Tips On Your Taxes From IRS Expert
CAVANAUGH: I'm Maureen Cavanaugh. It's Tuesday, January 29th. Our top story on Midday Edition, tomorrow the 2013 tax season begins in Ernest, as the IRS starts processing individual income tax returns. The filing season was delayed this year because of last-minute legislation passed by Congress during the fiscal cliff showdown. As we prepare to sharpen our pencils or fire up the income tax software, a bit of helpful guidance from the IRS is always appreciated. My guest, Raphael Tulino handles IRS media relations for Southern California and Nevada. Welcome back to the program. TULINO: Hi, Maureen. Thanks for having me as always. CAVANAUGH: Why would a passage of a deal to avert the fiscal cliff affect the IRS filing season? TULINO: Well, it's a pretty big operation we have to do. We're processing about 143 million individual tax returns. So it's a really large process. And we can only administer the law as it's written. The law this year was enacted on January 2nd. So we needed a new extra days to get our programming and processing systems you will up to speed to begin that process to seep those tax returns, and we needed an extra eight days. We original said January 22nd, and that was announced months ago, but we had to get the extra time to get things up to speed. This is the vast majority of taxpayers that can begin tomorrow. You could have filed several days ago. CAVANAUGH: It just wouldn't be processed. TULINO: Exactly. But there are some folks who may have to wait a little while longer. And there's a whole variety of forms that we have listed on the IRS website, about 20 of them. A lot of them are not so well used by the vast majority of taxpayers. But the bottom line is those folks may have to wait a little longer while we get our programming and processing systems up to speed to accept those forms and those returns. Hopefully that gives you a bit of a snapshot of the logic behind it. CAVANAUGH: Yes, it does, and thank you. And I'm going to ask you a little bit more about those people who have to wait a little bit longer. But the people who can have their income tax returns start being processed tomorrow, what is the usual time? TULINO: In the years previous, somewhere in mid-January. And then we did -- like I say, we had January 22nd on the calendar, and that would have been maybe a few days later based on the calendar and where we're in the calendar in January. And then we went along and decided that another eight days was needed to get things going. CAVANAUGH: One thing that I don't understand, the law passed by Congress, the American taxpayer relief act, what most people have heard is the deal that averted the fiscal cliff, from my understanding, doesn't it mostly affect taxes and income this year? Things we'll be reporting on the 2014 taxes? So I'm wondering how it impacts this year's taxes. TULINO: Good question. There are a lot of extender, a lot of pieces of tax legislation that were extended retroactively for the tax year, 2012, one of them and a major piece of that was known as the alternative minimum tax. That was not addressed until this law was enacted for all of 2012. And so if we didn't get that when we got it, and let's say it didn't become part of that bill, we may not even be filing returns tomorrow because of what we had to do to administer the law as we had written. But the bottom line is something like AMT, the extenders for the teacher deduction, all those were extended for 2012 and 2013, keeping in mind that we're filing now for the 2012 tax year. As you can see, if those things were coming back into the law and we had to put them on a tax form or your software had to have them ready for you when you filed your return, then of course that's for the year we're filing. So we had to get those systems and programming up to speed. And we didn't know what the law was, although there was some clairvoyance on our part to see what was going on. So we really moved as quickly as we can with the least burden to the taxpayer, considering the situation we're in this year. CAVANAUGH: In addition to changing instructions, the IRS mentions the late legislation forced it to make processing system adjustments. What does that mean? TULINO: It just means we can administer the law only as it's written. So for example the tuition and fees and sales tax, that wasn't back in the law or it was, we have to make sure that we could administer such, and if it's not on the tax return, we need to make an adjustment. And in previous years, we have had legislation, in other years we have had legislation way before the end of the year, so we can print things and have everything ready to go. All that's coming, the information is much easier accessed on the IRS website which is updated daily, hourly depending on where we are with things and the announcements and things as we do this time of year to provide that information to the taxpayer. CAVANAUGH: You answered a question that I was going to ask you, you do have to make changes, actually printed tax form changes even though most people, most people now who are using e-filling? TULINO: Yeah, 81% last year. So 4-5. Now it's more than 4-5 taxpayers are having their returns processed electronically, and that's hitting enter, choosing direct deposit for your refunds. If you're using paper, you're in the minority. But if you think about all the printed forms, and the publications and such, those forms and publications need to be printed accurately based on the law. And we're moving as fast as we can. CAVANAUGH: What is the status of those printed IRS forms with so many people as you say filing electronically? Are there any plans to phase them out? I know the Social Security administration was phasing out sending out checks. They want to just do direct deposit now. Any plans to phase out the printed forms? TULINO: Not they know of, but evolution has brought us to the point where we stopped sending you the 1040 instructions in the mail a couple years ago. If you want it, you can download it and print it or go to your nearest senior center or library or such and find those. But the bottom line is we've come to a point for everything, technology and -- if I can use the word evolution to the point where paper is becoming old fashioned, and everything is being done electronically. And the convenience in filing a tax return to you as a taxpayer is night and day compared to what it used to be. Now you can get your refund in as little as about two, three weeks. Certainly we encourage folks to try and take care of it as easy and convenient as possible for you. CAVANAUGH: For most people, a slight delay like this, in the date that returns are accepted for processing by the IRS, it doesn't mean much. But are there any circumstances where this delay is really felt? TULINO: I would imagine so for some. About 3-4, they get refunds. So most tax returns are refund returns. So for those who want their hands on their money Asap, then yeah, we're asking -- and we apologize, but we're doing what we can to get things going for your tax return to get to you as soon as we can, and that begins processing tomorrow of course. You see a little bit of a curve, a lot of folks filing as soon as we open the season, then it drops off toward the end of February, and goes down a little bit, and kind of goes into a lull. And then as we get to the end of March into April, you see a pickup of the number of volume of returns that are processed by the IRS. On behalf of the agency, I would apologize to you, I'm sorry that it might take you longer to get your refund, but certainly we're going to do the best we can. CAVANAUGH: And there's no extension of the April 15th. That's still the tax deadline. TULINO: Yeah, but you always have six months, through October 15th if you want that extension. The April 15th deadline is to pay. What happens if you don't? If you have a balance due, you could get penalties or interest added onto it, that would have you paying more than the balance you had, but the majority of tax refunds are refund tax returns. CAVANAUGH: Most people -- the IRS will begin processing their tax forms starting tomorrow. Any big changes on this year's tax forms? TULINO: Oh, that law that you mentioned, the American taxpayer, Atra, there are so many tax revisions in there. The tax brackets, the tax rates are made permanent from the 2001 and 2003 acts, except for those who make over $400,000, your tax bracket went to 39.6%. CAVANAUGH: Is that this year though? TULINO: Yeah, that was in the law this year. CAVANAUGH: Is this going to show up on the 2013 taxes? TULINO: 2013, AMT was made permanent, the estate tax was made permanent, the various extenders were brought back, capital gains of addressed. There's a whole variety of different things I could probably run them off one by one in terms of what's out there, business tax extensions and credits and such were extended for one or two years or brought back. CAVANAUGH: I followed this pretty closely, it kind of surprises me. So the increase in the rates for people and so forth, that's retroactive through 2012? TULINO: Yeah, well, 2012 was set, but we're talking about 2013, so you can plan and go forward. CAVANAUGH: Oh, I see what you're saying. Okay. TULINO: That was addressed as well. CAVANAUGH: Okay, so what you're saying is the whole big differences, tax rates and so forth, is something people have to keep in mind when they're paying their taxes next year. TULINO: Sure. And perhaps not a bad idea as you're considering your taxes this year to do some tax plans for a variety of reasons. CAVANAUGH: Sounds like a good idea. TULINO: As I said to my friends last year, as we approach the end of 2013, considering the legislation and what's going on, take a look at consider financial picture and see where you are. Not a bad idea to do it really every year. Consider tax planning. Like I say, a lot of people get a refund. The average refund being about $2,800 and change. Somewhere around there last year. And so with all that money coming back to taxpayers, you might do some tax planning, keep the money in your pocket as opposed to waiting until the spring of 2014 to get it back as a refund. So you could take a look at those things and tax plan as well as take care of 2012. CAVANAUGH: Who are those tax filers who still have to wait a while before the IRS will begin processing their returns? TULINO: I can think of two or three off the top might have head, the general business credits, those who claim residential energy credits, and there's about 20 other forms, and a lot of them aren't very well chosen or claimed by the majority of us, but the answer to that question, if you go to IRS.gov, click on news and events. And there's a news release down there that we issued around the second week of January, I believe. January 9th, I believe. Click on that news release, there's a link in there of all those forms that we're speaking of. And you can find that information in terms of more about what I'm saying, you can read about it and get all the information that you want to know about taxes this year. CAVANAUGH: So if you want to file using one of those forms you'll have to wait until when? TULINO: We are hoping the end of February. But we will announce it, and that way you can know that. The other thing is we announced yesterday that some of the education, two education credits, if you're taking the lifetime learning or the American opportunity tax credit, two rather popular credits, especially as we sit here at San Diego state. You're going to have to wait until mid-February for those as well. So that's form 8863 off the top of my head, and those two education tax credits are quite popular, but if you're in a position to claim those two, then we have a delay till right around Valentine's day. But that information to be sure is also on IRS.gov, better than what I can babble off the top might have head. CAVANAUGH: Anybody who's watching TV now is seeing lots of advertising for companies that help people prepare their taxes in person and online. What kind of help does the IRS provide? TULINO: Well, we have free help in and around the community, throughout the county, throughout the country really for those who are low to moderate income taxpayers, about $50,000 or less. We have the free file program which is $57,000 or less. So that part of it is available. And I'll address that further as we move forward. Those volunteer sites that are up and running around the county and the partners that IRS has are just critical. There are so many folks who get free tax preparation. But we provide as much as we can to to the taxpayer through our website, through calling the IRS, whatever we can do to help you facilitate filing your return. But certainly the most critical part of that, the question I want to go back to, is all the help that's available around the county. Where can you find a free site? 211 is a good spot. IRS.gov has a Zip Code locator. You just go in and type in the word VITA, volunteer income tax assistance. And it could be up to $5,800 for taxes, 2012. Last year, it was just over half a billion dollars by San Diego County taxpayers. But so much is left on the table. So if you're eligible for this credit, if you're eligible to get free tax preparation, take advantage of it. CAVANAUGH: So if you call 211 or if you go to IRS.gov. TULINO: We might even have the link on the front of our site. And there's critical outreach from April 15th and beyond that we have that announcement that was made recently this last week about getting the word out and jumping up and down and saying, hey! Here's help for you if you need it. So that information is available there. CAVANAUGH: Just a little bit of a non sequitur, but it occurs to me when I'm seeing these ads, does the IRS check the software that's offered by these electronic filing companies to make sure it's correct? TULINO: Well, the software companies that you mention, there's a big one based here that a lot of people use, and there are others in terms of what software, but we work with the software companies and they are up-to-date just as much as we are, in terms of the tax codes. Whatever software, you use, chances are, it's reputable, are quality, it's going to hold your hand all the way through it. If you're going to choose a CPA or someone else, as about 60% of us do, certainly choose wisely. Choose somebody looking out in your best interest. Certainly you're the one responsible once you sign your return. So be careful out there, and choose somebody who's going to look out in your best interests. CAVANAUGH: We are amazingly out of time, but I would like to invite you back later for a longer segment, and we'll be able to make questions. Can you make a return visit? TULINO: Absolutely. Anytime. CAVANAUGH: Terrific.
The 2013 tax season begins in earnest on Wednesday, as the IRS starts processing individual income tax returns.
The filing season was delayed this year because of last-minute legislation passed by Congress during the "fiscal cliff" showdown.
That legislation made changes to tax law that the IRS needed time to assess. But, it says it's now ready to provide up-to-the-minute advice and guidance to taxpayers.
Most taxpayers can begin filing Wednesday, but Raphael Tulino, an IRS spokesman, said those who plan to file for energy credits will have wait longer.
Tulino also highlighted changes in this year's tax laws. The Alternative Minimum Tax, or AMT, was made permanent in 2012, he said, as was the estate tax.
Deductions for tuition and fees and teachers were also brought back for 2012, he said.
For households bringing in $50,000 or less, Tulino recommended checking if eligibility for the Earned Income Tax Credit. He said about 20 percent of all eligible taxpayers don't claim it.
"It could really significantly boost your refund," he said.
Tulino said free tax help is available throughout the county.