Blog

The law gives taxpayers who fail to file their income taxes three years to submit a return and claim a refund. Generally, the three-year countdown starts on the due date of the return, including extensions.

Over a million Americans fail to file a tax return every year. By not filing, many of these people risk losing any refund they’re owed, which averages more than $600, according to Internal Revenue Service estimates.

The law gives procrastinators three years to submit a return and claim a refund. The three-year countdown starts on the original due date of the return or the extension due date if an extension was filed. Late filers who owe no taxes don’t pay any penalty, and might even be eligible to get credits beyond the money withheld from their wages.

Time matters with tax refunds

April 15, 2020, is the last day to file your original 2016 tax return to claim a refund. If you received an extension for the 2016 return then your deadline is October 15, 2020.

If you miss the deadline, any excess in the amount of tax you paid every paycheck or sent as quarterly estimated payments in 2016 goes to the U.S. Treasury instead of to you. You also lose the opportunity to apply any refund dollars to another tax year in which you owe income tax.

Under certain conditions the IRS will withhold your refund check. It can be used to pay any past-due student loans, child support and federal tax debt you owe. The IRS can also hold refund checks when the two subsequent annual returns are missing. That means you should file returns for 2017 and 2018 as soon as possible. For the 2017 tax year, with a filing deadline in April of 2018, the three-year grace period ends April 15, 2021.

Obstacles to your tax refund

One of the hills you have to climb to claim your refund is gathering the necessary documents. If you kept your financial records, you have an easy ascent. If not, then you must build time into your filing schedule to obtain a copy of your W-2 from your employer and any 1099 forms you’re missing from your bank and other payers.The IRS can help if your document search fails. You can ask the agency for a transcript of these information returns by filing Form 4506T, “Request for Transcript of Tax Return,” and checking off Box 8. Allow 10 business days for a response.The IRS also accepts online requests (at irs.gov) and phone transcript requests (at 800-908-9946). The 1040 series of tax forms can be downloaded from the “Prior Year Returns” link on agency’s “Forms and Publications” web page or ordered by calling (800) 829-3676. You have the option of e-filing or mailing a paper return. Regardless of the filing method you choose, be sure you sign, as the IRS does not issue refunds to late filers without their signature.

If you haven’t filed your tax return yet, contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

If a business, government office, or other source owes you money that you don’t collect, it’s considered unclaimed.

The federal government doesn’t have a central website for finding unclaimed money. But you don’t need to hire a company to find unclaimed money for you. You can find it on your own for free, using official databases.

1. Search in Your State

Businesses send money to state-run unclaimed property offices when they can’t locate the owner. The money in state unclaimed funds is often from bank accounts, insurance policies, or your state government.

• Start your search for unclaimed money with your state’s unclaimed property office.

• Use the multi-state database to search for your name, especially if you’ve moved to another state.

• Verify how to claim your money. Each state has its own rules about how you prove that you’re the owner and claim the money.

2. Search for Money from Employers

• Unpaid Wages – The Department of Labor (DOL) may recover back wages for you if your employer broke labor laws. If you think you may be owed back wages from your employer:

  • Search DOL’s database of workers who have money waiting to be claimed. DOL holds unpaid wages for up to three years.  

• Pensions from Former Employers – Search for unclaimed pensions from companies that went out of business or ended a defined plan.

3. Search for Money from Insurance

• VA Life Insurance Funds – Search the U.S. Department of Veterans Affairs (VA) database for unclaimed insurance funds.

  • The VA may owe money to current or former policyholders or their beneficiaries.

  • This database doesn’t include funds from Servicemembers’ Group Life Insurance (SGLI) or Veterans’ Group Life Insurance (VGLI) policies from 1965 to the present. 

• FHA-Insurance Refunds – If you had an FHA-insured mortgage, you may be eligible for a refund from the U.S. Department of Housing and Urban Development (HUD).

  • Search the HUD database with your FHA case number (three digits, a dash, and the next six digits—for example, 051-456789).

4. Search for Money from Tax Refunds

• Tax Refunds – The Internal Revenue Service (IRS) may owe you money if your refund was unclaimed or undelivered.

5. Search for Money from Banking and Investments

• Bank Failures – Search the Federal Deposit Insurance Corporation (FDIC) for unclaimed funds from failed financial institutions.

• Credit Union Failures – Find unclaimed deposits from credit unions.

• SEC Claims Funds – The Securities and Exchange Commission (SEC) lists enforcement cases in which a company or person owes investors money.

• Replace a Savings Bond – Replace a lost, stolen, or destroyed paper savings bond.

For any kind of tax help, contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Every year, hundreds of people volunteer their time to help other taxpayers. IRS volunteers provide free tax preparation in communities across the nation. While it might seem like the distant future, people who want to volunteer in 2020 can start taking action now.

The Volunteer Income Tax Assistance and the Tax Counseling for the Elderly programs offer free tax help across the country. These programs help people with low-to-moderate incomes, senior citizens, persons with disabilities, and those who speak limited English. Last year, VITA and TCE volunteers prepared millions of federal tax returns for qualified taxpayers at no cost. Anyone interested in volunteering can visit the sign-up page on IRS.gov.

Here are reasons people become an IRS-certified VITA or TCE tax volunteer:

Flexible hours. Volunteers serve an average of three to five hours per week. The programs are usually open from mid-to-late-January through the tax filing deadline in April. Some sites are even open all year.
 
VITA and TCE sites are often nearby. Each year there are thousands of sites set up in neighborhoods all over the country. These free tax help sites are in places like community centers, libraries, schools and shopping malls.
 
No prior experience needed. Volunteers receive special training and often serve in a variety of roles. VITA and TCE programs want volunteers of all backgrounds and ages. They also want people who are fluent in other languages.
 
Free tax law training and materials. Volunteers receive training materials at no charge. The tax law training covers how to prepare basic federal tax returns electronically. The training also covers tax topics like deductions and credits.
 
Continuing education credits for tax pros. Enrolled agents and non-credentialed tax return preparers can earn continuing education credits when volunteering as a VITA/TCE instructor, quality reviewer, or tax return preparer.

For any kind of tax help, contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

New versions of well-known tax-related scams appear every year…and 2019 is no different. No matter what time of year, taxpayers should be on the lookout for scams. Here are some things taxpayers should remember to help them spot scams and avoid becoming a victim.

Phone scams

• The IRS does not leave pre-recorded, urgent or threatening messages.
• In many versions of phone scams, potential victims are told if they do not call back, a warrant will be issued for their arrest. Other verbal threats include law-enforcement agency intervention, deportation and revocation of licenses.
• Criminals can fake or “spoof” caller ID numbers to appear to be anywhere in the country. Scammers can even spoof an IRS office phone number, or the numbers of various local, state, federal or tribal government agencies.

Email phishing scams

• The IRS does not initiate contact with taxpayers by email to request personal or financial information.
• The IRS initiates most contacts through regular mail delivered by the United States Postal Service.
• There are special circumstances when the IRS will call or come to a home or business. These visits include times when a taxpayer has an overdue tax bill, a delinquent tax return, or a delinquent employment tax payment.
• If a taxpayer receives an unsolicited email that appears to be a scam, they should report it to the IRS. They can forward the email message to phishing@irs.gov. They should not open any attachments, click on any links, reply to the sender, or take any other actions that could put them at risk

Telltale signs of a scam

Taxpayers should remember that the IRS generally first mails a bill to a taxpayer who owes taxes. The IRS and its authorized private collection agencies will never:

• Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments.
• Ask for checks to third parties. The IRS has specific instructions on how to pay taxes. All tax payments should only be made payable to the U.S. Treasury.
• Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
• Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.

If a taxpayer receives a phone call, but doesn’t owe taxes and has no reason to think they do, they should:

• Hang up immediately.
• Contact the Treasury Inspector General for Tax Administration to report the call.
• Report the caller ID and callback number to the IRS by sending it to phishing@irs.gov.
• Report the call to the Federal Trade Commission.

If a taxpayer owes tax or thinks they do, they should:

• View tax account information online at IRS.gov to see the actual amount owed.
• Review their payment options.
• Call the number on any billing notice they receive or call the IRS at 800-829-1040.
• Remain on guard against scams and know that the IRS has a specific collection process.

For any kind of tax help, contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Many people enjoy hobbies that are also a source of income. From painting and pottery to scrap booking and soap making, these activities can be sources of both fun and finances. Taxpayers who make money from a hobby must report that income on their tax return.

If someone has a business, they operate the business to make a profit. In contrast, people engage in a hobby for sport or recreation, not to make a profit. Taxpayers should consider nine factors when determining whether their activity is a business or a hobby. They should base their determination on all the facts and circumstances of their activity.

If a taxpayer receives income for an activity that they don’t carry out to make a profit, the expenses they pay for the activity are miscellaneous itemized deductions and can no longer be deducted. The taxpayer must still report the income they receive on Schedule 1, Form 1040, line 21.

Many people enjoy hobbies that are also a source of income. From painting and pottery to scrap booking and soap making, these activities can be sources of both fun and finances. Taxpayers who make money from a hobby must report that income on their tax return.

If someone has a business, they operate the business to make a profit. In contrast, people engage in a hobby for sport or recreation, not to make a profit. Taxpayers should consider nine factors when determining whether their activity is a business or a hobby. They should base their determination on all the facts and circumstances of their activity. If a taxpayer receives income for an activity that they don’t carry out to make a profit, the expenses they pay for the activity are miscellaneous itemized deductions and can no longer be deducted. The taxpayer must still report the income they receive on Schedule 1, Form 1040.

For any kind of tax help, contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

The IRS urges all employees, including those with other sources of income, to perform a Paycheck Checkup now. Doing a checkup will help employees make sure their employers are withholding the right amount of tax from their paychecks. Doing so now will help avoid an unexpected year-end tax bill and possibly a penalty.

The easiest way to a Paycheck Checkup is to use the Withholding Calculator on IRS.gov. Taxpayers can use the results from the Calculator to help fill out the Form W-4 and adjust their income tax withholding with their employer.  Taxpayers who receive pension income can use the results from the calculator to complete a Form W-4P and give it to their payer.

If you need help with a payroll checkup call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600