February
Take Advantage of Your Tax Payer Rights!
2009 It could save you hundreds of dollars!
It’s that time of year again! Tax Time! I don’t know about you, but I sometimes feel a
little intimidated by the IRS. I don’t ever want to see a letter (without a check addressed
to me) coming to my address from the IRS. It sometimes seems like they have all of the
advantages.
If you know the rules, you can beat them
at their own game!
The IRS has to pay penalties and interest too! – The IRS must send your refund within
45 days of the date the return was due or from the date you file, whichever is later. If
they don’t get the refund out within 45 days, they have to pay interest, even if they’re
only one day late!
Never let the IRS apply your refund to next year’s tax bill! – If you file the short form,
1040A or 1040EZ, and claim a refund, the IRS will send you a check for that amount
(provided you have not made any errors on your return). However, if you file the long
form, 1040, you are offered an alternative to getting a check. On the back of the form,
down at the bottom, it asks if you want to let the IRS keep you refund and apply it to
your next year’s estimated tax bill…
Take the Check!!!
Do not apply it to next year’s tax bill! Never let the IRS hold on to your refund! Why
not? Because it will not really help you in the long run—AND MAY END UP
HURTING YOU.
Example: You fill out your return and discover that you had a $900 refund coming. You
decide to let the IRS hold on to it and apply it to your next year’s estimated tax bill.
But what if the IRS finds a math error on your return? Or your employer made a mistake
on your pension 1099? Or you forgot to include some interest from an account that you
forgot? Or your accountant made an honest mistake?
These things happen all the time. Any one of them would affect your tax return.
Let’s suppose that the bottom line is this: After correcting your return, the IRS sends
you a bill for an additional $400.
You already have $900 sitting in your estimated tax account. As far as you are
concerned, the IRS can go ahead and take the $400 out of that. Right?
WRONG! You told the IRS to credit the $900 to your estimated tax account, and you
are stuck with that decision. In other words, you will have to come up with the extra
$400 on your own.
Timely Tips from Eric C Hagen | www.TwinCitiesRetirement.com …
What if the IRS audits a recent return and finds that you owe additional taxes plus interest? You
still cannot touch your $900.
To make matters worse, the money you left in your estimated tax account does not even earn any
interest.
If you really want to earmark your refund for your future tax bill, let the IRS send your check to
you. Then deposit the money in a saving account or invest it for a year. Do not let the IRS have it
for nothing!
If the IRS sends you a bill, BEWARE!
When the IRS comes up with a deficiency as the result of an audit, the taxpayer is given a waiver
to sign and mail back to the IRS. According to the tax law, if the IRS does not demand payment
of the tax bill within 30 days after the waiver was executed, interest on the deficiency stops
accumulating.
The IRS has been charging some taxpayer’s interest right up to the date of billing, which is often
several months after the waiver was signed and returned. This extra interest can be several
hundred dollars more than you should pay.
Carefully check interest charges before paying the deficiency bill. Interest should be charged for
the period beginning with the due date of the return and ending 30 days after you sign the waiver
and mail it back to the IRS. Pay the tax you owe and the interest that you determine to be correct.
Clearly explain in an accompanying letter how you arrived at your figures, including a detailed
computation of the correct interest. Note: Pay the deficiency bill within 10 days after you get it.
If you do not, interest will start accruing again.
The person that knows the rules…wins the game!
At TwinCitiesRetirement.com, we help people reduce their taxes to the minimum legally
possible. We are not tax preparers…WE ARE TAX REDUCERS. If you have not received a
second opinion in the last three years, you need to call us. We don’t want you to leave your tax
person. As I said, we do not prepare tax returns; we create strategies to work with your tax
preparer. Why three years? Because you are allowed to re-file your tax returns for a refund up to
three years back.
Call us today to schedule an evaluation of your last three years’ tax returns. We find hundreds of
dollars in tax savings everyday for people that visit with us. Call 952-746-1321 today!
Eric C Hagen | 12100 Singletree Lane, Suite 171 | Eden Prairie, MN 55344
952-746-1321 | Fax 612-392-8612 | www.TwinCitiesRetirement.com
Securities offered through NEXT Financial Group, Inc., Member FINRA/SIPC. TwinCitiesRetirement.com and NEXT
Financial Group, Inc. are not affiliated. Neither NEXT Financial Group, Inc. nor its representatives offer tax or legal
advice. Please consult your tax or legal professional before taking any action.