Taxpayers can procrastinate two more days before filing their 2006 federal tax return with the Internal Revenue Service because the traditional deadline falls on Sunday and Emancipation Day, a legal holiday in Washington, D.C., follows on Monday.
Americans with adjusted gross income of less than $52,000 can file for free electronically using IRS.gov to link into the Free-File consortium, IRS spokesman Raphael Tulino said from his San Diego office.
“If you e-file, it makes the whole process so much easier,” he said. “Let the software hold your hand all the way through.”
By choosing direct deposit over a paper check, taxpayers can have refund money show up in their bank account in as little as 10 to 14 days instead of waiting four to six weeks for the check, he said.
Those who need extra time can file for a six-month extension through Oct. 15. The extension is only for filing, not for paying, Tulino said. April 17 is still the deadline for any balance due.
“The extension gives you time to file,” he said. “If you know you’re going to owe, you should send a payment, a good-faith estimate. If you overpay, you’ll get a refund. You don’t want to accrue penalties and interest if you can avoid it.”
Tulino said 75 percent to 80 percent of U.S. taxpayers receive refunds.
Randall Brody, owner of Liberty Tax Service in Las Vegas, suggests several options for those who owe taxes. First, have a professional tax preparer look at your return.
“A lot of folks think they owe money but never actually take the step to see if I owe money or do I have money coming to me,” Brody said. “It’s worthwhile to take that extra step. Get a free estimate. There’s no obligation with us.”
He said there was $2.2 billion in outstanding refunds that went unclaimed by 1.8 million people in 2003.
One of the refunds that’s been largely overlooked in the 2006 tax filings is the telephone-excise tax refund on long-distance calls, Brody said. It can typically amount to $30 to $60.
The least costly option for those who can’t pay the full amount owed by April 17 may be taking out a bank loan, he said. Another option is to submit IRS Form 9465, a request to make monthly installment payments. Taxes owed can also be charged to credit cards.
“To limit penalty and interest charges, you should pay as much of the tax due as possible when sending in your return,” Brody said.
The IRS’ Tulino said there several exemptions for active-duty soldiers, particularly those who served in war zones.
The HERO Act, enacted in May 2006, enables military taxpayers to count tax-free combat pay when determining whether they qualify to contribute to either a Roth or traditional individual retirement account.
Previously, members of the military whose earnings came entirely from tax-free combat pay were generally barred from using IRAs to save for retirement.
Cookie Grigsby, whose son is serving in Iraq, took advantage of free tax assistance provided by Power Tax Relief to military personnel and their families.
“I just have some questions on how to do moving and stuff I can write off,” she said Wednesday at the VFW Post on Las Vegas Boulevard North. “I usually have it done someplace else, but I don’t trust them any more.”
Brian Kennedy, president and chief executive officer of Power Tax Relief, said most of U.S. troops don’t have the money to go out and pay for tax services, so they end up filling out the simple forms and don’t get all of the money due back to them.
Other provisions for Armed Forces personnel include:
• Tax-free combat pay up to the highest rate of enlisted pay; tax-free housing assistance payments.
A taxpayer on qualified official extended duty in the U.S. Armed Services or the Foreign Service may suspend for up to 10 years of such duty time the running of the five-year ownership-and-use period before the sale of a principal residence. This benefit may help in qualifying for the tax-free capital gain of up to $500,000 for a main home sale.
• Combat zone tax forgiveness upon death while in active service from wounds, disease or other injury.
• Child and dependent care relief. For tax years after 2002, dependent care assistance programs for military personnel are excludable from income.
• A deduction for overnight travel expenses for National Guard and Reserve members.
Liberty Tax’s Brody said he hasn’t been hit yet with a barrage of extension filings, but expects to get quite a few in the coming days.
“We recommend whenever possible try to file your tax return on time,” he said. “If it’s fear — I don’t want to file because I know I owe — it’s not a great idea (to wait). They have installment requests.”