As tax law is very complicated, this article is intended only for educational or illustrative purposes and should not be construed to communicate legal or professional advise.  You should contact us with any specific questions so we can properly interpret how the tax laws applies to your situation.   Killingbeck Tax Preparation, Kokomo, Indiana.  765-452-8000.

Here's Information for After You Get You Tax Return Prepared.

Below we have listed information on:  Signing you tax return, 3rd Party Designees, Mailing, and Amending,   Also, we include information on putting your return together, getting a copy of a prior tax return, contacting the IRS by phone, and penalties. 

Third Party Designee

  1. You can complete section on the bottom of the back of the 1040 to allow any third party the taxpayer wished to contact the IRS to resolve original processing problems.  
    1. Can enter our firm's name and anyone from our office will be able to talk to IRS about return till end of filing season (10-15). 
    2. If the person designated is the paid preparer, write “Preparer” in  the space for the designated name and check the box “yes”.

Sign Your Tax Return

 Tax return must be signed to be an official  document.  If joint return, both must sign.

  1. Others sign for taxpayer   
    1. One spouse can sign for the other for situations below by signing spouses name & then writing by & then signing their own name.  They also must include an attachment as listed below
      1. This can include illness or injury, spouse being in combat zone, and other good reasons.
      2. Attachment must include type of return, tax year, the reason spouse couldn't sign & is with spouse’s consent.  
      3. For other situations, a spouse must have a power of attorney.  Can use IRS Form 2848.
    2. If minor child, parent signs the child's name and then signs their own name and writes "by parent for minor child".
    3. Others who sign for taxpayer must attach power of attorney or court appointed representative papers..
      1. Must do form 8453 and send 8453 with POA (or court appointment paper) to IRS.  Keep signed copy with our copy of tax return.
      2. Power of attorney form must say specifically that it applies to signing a tax return.  Most don't.
  2. Codes for Tax Return ID Theft
    1. Victims of prior year tax return identity theft must enter 6 digit code from letter the IRS sent in December.  Number good only 1 year, IRS will send new number each year for 3 years.  Must call IRS if you lose the code.

  3. Deceased Taxpayer       
    1. Enter date of death if taxpayer died before e-filing tax return.  Delete on state.
    2. Form 1310 is not needed for deceased spouses & court appointed executors.                                 
      1. Surviving Spouses  If no executor, write in signature area "Filing as Surviving Spouse”.   No  need to sign for spouse.
        (a)  If spouse is executor, spouse should sign twice.  Second signature should be as executor.  Attach court authorization.
        (b)  If they are not the executor, they must file a joint return and have executor sign for spouse
        (c)  Executors can revoke a jointly filed return filed by the surviving spouse to file a separate return for the deceased.
    3. Power of Attorney and Executors should attach a copy of court authorization (must include filing income tax) and form 8453.  They write in signature area "POA" (if so), or “Filing as Personal Representative” and must sign their own name.
    4. Other filers must file Form 1310.  (Can also use 1310 for state.)
    5. Use Form 4810 when both spouses are deceased as IRS can only make further assessments to estate for 18 months.
    6. A Deceased Taxpayer is only taxed on income & can only claim deductions made up till the date of death.
      1. An exception is made for medical bills.  Can claim any medical  bills paid for deceased within 12 months after death on final return.
      2. After date of death the beneficiary or the estate is required to report income over $600.  Should be on a 1099.
      3. May have to do a nominee distribution on 1099's to properly split the income.

Putting Return Together 

  1. Forms go in alphabetical order, then numerical order.
  2. Attach copy B of W-2's & 1099's with withholding.

Mailing 

  1. Where return is sent depends on whether you owe or are getting refund.
  2. Military personnel should file their return in service center where they reside as civilians or plan to reside.
  3. Do not use the same envelope for different returns or for estimated tax.
  4. The IRS will cash any check they receive no matter who the check is made out to.
  5. Emailing returns is not secure!  Mail or fax.

          

Copy of the Tax Return or Transcript

  1. The IRS has a new (2014) online transcript system for taxpayers use only.  You can access it at www.irs.gov/Individuals?Get-Transcript
  2. Or you can call 1-800-908-9946 and have it mailed to you. Only you, the client, can order your transcripts.
    1. Return Transcript - 2011-2013
    2. Record of Account - 2010-2012
    3. Account Transcript - 2009-2013
    4. Wage & Income - 2004-2013
    5. Verification of non-filing
  3. To get an actual copy of a past year's tax return use Form 4506.
    1. The cost is at least $50.00.
    2. Can get the last 7 years of tax returns filed.
  4. Can get a transcript of tax return at no cost.  Transcript have some details but not all. Also can get transcript of W-2s and 1099's.

AMENDING: Form 1040X

  1. Should wait for original refund before sending in 1040X as a 1040X will freeze the original refund.
  2.  May amend a return up to 3 years from due date of return or two years of when tax was paid.
    1. This means until April 15 you can amend the current year, plus the 3 prior years.
    2. After April 15 you can only amend current plus last 2 years.
    3. Can amend up to 7 years on worthless stock.
    4. If original return was not filed, taxpayer has 3 years from when it was due plus extension. 
  3. Send amended return to service center where it was originally filed. Send to new address if service center moves.
  4. Watch that you attach necessary forms to 1040X.
  5. Be sure to give explanation as to reason for amending on 1040X.
  6. On State Amendments, be sure to send first 2 pages of 1040.
  7. The State doesn't touch amended returns until all current returns are processed after 4/15.
  8. It could take 6 months or more!

Contact IRS by Phone

  1. Can contact IRS by phone to speed certain paperwork,
  2. To abate a penalty,
  3. To respond to a notice where tax has been paid,
  4. To respond to a missing form, or
  5. To correct a withholding mistake.
  6. May be able to fax item.  Read notice IRS sends.

Taxpayer Penalties

YOU ASK IRS TO WAIVE PENALTY  

Generally, penalties are not imposed if taxpayer can show that the failure was due to reasonable cause.  Reasonable cause can include death or serious illness, unavoidable absence of taxpayer on filing date, or destruction of taxpayers home or business.

Hardship waiver write note on notice or use request waiver, form 8944.

But if taxpayer has good reason why, explain to IRS and ask them to waive penalty.  Often works.

Hardship waiver request Form is 8944.

  1. Failure to fileThe IRS can go back 6 years for people who haven’t filed a tax return.
    1. A failure to file penalty of lesser of 100% of tax or 5% per month of amount due is charged up to 25%. Unless you attach a reasonable explanation of why you are late.
    2. If return is not filed within 60 days of the due date, penalty is the smaller of $135 or the amount of tax due will be imposed.
    3. FRAUD:  If fraudulent, a 15% penalty per month up to a 75% penalty.  There is no time limit on when tax may be assessed where a fraudulent return is filed.

  2. Failure to pay
    1. This penalty is 1/2% per month up to a 25% maximum.  (1% if repeated requests to pay.)
    2. Can call IRS & they will figure penalty.
    3. Also applies to failure to pay tax deficiency within 21 days of the date of notice. 
  3. Returned check:  Larger of 2% of check or $25.

  4. Accuracy Related Penalties  20% Penalty for any of the following:
    1. Negligence or disregard of rules or regulations.  Negligence can include failure to keep records.
    2. Understatement of tax over 10% of tax or >$5000.  Failing to report an item of gross income > than 25% of gross income, the IRS has 6 years to assess tax.
    3. Overvaluation of property for a charitable contribution over 150% of value (40% if over 200%).
    4. Disallowance of claimed tax benefit due to transaction lacking economic substance.
  5. Fraud:  Penalty of 75%
  6. Willful attempt to evade tax $100,000
  7. Frivolous or incomplete Tax Return:  $5000 penalty 
  8. Failure to Disclose Foreign Assets:  $10,000   20-40% on foreign financial asset understatement.

 

Give us a call if you have questions or we can be of help, 765-452-8000.  Killingbeck Insurance & Tax Preparation, Kokomo, Indiana.