Last Minute Tax Tips
Maybe you've already filed your taxes, maybe you haven't. You've got another few hours till the final deadline!
If you're still putting the last minute touches on your return, here's a chance to get your questions answered... if you already filed but you still have questions at the back of your mind.. maybe about your refund, or changes that could affect you next year... listen in and please give us a call so we can get your questions answerd. You can be sure many other people have that question too and will benefit from hearing the answer.
Raphael Tulino, IRS spokesperson for Southern California and Nevada.
This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.
ST. JOHN: You're listening to These Days on KPBS, I'm Alyson St. John in for Maureen Cavanaugh. Okay. So maybe you're already filed your taxes, maybe you haven't. You've got another few hours to your final deadline, if you're still pulling the last minute touches to your return, here's a chance to get your questions answered. If you're already filed but have questions maybe about your refund or changes that could affect you next year, listen in, and please give us a call so that we can get your questions answered. You can be sure many other people have that question too and will benefit from hearing your question, and the answers. So the number to join us is 1-888-895-5727. And our guest this hour is Raphael Tulino, IRS spokes person for Southern California and Nevada, Raphael, thanks for being with us.
TULINO: Hi, Allison. Glad to be here.
ST. JOHN: So why is it we have that extra weekend to fret over our taxes?
TULINO: To fret, that's funny. That's the word for some, unfortunately. Okay. So because in the District of Columbia, Friday the 15th is Emancipation day, which is a holiday designated in DC, and because tax payers in DC get a holiday from tax filing, so does the rest of the country. So if Friday the fifteenth is the actual holiday, and their law says we all get the same kind of treatment to have that extra day, that extra day following on a Saturday and a Sunday moves to Monday because we go to the next business day. So that's the quick logic behind the extra weekend.
ST. JOHN: So we know that the midway post office at 2535 midway is gonna be open till midnight tonight, but in fact, most people are filing electronically.
TULINO: Yeah, in that picture, as the years go by, you get maybe les and less folks going there. But certainly the easiest thing to do, is the other picture, let the software hold your hand all the way through, choose direct deposit for your refund, do a paperless tax return, and it's -- as of last week, I believe the numbers were 80 percent of all returns being transmitted electronically, and we do get a lot of volume in April, but when all is said and condition, I imagine we'll see some numbers close to three out of 4 or 4 out of five, last year it was fully 70 percent of all returns transmitted electronically. This year, I'm assuming we're gonna continue to go forward.
ST. JOHN: Okay. And what sort of percentage people do tend to file right at the last minute.
TULINO: We get about 25 to 30 percent of all volume in April.
ST. JOHN okay. So you're not all alone if you're out there still --
TULINO: Yeah, it's a little bit like a U, you get a lot of volume right around mid January to late January into early February, a lot of folks file, they get their refund because about four out of five get a refund as well, so you want that money coming back ASAP, then you get a little bit of a lull coming up into March, and then it picks up again as we get into April. The number in my head was 2895, I believe so almost tree hundred -- just under $2,900.
ST. JOHN: Is that more than usual?
TULINO: As the last few years go, it's been increasing steadily. Last year was just under $3000, so it was a little less last year, but if you think about it, while you're doing your return this year, you might think of some tax planning because with four out of five getting a refund, and the average refund getting that much, there's a lot of folks withheld, giving the government their dollars and they don't have. So you want to bring the tax you pay closer to what you owe, bring that as close to zero as you can that way you have your money throughout the whole year in lieu of getting your refund in the Spring.
ST. JOHN: Yeah. Do you think a lot of people are using that refund as a kind of savings account sort of disciplining themselves by not withholding and therefore knowing they're gonna get a big refund.
TULINO: I can tell you I've heard stories across the board from people I know and as such, certainly it's your money, it's not necessarily a windfall, although it's looked at that way.
ST. JOHN: You could get interest if you saved it.
TULINO: Exactly or knocking off a credit card with interest that's higher than normal. But certainly if you talk to a financial professional, they might tell you the better part of a financial snapshot is to consider like I say not having it or not having so much --
ST. JOHN: Or less Withholding. Raphael Tulino's in studio, and the number is 1-888-895-5727 to reach us. Lucy from El Cajon is calling in. Go ahead with your question, Lucy.
NEW SPEAKER: Oh, hi, thanks so much for taking my call. This is a wonderful opportunity. I have a great question. So I have a flexible medical spending account, where I can get reimbursed for my medical expenses, and the money is taken from my salary every month. But telly the last couple of years, my medical expenses have exceeded that account. And I am wondering how is it possible for me to be able to use those additional amounts toward my income taxes? And a tax professional told me I couldn't. And also another person said that it had to be above the $3,000, when I'm talking, like, 6 or $7,000 an amount of money total, and my flexible spending account was 5000, is there no way for me to be able to get those other additional funds off of my income taxes?
TULINO: Well, two quick things, Lucy, one, if you put money in an FSA, as I be it, it sounds like you have to exhaust, it sounds like you have, because if you don't exhaust or all your money in an FSA, I believe you forfeit it.
NEW SPEAKER: Correct.
TULINO: That's the first thing off the top. The second thing is, medical expenses are deductible, on a federal tax form, on an IRS schedule A, so if you itemize, you find a spot for medical deductions. The thing about medical deductions in general is that they're subject to 7.5 percent of the AGI rule. So let's just say as a round number, you make $100,000 in adjusted gross income, you have to realize more than $7,500 in medical expenses, qualified medical expense, I should say, that's unreimbursed medical expenses, and there are things that qualify for having such, in order to realize a text benefit on a tax form.
ST. JOHN: So that's a pretty hefty medical cost that you'd have to incur to be able to claim.
TULINO: The 7.5 percent rule definitely does raise the ceiling a little bit, do you do have to have more than that amount. Like I say, it's half of that, let's say it's $50,000 of income, then it's 3750 above. But you get the general logic and idea behind that on a form --
NEW SPEAKER: -- but my total medical expenses were, let's say of course $7,000, I wouldn't be able to claim the additional $2,000 that were beyond my account in any way because it would not be within that percentage?
TULINO: Generally, yes. I heard the second part of what you said, but generally, I think you got the logic on T.
ST. JOHN: Lucy, thank so much for the question. I hope that helped you out. Leanne is now calling us from Claremont with a question about domestic partners. Go ahead, Leanne.
NEW SPEAKER: Hello, hello.
ST. JOHN: Leanne, you're on the air. Thanks for calling.
NEW SPEAKER: Thank you. I have a questions about registered domestic partnerships. I know publication 555 came out in march. And when I went to file my taxes electronically, turbo tax didn't have the forms available, I guess, to do the community property, which you need to do now. That's the first part of, I guess, my question.
TULINO: And Leanne, let me address that. I read something an art coal that recently about that specific tax software provider, you might want to go to them. I understand that. Everything is so new with the registered domestic partners in terms of how that's working with the law. One of the things I might say off the top, if you're in that position, not a bad idea to see a tax professional considering the newness, shall I say, of the law, and the intricacies involved, in such, versus the federal side and the California side. But anyway, go ahead.
NEW SPEAKER: I'd love to think a tax professional is kind of up and ready, but they're all kind of in a daze as well, about kind of what to do is where to proceed, and to compliment my question.
NEW SPEAKER: I actually have dissolved that partnership last year, as of this year, after eight years, and I want to know if in transferring assets between myself and my expartner on the federal level, I still get tax on that, or can I not get tax on it, as I would in a heterosexual marriage.
TULINO: Geez, Leanne. I really don't know off the top. Everything is so new, the one thing I understand is information you know from publication 555, that obviously says that California domestic partners, and we're talking about California here, must split their assets in half, in other words, the income, if it's more for one than the other, you have to split in half, and they both file returns but above and beyond that, I don't know the technicalities, and I apologize that I don't know the answer to your question. I assume a tax professional would know about it, but you might want to go and search for one who is maybe more knowledgeable than some others on this issue.
ST. JOHN: Well, Leanne, that's a very interesting question, and hopefully, there might be some tax professionals who specialize in this and can help. Because I must say that's a little distressing if we've got new changes that even the professionals can't answer.
TULINO: Well, these are the difference, you know, federal side and the state side. Because in California you have to file a state return, then you have the state law that is a lot different, and for the federal side of it, we recognize it as a different way as the state. So Leanne's question, a lot of folks in that position, there definitely is a little bit of a -- I don't want to say confusion, but added complication this year in order to take care of business.
ST. JOHN: Yes, well, maybe that's just the name of the game with taxes is that they're constantly changes and that does lead to confusion. So 1-888-895-5727 is the number, if you'd like to call in and speak with Raphael Tulino, who is the IRS spokes person for Southern California. Marcus is on the line from Chula Vista. Go ahead, Marcus.
NEW SPEAKER: Hi, Raphael. Thanks for taking my call.
TULINO: No worries. Hi.
NEW SPEAKER: Can I wrote off home inspection costs for a home I didn't wind up purchasing?
TULINO: Generally speaking, the only thing you can deduct in a home purchase is mortgage interest, that includes a second equity, for example, home equity line, you can deduct that, and then points of that's pretty much it, the other fees, and as such generally are not deductible.
NEW SPEAKER: Okay, thanks a lot.
DEFENDANT: No worries.
ST. JOHN: Okay. That was quick and easy 678 now Wendy from Laguna Niguel has a question. Go ahead, Wendy.
NEW SPEAKER: Hi. I found out about six months ago when I was applying for a job that actually another person is utilizing my Social Security number, actually it's two people, but I think it's -- the first name is the same, so it may be just one individual. And I'm not quite sure, you know, what to do about this. If there's been any moneys that this person's earned, so --
ST. JOHN: That's a good question. Because a lot of people --
TULINO: I would argue that on the tax side of it, in terms of -- and I'm sorry to hear about that, by the way. But the tax out of it is just a piece of things of but on the tax side, you do want to contact the IRS. We have information about somebody else using your Social Security number. If you go to the IRS website, IRS.gov, type in ID theft or mismatch Social Security numbers, and you will get information as to how you can contact the IRS, we have a special unit that handles that, and at least on the tax side of things, you can at least contact the agency so the agency knows about your situation.
NEW SPEAKER: Okay.
ST. JOHN: I hope that helps, Wendy. Appreciate your call. Does that clear it up for you?
NEW SPEAKER: Yes, it does, but I just want to comment from the other caller that this whole thing with domestic partnerships is so confusing, and you know, we just had our tax person do our taxes wrong in the past so --
ST. JOHN: Interesting.
NEW SPEAKER: I hope it's cleared up. We're married now in the State of California, as a same sex couple, which is even -- I don't really know how complicated that is, as well.
ST. JOHN: That's another whole complication, isn't it?
TULINO: Well, when we talk about the franchise tax board, and the laws in the State of California, you're recognized here, but on the federal side, it's still the union of a man and woman so to speak in the defense of marriage act, is when the follow side says. But we do have that law that came along this year, as I mentioned with the previous caller. But I do understand your frustration in it, because there's just two different things there, and certainly it's also new in terms of how it's being administered. So like I say, the best I can tell you is based on what I've read is tax professional is a good spot for that because of that kind of a situation.
ST. JOHN: Changing laws.
ST. JOHN: Wendy, thanks for that call. 1-888-895-5727 is the in be to reach us here and speak with Raphael Tulino of the IRS, if you are perhaps just hesitating to send in your tax return on today, it's the last day to file, and you've got just one more questions, maybe this is the time to get it answered. 1-888-895-5727. And Monica is calling us from Coronado, Monica, go ride hate.
NEW SPEAKER: Hi. I have a -- I'm in a partnership as well, and I don't know if we're gonna file joint he or if we're gonna file separately. Separately is very easy because I know how to estimate, what I'll have, my income, and what's going to be what I owe, me personally. But now we're debating if we're gonna file joint he, because he's got a business, and his deductions are, like, all over the place, and his income is, like, all over the place. So I'm thinking when I file the extension, if I don't know if we're gonna file jointly or not, do I file two extensions just to be on the safe side?
TULINO: Okay, this is for you, and were you married in 2010?
NEW SPEAKER: No. We just live together.
TULINO: Okay, well, then -- you have to be married to file married filing joint and married filing separate.
NEW SPEAKER: Okay. I didn't know that.
TULINO: Otherwise, you both would file single returns right off the top.
NEW SPEAKER: Okay, okay.
TULINO: Yeah. And then when you take the extension, by all means do that, it's that extra amount of time to protect you in terms of you don't want to overpay or miss out on something, but you do if you have a balance due, Monica, you do want to pay by today to avoid any penalties or interest that could accrue. So do see -- do send something in with your extension, that way you have taken care of your tax payment, if that's the case.
NEW SPEAKER: I guess my concern is, like, under estimating.
TULINO: Yeah, and everything you can do, Monica, real quick, you could run the numbers and see what you have in the tax software before you transmit the return so you can kind of get on the software and run some numbers and see where you are, and that way it'll help you by today, to maybe make pay decision on that.
ST. JOHN: Okay. Monica, thank you. And that brings up this point, doesn't it, Raphael, that you can file and extension but if you owe the government money, you still have to pay it now. And if you haven't run the numbers, you don't know.
TULINO: Yeah, but a lot of folks can say, well, how do I know, and you can look at last year's return as a good guide, if you made no changes this year. I'm talking about from '09 year to 2010 tax year. But you can also run software these days. It's not too hard to get on a computer and run the software for free, so to speak, before you transmit it, to see where you are. The other thing is is to say, if you cannot full pay, if you're in a position where you owe, and you're thinking, geez, I can't full pay, do file the return, do pay something, do pay what you can, let the agency know there are ways we can work with you in terms of payment extensions, installment agreements, offers and compromise, if that's something that fits you, helps you take care of your obligation, and also the IRS realizing that a lot of taxpayers are in this situation, we want to flexible and hinderer in terms of where folks are. So --
ST. JOHN: There is one big change from last year, which is this reduction in payroll taxes for Social Security, right? Has that made a difference.
TULINO: The payroll deduction actually I think is happening this year.
ST. JOHN: Okay. I see.
TULINO: It's in play now. Last year we had something called the making word pay tax credit, which is a similar -- we could call it a cousin to the payroll tax cut, both the bottom line is putting a few more bucks in your pocket in terms of these credits that are being administered through your paycheck, so to speak. So you have a bigger -- a few mirror dollars in each paycheck. The payroll deduction you mention is in place 2011, it came along in the December law that was enacted about three or four months ago, and that's less, two percent less you're being taxed on your Social Security, your portion of it, down to 4.2 percent from 6.2 percent, and that two percent theoretically being a boost in your paycheck as a worker. And millions of workers are seeing that currently.
ST. JOHN: Does that mean you get a bigger tax bill at the end of the year.
TULINO: No, no, this is it a payroll tax cut, so there's no.
ST. JOHN: I see. So if you're trying to estimate based on the previous year, that shouldn't make a defense.
TULINO: And upon that, since you mentioned that, allow me to segue into the IRS withholding calculator, if you go to IRS.gov, we've got a withholding calculator there, and this handy little tool will help you estimate where you are this year in 2011, so you avoid that big refund, or you avoid being too far down for paying, based on the situation you have, what you enter into this calculator, will give you an idea of where you want to be. So if you go to IRS.gov, and you want to work through that, it's a good little tool.
ST. JOHN: Okay. 1-888-895-5727 is the number to call and speak to with Raphael Tulino, and Paul is calling us from Oceanside. Paul, first degree question, go ahead.
NEW SPEAKER: Thank you, I'm calling concerning the $1,500 potential tax credit for installing energy efficient -- various types of energy efficient appliances and things into your home.
NEW SPEAKER: We put a furnace into our home this year, and unfortunately I'm not able to take advantage of the credit because of my income. My partner lives with me, and I'm wondering if she can take the credit. She's basically been paying the billing, although she's not on the title for the house.
TULINO: That's gonna depend on who owns the home, and who is paying -- whose name, I think, is secured to the mortgage, and who's paying. And I can't tell you right off the top. But this is something you're doing in 2011; correct or not in 2010?
NEW SPEAKER: 2010.
TULINO: You did it in 2010.
NEW SPEAKER: The program ended in 2010.
TULINO: Right. No, there's still a little bit left in 2011 from that December law although it's not quite as lucrative, I suppose as the 2010 law. But certainly if you -- and the answer is maybe. I can't tell you unless I knew more, Paul. But the answer is possibly you can take that credit. And that's something you should do if you have an opportunity, because the furnace, if it's qualified, based on the energy star, and energy efficient, based on with the manufacturer, certified with the IRS, then you may have a tax credit there.
ST. JOHN: That's an interesting question, because if the person who actually paid the bill, you would have thought they should be able to take it off their taxes. Does that --
TULINO: They have to own the home.
ST. JOHN: I see.
TULINO: As I'm speaking off the top, he has to be secured to the home as the home owner.
ST. JOHN: Just speaking personally, I mean I know that we did some of that with some windows and we to the a receipt when we got the wind, which we were then able to show our tax preparer.
TULINO: Okay. Yeah.
ST. JOHN: So perhaps if you have that receipt, supposing you're a renter, and I know it sounds unusual, but there are some renters who decide to upgrade their homes, would you just not qualify for that if you weren't the owner of the home?
TULINO: Off the top, I'm not exactly sure, I'm thinking no, but I valid to do a quick bit of research to make sure I'm absolutely -- the form is 5695, by the way, if you want to look at the instructions for form 5695. I'm almost sure that's the energy credit form that would attach to the tax return, and the instructions for that may spell that out in -- you know, so we know. It's a good question. No question about that.
ST. JOHN: It makes sense, this idea that if you are maybe a domestic partner, and you aren't on the title of the home, you may not be able to take that credit, even if you spent the money.
TULINO: Right, benefits and burns of ownership, and who's paying it, and hike I said, there's a lot of facts and circumstances around every specific case for certain tax payers.
ST. JOHN: We have Lesley on the line now from La Jolla with a -- sounds like a fairly complex question, but let's give it a try, go ahead Lesley.
NEW SPEAKER: Hello. I'm calling for my husband who's a Dutch citizen, and has a green card here, and has worked many years in the United States, is still working, is past -- he's 66. He also worked in the Netherlands, and he's started to receive his retirement income from the Netherlands. And I found information about the tax treaty. But in using turbo tax, I got really kind of -- I couldn't figure out what to do. I reported that we had an account in the Netherlands, but it's never had a balance more than 10000. So I did that. But he's going to be paying taxes or he is filing taxes to pay for in the Netherlands; is that correct? Are we okay?
TULINO: Well, is he a U.S. citizen?
NEW SPEAKER: No.
ST. JOHN: He's got a green card.
NEW SPEAKER: Green card.
TULINO: Let me tell you my answer off the top whenever I get foreign tax law questions. It can be very technical. And I don't really try to address them very well because there's so much there. Yes, there are tax treaties with countries around the world. So if you pay taxes with one country, you may have to pay it in the United States. Or you get a credit for it because you're not gonna pay tax in two countries based on these treaties that the government has with countries around the world in terms of taxes. The one thing you might do if you're up on the gun here, is take the extension. If you think you have a payment, take care of the payment, and then take the time to file the return. I might recommend you seek the services of a tax professional, when you're talking about tax law, from foreign tax law internationally. Just the easiest and something to do so you're sure.
ST. JOHN: Okay. Lesley, and I guess you miff to tax a tax preparer who really is familiar with international tax law, because again I think that's not something that all tax preparers are familiar with international tax law, because again, I'm not sure that's something that all tax preparers are familiar with.
TULINO: That's true. But if you go to a qualified CPA, I'm sure that person would be able to understand or research and get it for you. But take the extension, Lesley, if you need to, that way you're not up against it, and panicking tonight if you cant get it done or don't understand how you're doing it in your software for such thing, and then give yourself that extra time.
ST. JOHN: But it's interesting, because in a country which is made of so many immigrants, that must be a question that a lot of people are facing.
TULINO: Oh, it's common. And as I mentioned before, facts and circumstances, and when you're talking about foreign tax law, it can be complex, no question.
ST. JOHN: 1-888-895-5727, and Alise is on the line from San Diego. Go ahead, Alise, with your question.
NEW SPEAKER: Hi, thanks for taking my call. I am filing a late tax return from another year. And the interest and penalties are more than the actual amount that I owed. My understanding is there's one that you can negotiate with the IRS, and I don't know if it's either the interest or the penalties, and one, you cannot because it's required to, accumulate by law; is that correct?
TULINO: Well, if you have a balance due from last year and you're paying it. Have you contacted the IRS and has the IRS come back to you to help you work through it?
NEW SPEAKER: No, not yet. I'm filing today, but my plan is to contact the IRS and see if I can get a reduction in one or both.
TULINO: What you blight allude to is something called an offer and compromise, and that's usually a position that a lot of taxpayers take when they really have no way of full paying, they can't full pay in the future, perhaps they cannot pay the obligation, so the IRS will look at that. We are much more flexible. I will tell you based on where the economy is, and has been for the last couple of years, do contact the agency, let us know what your situation is and the agency will work with you based in the flexibility we have so we can help you take care of your obligation that's good for you and for the government based on what we have in the law to help out both ways. But do contact the IRS, do file a return this year for 2010, if you're in that position, do pay something, and be proactive with the agency so we can help.
ST. JOHN: Okay, Alise, thanks for that. And what is the best way to contact the IRS.
TULINO: Well, IRS.gov is a good spot, anything you need 247. But if you want to call the IRS, it's 1-800-829-1040. And tonight, today, certainly you'll probably find a lot more busier than the norm. I suppose 7:00, 8:00 to 10:00 PM in terms of the hours. But you can always go in an office, if you need face-to-face help. But I suppose the best thing is, though, take the extension, then take a bother, if you owe, do pay, and then take that extra time.
ST. JOHN: Okay. Thanks for the advice. Keep calm. Yeah. That's Raphael Tulino, IRS spokes person for Southern California and Nevada. We appreciate you coming in to help some of the last minute questions we have on this tax deadline day.
TULINO: Thank you.
ST. JOHN: And thank you for listening to These Days. Stay with us for another hour, coming up right after the news.