Tax tips offered for last-minute filers

Society of CPAs information

COLUMBUS — Here are a few last-minute tax tips from The Ohio Society of CPAs (OSCPA) tax filers should keep in mind as the April 18 tax deadline approaches.

Check for Errors

Before filing a return, review it carefully. The Internal Revenue Service (IRS) reports the most common errors are:

• Incorrect or missing social security numbers
• Incorrect tax amounts based on taxable income and filing status
• Math errors
• Missing or incorrect identification numbers for child care providers
• Withholding and estimated tax payments entered on the wrong line

Pay taxes on time

For those who owe money to the IRS, it is important to make payments on time, even if it’s necessary to file Form 4868 to request a six-month filing extension. Not paying on time could subject late payers to interest and late penalties on the amount they owe. Fortunately, the IRS provides options to avoid the penalties:

• Enroll in the Online Payment Agreement (OPA) to pay off taxes in installments if $25,000 or less is owed.
• Those who owe more than $25,000 can file Form 9465 with their taxes to request an installment plan. Form 433F may need to be completed as well. The IRS will notify those requesting an installment plan if theirs has been accepted or modified.

Claim hardship

Those who cannot pay their taxes because of an unusual financial hardship — such as serious illness of a dependent — might be able to file an offer in compromise (OIC) with the IRS. Taxpayers with incomes of up to $100,000 who owe less than $50,000 may use this option. A $150 fee is due upon filing; however, a waiver is available for certain low-income individuals. The IRS accepts OIC offers based on the reasonable collection potential (RCP), which is a measurement of the taxpayer’s ability to pay and their anticipated income. Consult a CPA for advice on a proper amount to include on an OIC.

New refund options for 2011

The Ohio Department of Taxation now offers direct deposits of Ohio tax refunds into certain investment accounts as well as checking and saving accounts. This year, taxpayers who file an Ohio income tax return electronically can choose to deposit their refund electronically into four different types of pre-existing accounts including checking, savings, and individual retirement accounts (IRAs) or annuities and CollegeAdvantage 529 Savings Accounts administered by the Ohio Tuition Trust Authority.

Taxpayers receiving a federal income tax refund can choose to directly deposit it into a checking, savings or IRA account, or a combination of all three when they file electronically using the Free File option from the IRS or by attaching Form 8888 to traditional paper returns.