 tax deadline remains in effect. All taxpayers should continue to file their returns and pay their taxes as normal. The IRS plans to continue accepting all tax returns, both electronic and paper. Refunds will continue to be processed normally for electronically filed tax returns and most taxpayers will not see delays for e-filed returns. However, taxpayers should expect delays for paper tax refunds.

* Small organizations whose annual gross reciepts are normally less than the threshold are not required to file annually, but may be required to file a notice by e-postcard.