Tax tips from the IRS.
March 22, 2012 12:59 p.m.
Raphael Tulino, IRS spokesperson
Related Story: Have You Filed Yet? We Have Tax Tips From The IRS
CAVANAUGH: This is KPBS Midday Edition. I'm Maureen Cavanaugh. It's now less than a month to tax day. That still leaves most people plenty of time to figure out if they'll be doing their own taxes, going to a professional, or getting some software to do the job. Whatever method you choose, be it's always great to get some advice from people at the IRS itself. And it's always great to welcome back Rafael Tulino, other an IRS spokesman and frequent tax time guest on this program. Welcome.
TULINO: Hi, Maureen. Thanks for having me.
CAVANAUGH: We invite our listeners to give us a call with questions about taxes. Of if you find yourself in a special circumstance this year or maybe you've got a financial situation that's unfamiliar, we'll be happy to take all your tax questions. 1-888-895-5727. Let's part out with how people prepare their taxes. Does everyone do it online now?
TULINO: It's about 75-80% if you want to use last year's numbers for the filing of 2010. So you see that many filing electronically, and of the 75% of us who get refunds, about 75% choose direct deposit. So as the years go by, and the evolution of technology, you're seeing paperless tax returns being done. The convenience is night and day. It's so easy to do want
CAVANAUGH: For those who are still not comfortable doing this online, where do you get a tax form these days?
TULINO: You download it and print it from IRS.gov. They're still available in certain places if you want to go out in the community and get it. As the years go by, you get less and less of those. Last year were the first year that we began not sending paper forms in the mail anymore. You don't get the 1040 form and the instructions in the mail anymore. It's just so easy and convenient to do it electronically. That said, I hear what about those folks who can't get to a computer? My recommendation is do what you can to try to find yourself somewhere to download and print the form, and/or if you can, have gumption to do it electronically. Of it's all done for you by the software.
TULINO: I know you can't advocate any kind --
CAVANAUGH: What can you tell our listeners about finding the right person or online program to prepare your taxes?
TULINO: Two separate things. If you're looking for the right person, a CPA, enrolled agent or tax attorney, and a lot of people do, about 60% of all returns are done by a tax professional. On that tangent, you want to choose somebody reputable, somebody who's looking out in your best interests. And I can mention a few tips and such for that. On the other side of it, any software you choose, and there's a lot of software providers out there, is going to have all of the up-to-date information generally in terms of what's there in the law legislation-wise, based on your situation, based on the information it asks you, questions and such, as you go through to get you everything you're available to get, legally based on your situation. So either you're getting a lower bill and/or increasing your refund.
CAVANAUGH: When should someone think about using a tax professional when preparing their return?
TULINO: It's up to you as an individual. It depends on what you feel like. A lot of folks just throw their hands up in the air and say go away, I want no part of it. Nobody's going to argue that. But if you can get to a computer and try it yourself, even if you have a complicated situation such as rental income and homes where you rent out, and those kinds of things, and a small business, you know, if you're K1, you'd be surprised how simple it is to get a computer to yourself. Of the other side of the coin, tax professionals, chances are on behalf of you as a clients, they're E-filing for you, because it's so much easier for them, and professionals out there, they might have hundreds of clients. They might agree, it makes it so much easier via the computer.
CAVANAUGH: I'm speaking with Rafael Tulino. If you have any kind of tax question, give us a call. Marianne is on the line from San Diego. Welcome to the show.
NEW SPEAKER: Thank you so much.
CAVANAUGH: Yes, hi, how can we help you?
NEW SPEAKER: My situation is this, my husband is in the military, he maintains residence in North Carolina where he's from. I'm from San Diego where we met and we're married. And this is the first year that we're filing together. I've heard that my state filing taxes may follow his North Carolina residence, but I'm not certain. So if you could help me out, that would be wonderful.
>> Well, thank you very much on behalf of at least myself and I'm sure millions out there for his service. But the first thing is, on the federal side -- it's more of a state question, you're talking about the franchise tax board and such. But chances are, as I understand it, you will have to pay some California tax if you're a resident. You said you're a resident and he's in North Carolina?
NEW SPEAKER: Well, he lives here in San Diego but he is able to maintain his residence in North Carolina.
TULINO: My goes is the State of California will have a say in it, but you might have to pay some California taxes. On the federal side, no matter where you live, based on your situation, the federal taxes are the same. And allow me to let you know that there are a lot of special laws out there for military personnel and their families. And I want to just let you in on them, if you have a chance to go to the IRS website, you can key word search IRS publication 3, which is the armed forces tax guide, and you can see what's there for you, especially for military personnel and their families. And then I just offer on behalf of the State of California, the franchise tax board website is FTD.CA.gov.
CAVANAUGH: Thank you for the call. Amy is calling from Rancho Bernardo. Welcome to the program.
NEW SPEAKER: Hi, thank you. I have a disabled son, and I was talking to someone the other day, and they said oh, you know you can take some tax deductions for him! And I never knew that. Is that true?
TULINO: Well, it depends on more facts and circumstances around him being disabled. I'm assuming he's a dependent that you claim on your tax return?
NEW SPEAKER: He always will be.
TULINO: Then yes, you definitely to want to look into all the benefits you'd receive on taxes for that. IRS publication 501 will help you out, and that's the exemptions and filing status for your question. But it depends on all the facts and circumstances. But certainty it sounds like there's a dependency exemption there.
CAVANAUGH: There may follow some additional deductions she might be able to take out of that?
TULINO: Yes, it just depends on what they are. For example, medical expenses and those kinds of things that go on the return.
CAVANAUGH: I want to go back to that military question. We have so many military personnel here. Are there special circumstances that apply to them when they're filing their taxes?
TULINO: Freshman, right off the top, if you're in a combat zone, the April†17th as it is this year, doesn't apply to you. You have an extra six months, and maybe an extended period of time to file a tax return. There are so many other different special law, for example in claiming your unearned income tax credit, if your only income is combat zone pay, which is generally nontaxable, there's a law that came along that said even though the pay is nontaxable, it will be treated as earned income for you to play the ITC, which is a lucrative tax credit given to lower income individuals and family. The home buyer credit, that was extended a year for military personnel and their families who were overseas for example buying a home here. There's just so much there.
CAVANAUGH: Yeah, you got to look into it. Is there any way that the military helps people prepare their taxes?
TULINO: Yes! Thank you for asking. Our volunteer income tax prep program or VITA, there are dozens around the county here. We work, the IRS works with the folks on the bases, Pendleton, Mira Mar, to train them to prepare taxes free for armed forces personnel and their families. And that's a big ongoing, critical relationship we have. And it's done every year. And I know the folks who do that on behalf of the IRS, and it's really an important thing. And we work to make that happen for the folks on base.
CAVANAUGH: Tax season always seems to bring out scams. What should we watch for?
TULINO: The first of time which is so pervasive and sinister is phishing. And that's the e-mail you get in your in-box that is allegedly from the IRS alerting you to a probe or survey or refund, and this is an initial contact out of the blue, showing up in your in-box. It's not the IRS doing it. It's a scam. Tax time generally brings out the scammers. And they're trying to bring IRS as a lure to get you to provide intrusive information. The other thing we've seen recently, we went out with some good words on, promoters at an event such as a church or church function saying something to a senior citizen who has no real filing requirement or just a little bit of income saying you can file this tax return, an actual return for this credit called the American opportunity tax credit, which does exist, and it is a credit for education purposes, but based on that, you can get this stimulus. What happens is you say okay, it sounds good. It's not. You file out the return, and then the promoter, and the money you pay him to file the return are long gone. And you're left with a bogus credit having to pay penalties. So that's not a good thing. You just want to say if someone sounds like it's too good to be true, perhaps it is. And just know that the IRS is never asking you for personal intrusive information. If you get somebody asking you about filing about an actual, physical tax return that you don't qualify for --
CAVANAUGH: Think twice. Rob is calling from San Diego.
NEW SPEAKER: I formed a corporation two years ago, it's had absolutely no activity, no income, no expenses. I'm too strapped to pay someone to prepare the zero return. Where can I get an idea of what a zero return looks like? I've look said at the forms myself, even though 15 years ago, I was a tax preparer, it's still more than I can figure out.
TULINO: Well, a couple things for you. But if you have to, you're talking about business and business structures and what you can expense and deduct, you can't find some sort of tax professional to help you out there?
NEW SPEAKER: The only one I've been able to find is about $225, which I can eat on that for four months.
TULINO: I totally understand. We have something called the low-income taxpayer clinic, I know that's one on the campus of USD. The thing about it is, I don't know if they will help you off the top with a C-corp kind of return. But if you go to the IRS website and key word search low income tax clinic, that's where you might get some help on the pro bono side, so to speak.
CAVANAUGH: Would an online program help rob?
TULINO: He could. You could run some software, some numbers. But chances are, depending on your income, we have a free file program and such. I'm not going to offer vita to you, because they do simpler returns. But around the whole county, you might find that low-income taxpayer clinic may help you want
CAVANAUGH: If he's had no income and no expenses, does he even have to file anything?
TULINO: That depends on the requirement, on the business, where he's been in the past, it depends on how long ago -- does he have a requirement from years past? There's so much there to ask, you don't really have -- I couldn't give you a definitive answer.
CAVANAUGH: It's complicated. Thank you so much for the call.
TULINO: I hope you find the help you need certainly on the pro bono side, and I understand a lot of folks come from that position.
CAVANAUGH: There are still a lot of people who are out of work. If you're unemployed, do you need to file?
TULINO: Well, if you have a filing requirement, you have a certain amount of income you make every year, and if it's below a certain point, you don't necessarily have to file a tax return. Unemployment generally is taxable on the federal side of things. If you have that and nothing else, perhaps you don't meet the minimum threshold. But if you had just a little bit of earned income, you should file, because then you could take advantage of the earned income tax credit. And almost a half billion dollars was claimed in those funds from San Diego taxpayers. The IRS realizes a lot of folks are struggling, a lot of folks are unable to pay their balance due. We have a lot of mechanisms in place to help you as a taxpayer and to further the obligation that you have to pay with the IRS, and the IRS wants to work with you to help it with our programs. And certainly one of the things we have is this fresh start program. Real quick since you mentioned unemployment, you get -- basically if you have unemployment, and you've been unemployed, and you owe taxes on it, off the top, it's a fresh start program. But we could waive the actual penalty for that. That's part of the fresh start program we've begun. It's a little bit of a help for you if you're in that position. But you have to have had unemployment, been unemployed last year, and the installment agreement which was doubled online, that came along just a couple three weeks ago. And I know I didn't explain it very well, but it's coming.
CAVANAUGH: At least people know there is such a thing as a fresh start program.
TULINO: Correct. We began the posture three years ago, and we're continuing to add to it.
CAVANAUGH: Rich is calling from San Diego. Welcome to the program.
NEW SPEAKER: Thank you very much. My question is, I was flying back and forth to the territory of Guam, and I was earning some money out there, do I have to pay next tax on that money.
TULINO: Generally, yes, are you a citizen of the United States?
NEW SPEAKER: So it's a territory but I have to pay the federal government?
TULINO: Wherever you are in the world, generally you have to pay next taxes. Depends on what you did and where you are, if you're in a different country other than Guam, we have tax treaties and stuff. When you're talking about international tax law, it can get kind of complex. So you might benefit from seeing somebody who's a tax professional.
CAVANAUGH: Thanks for the call. I cannot believe this, we are completely out of time. Where can people get more information? We have a number of people waiting to have their questions answered on the line, let's of questions about tax the.
TULINO: IRS.gov, and the fresh start program as I mentioned, and the lady the publication 3 for the military, we even have an interactive tax assistant, which is the link from the front page of the website where you can actually get your question answered right there as well as so many different publications and links and such to information to help you as a taxpayer.
CAVANAUGH: And we'll have to have you back before -- what is it? April 17th?
TULINO: It's a Tuesday. And thank you for having me.
CAVANAUGH: Thank you.