IRS Urges Taxpayers Who Filed An Extension to Check Their Eligibility for Overlooked Tax Benefits
IRS Tax Alert IR-2017-169
Issued October 5, 2017
The Internal Revenue Service urged taxpayers who have a filing extension through October 16, 2017 to check their returns for commonly overlooked tax benefits. When they are ready to file, the IRS recommends they file their return electronically using IRS e-file or the Free File system. Both are still available for taxpayers who still need to file their return.
Although October 16 is the last day for most people to file, some individuals (i.e., military serving in a combat zone) are allowed more time to file or those. They usually have until 180 days after they leave the combat zone to both file their return and pay any taxes due.
In addition, taxpayers who have a valid extension and are in a federally declared disaster area may be allowed more time to file. The IRS extended relief for this tax deadline to taxpayers affected by California wildfires in several counties. See the disaster relief page on IRS.gov for details of tax relief in other disaster situations.
Check for Tax Benefits
Before filing, the IRS encourages taxpayers to take a moment to see if they qualify for these and other significant credits and deductions:
- Benefits for low and moderate income workers and families, especially the Earned Income Tax Credit, can increase a taxpayer’s refund and lower the amount of taxes they pay. The EITC Assistant can help taxpayers see if they’re eligible.
- Savers credit, claimed on Form 8880, for low- and moderate-income workers who contributed to a retirement plan, such as an IRA or 401(k).
- American Opportunity Tax Credit, claimed on Form 8863, and other education tax benefits for parents and college students.
E-file and Free File Available
The IRS urges taxpayers to choose the speed and convenience of electronic filing and direct deposit for their refunds. Fast, accurate and secure, filing electronically is an ideal option for those rushing to meet the October 16 deadline. The IRS verifies receipt of an e-filed return and people who file electronically make fewer mistakes. Of the 145.3 million returns received by the IRS so far this year, approximately 87.5% have been e-filed.
Everyone can use Free File, either the brand-name software, offered by the IRS’s commercial partners to individuals and families with incomes of $64,000 or less, or online fillable forms, the electronic version of IRS paper forms available to taxpayers at all income levels. IRS Free File remains available either online at IRS.gov/FreeFile or through the mobile app, IRS2Go.
Keep in mind that the adjusted gross income (AGI) amount from your 2015 return may be needed to electronically file your 2016 tax return.
Quick and Easy Tax Payment Options
IRS Direct Pay offers taxpayers a fast, easy and secure way to pay what they owe. Direct Pay is free and allows individuals to securely pay their tax bills or make quarterly estimated tax payments online directly from checking or savings accounts without any fees or pre-registration.
Taxpayers can also pay by debit or credit card. While the IRS does not charge a fee for this service, the payment processer will. Other payment options include the Electronic Federal Tax Payment System (enrollment is required) and Electronic Funds Withdrawal which is available when e-filing. Taxpayers can also pay what they owe using the IRS2Go mobile app. All of the electronic payment options are quick, easy and secure and much faster than mailing in a check or money order. Those choosing to pay by check or money order should make the payment out to the “United States Treasury.”
Taxpayers with extensions should file their returns by October 16, 2017 even if they can’t pay the full amount due. By doing so, taxpayers will avoid the late-filing penalty, normally 5% per month, that would otherwise apply to any unpaid balance after October 16. However, interest, currently at the rate of 4% per year compounded daily, and late-payment penalties, normally .5% per month, will continue to accrue.
Help for Struggling Taxpayers
In many cases, those struggling to pay taxes qualify for one of several relief programs. Most people can set up a payment agreement with the IRS online in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to 72 months or request a short-term payment plan. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS.
Alternatively, taxpayers can request a payment agreement by filing Form 9465. This form can be downloaded from IRS.gov and mailed along with a tax return, bill or notice.
Some may qualify for an Offer-in-Compromise.This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, an offer will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay. To help determine eligibility, use the Offer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.