A Dunia Magazine article

Photo: Robert Cochrane

E-file. Last year, 112 million people, an estimated 78% of all individual taxpayers used IRS e-file to electronically transmit their tax returns to the IRS. According to the Internal Revenue Service (IRS), more than 1 billion individual tax returns have been safely and securely processed since the nationwide debut of electronic filing in 1990. This number has been rising consistently every year because this method (unlike paper returns) ensures accurate returns, it’s easy, safe and secure, refunds are faster and tax payers who owe the government have more payment options. About three of four taxpayers received a refund last year, the average refund was approximately $2,900.

When? The IRS began accepting e-file returns on Jan. 17, 2012. This year, taxpayers have until Tuesday, April 17 to file their 2011 tax returns and pay any taxes due because April 15 falls on a Sunday, and Emancipation Day, a holiday observed in the District of Columbia, falls this year on Monday, April 16.

Know your options. Tax payers can e-file their taxes themselves or through a tax professional. In general, for people concerned about security, e-file is a safe option as software vendors and paid tax return preparers use the latest encryption technology. Within 48 hours of filing a return, an electronic acknowledgement is issued that the return has been received by the IRS and either accepted or rejected.

Guard your identity. Identity thieves get your personal information by many different means, including stealing your wallet or purse, posing as someone who needs information about you through a phone call or e-mail, looking through your trash for personal information, accessing information you provide to an unsecured Internet site. Victims of identity theft may face several difficulties where their situation is concerned such as:

• Identity thieves may then use a taxpayer’s identity to fraudulently file a tax return and claim a refund.
  
• In other cases, the identity thief uses the taxpayer’s personal information in order to get a job.
  
• That person’s employer may report income earned by them to the IRS using your Social Security number, thus making it appear that you did not report all of your income on your tax return.
  
• The legitimate taxpayer may be unaware that anything has happened until they file their return later in the filing season and it is discovered that two returns have been filed using the same Social Security number.
  
• When this occurs, you should contact the IRS to show that the income is not yours. Your record will be updated to reflect only your information. You will also be asked to submit substantiating documentation to authenticate yourself. That information will be used to minimize this occurrence in future years.
  

Don’t wait, start early. Round up any documents you’ll need when filing your taxes such as receipts, canceled checks and other documents that support income or deductions you’re claiming on your return. Put your records together and be on the lookout for W-2s (Employers are supposed to mail out or deliver the Form W-2 by January 31st), 1099s and other important tax documents from mortgage servicers, bank interest, student loan interest, etc.

What’s on the table? This year, you should take advantage of a wide range of tax-saving opportunities, such as the American opportunity credit for parents and college students, and the child tax credit and expanded earned income tax credit for low- and moderate-income workers. Consult with a tax professional to ensure you receive all exemptions, credits and deductions you may qualify for.

Take stock of last year’s situation. In November 2011, the Internal Revenue Service announced that it is looking to return $153.3 million in undelivered tax refund checks. In all, 99,123 taxpayers were due refund checks last year averaging $1,547 that could not be delivered because of mailing address errors. Taxpayers who believe their refund check may have been returned to the IRS as undelivered should use the “Where’s My Refund?” tool on IRS.gov. The tool will provide the status of their refund and, in some cases, instructions on how to resolve delivery problems. Taxpayers checking on a refund over the phone will receive instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954. While only a small percentage of checks mailed out by the IRS are returned as undelivered, taxpayers can put an end to lost, stolen or undelivered checks by choosing direct deposit when they file either paper or electronic returns. Last year, more than 78.4 million taxpayers chose to receive their refund through direct deposit.

Have a fantastic season!

Information source: Internal Revenue Service

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