Hopefully this won’t come as breaking news, but it’s that time of year again. You know, the one that evokes one of life’s two certainties (Hint: it’s the one that happens once a year). Whether you’ve already filed your taxes, are racing to meet the April 18 deadline, or even anticipating a refund or dealing with a tax bill, our experts and reporters offer insight on tax-related questions you may have…but are too afraid to ask.
Tax Time Dos and Donts
Needless to say, the IRS is vigilant in its quest to find inaccuracies on our tax returns. Here are some line items that tend to come under the microscope more than others.
If you can afford to write a check and pay off your tax debt, that’s your best bet. But if you don’t have the cash available to do that, read on. There are other options.
The IRS suggests that paying your taxes with a credit card is convenient and safe. That may be true, but it isn’t cheap.
A little-known fee makes paying your taxes with plastic really expensive. That’s because the IRS contracts with companies to handle credit card payments. And the government doesn’t pay those companies for the service; you do.
Taxes on Cancelled Debt
When you lose a home or investment property, or have an automobile repossessed, typically you’ll receive a 1099-A form. Because the dollar amounts involved in these transactions can be large—involving tens or even hundreds of thousands of dollars—this is one area where you truly can’t afford to get it wrong.
Creditors who forgive $600 or more are required to file Form 1099-C with the IRS. Nearly 2.7 million of these forms were processed by the IRS in 2009 and that number is expected to increase for the 2010 tax year.
Taxes and Your Home
If you received a federal tax credit to help buy your house, you may be wondering whether you have to repay it. The short answer: Maybe.
Lenders are increasingly asking that borrowers pay one-twelfth of their property taxes each month as part of an increased mortgage payment. Not sure what an impound account is? Keep reading.
The Good Stuff: Refunds
The IRS recently introduced IRS2Go, an app for iPhones and Android phones that lets people check on the status of their tax refunds and get tips on tax filing.
The IRS will give out 600,000 tax refunds in the form of pre-paid debit cards this year, which could help some people avoid using costly tax return anticipation loans to get their money right away.
Tax Liens: The Good, the Bad, the Ugly
Finally, some good news from the IRS. They are lightening up on tax liens. The IRS’s draconian tax lien policy has ruined millions of Americans’ credit ratings, and probably made it even more difficult for them to pay the debt they owe to the IRS.
We all know that Uncle Sam doesn’t take kindly to those who don’t pay their taxes, but how do unpaid taxes impact your credit and credit scores?
Is there anything you can do to get a tax lien removed from your credit report?
Scams and Risks
The Minnesota Attorney General sued Tax Masters, saying the company charges up to $8,000 in up-front fees while failing to do anything to resolve consumers’ tax debt.
It’s tax season, which means you should keep an eye out for scam artists purporting to be from the IRS.
The IRS has failed to fix most of its existing data security vulnerabilities, even as new ones continue to crop up, according to a new report by the Government Accountability Office.
For Those Reading This on April 18 Who Haven’t Yet Filed…
Some of us here at Credit.com feel your pain. Consider this our gift to you:
The IRS allows you to apply for an automatic six-month extension to file your taxes by filing the Application for Automatic Extension of Time to File, Form 4868. This extension gives you until Oct. 17 to file your tax return.
Image: Chad Miller, via Flickr.com