Tax Tips, Tax Credits and Tax FAQs

You may have another month to file your 2008 taxes, but there is no reason to wait until the last minute. The sooner you file the sooner you will get your refund, or the sooner you can get that payment out of the way. Here are a few tips to keep in mind this taxing time of year:

Get a Faster Refund

Direct Deposit

There are a few steps you can take to ensure a faster refund. Whether you file electronically, by mail or through an authorized tax preparer, you will get your refund faster by choosing direct deposit. Not only is it faster, but direct deposit is safer because there’s no way for your refund to get lost in the mail.

Electronic Filing (e-filing)

E-filing, or filing online, is an already popular option that gets more popular every year. Like direct deposit, this is a secure IRS-recommended option that, according to the IRS will get you your refund in about half the time compared to paper returns.

You may have the option to split your refund and electronically direct it into up to three checking or savings accounts and three different financial institutions. If you would like to deposit your refund into your set-aside account, please call Client Services at 1-888-828-4673.

Filing Early

And of course, one sure way to get your refund faster is to file early. The IRS will receive your tax return sooner so you can beat the rush. Most taxpayers continue to wait until the deadline to file. When everyone files at the same time, it could take the IRS more time to process and distribute refunds.

Tax Credits

The IRS won’t claim your tax credits for you. If you are eligible to receive a tax credit you might have to do a little research and claim the credit on your return. Make sure you are eligible before making any claims because false information may cost you in the long run. Check out these tax credits and see if any apply to you:

Earned Income Tax Credit  

The Earned Income Tax Credit is a credit for low to moderate income working individuals and families. You may be eligible if you earned less than:

• $12,880 (or $15,880 if married filing jointly) and did not have qualifying children
• $33,995 (or $36,995 if married filing jointly) and have one qualifying child, or
• $38,646 (or $41,646 if married filing jointly) and have more than one qualifying child.

Child Tax Credit

Parents may be eligible for a tax credit of up to $1,000 for each qualifying child under 17 years old. A qualifying child must be a US citizen, US national or resident of the US and must have lived with you for more than half of 2008. For more information see Publication 972, Child Tax Credit.

Child and Dependent Care Credit

This tax credit is for taxpayers who have a spouse, child under 13 years old or another dependent who is “physically or mentally incapable of self-serve.” This credit may be worth a percentage of the amount paid to a care provider. For more information see Publication 503, Child and Dependent Care Expenses.

Adoption Credit

Parents of adopted children may be eligible for a tax credit of up to $11,390 for each eligible adopted child. For more information check out the instructionsForm 8839, Qualified Adoption Expenses. for

Credit for the Elderly or the Disabled

This is a credit for individuals 65 years of age or older, or under 65 and retired on permanent and total disability. The taxpayer must be a US citizen or resident and there are income requirements. For more information, check out Publication 524, Credit for the Elderly or the Disabled.

Retirement Savings Contribution Credit

Also known as the Savers Credit, this credit, which could be worth $1,000 for individuals, is for taxpayers who make eligible contributions to a qualified retirement plan such as an IRA or 401(k). For more information, check out Publication 590, Individual Retirement Accounts.

Tax FAQs

What if I haven’t filed my 2007 tax return?

You have three years to claim a refund or you will lose it. For example, the deadline for claiming a refund for your 2005 tax return is April 15, 2009. The IRS has $1.3 billion for people who have not filed a 2005 tax return. If you skipped filing last year or any year prior, the best action you can take is to file as soon as possible. Delayed filing may lead to a “failure to pay” or “late filing” penalty along with interest charges that will grow over time. You may not be charged fees and interest if you were owed a refund, but you cannot collect your refund until you file.

If you earned $40,000 or less and want assistance filing last year’s return, contact your local Taxpayer Assistance Center or call the IRS Tax Help Line for Individuals at 800-829-1040.

I am recently married/divorced. Could this affect my tax filing?

It could if you fail to inform the Social Security Administration about a name change. People who take their spouses’ names or revert to their maiden names after a divorce should make sure the name on their tax return matches the name that is registered with the SSA. A mismatch could result in an unexpected delay.

To inform the SSA of a name change file Form SS-5 at your local SSA office (800-772-1213). Verification takes about two weeks.

Does the IRS know that I moved?

You should notify the IRS about your address change to ensure you receive refunds and correspondence. The IRS does update taxpayer addresses through the Postal Service’s change of address files, but contacting the IRS directly is always a good idea.

For more information see Form 8822, Change of Address or call 800-TAX-FORM (800-829-3676).

With one month to go, it might be time to get moving on filing. The more complicated your situation, the more likely you are to encounter last minute questions. Do yourself a favor and file now.