TAX REFUND HASN’T ARRIVED
If the IRS owes you money and it’s been more than six weeks since you filed, call (800) 829-4477. Have a copy of your return handy. If the refund was lost in the mail, you’ll have to write the IRS Service Center where you filed the return.
CORRECTING YOUR 2003 TAX RETURN
If you’ve filed your return and then discover some key receipts or realize you failed to claim some deductions, it’s not too late. Form 1040X allows you to amend your tax return.
Even though the industry has shown new signs of life in recent months, many owner-operators are looking at an income tax bill, due April 15, that they can’t pay. Or at least pay on time.
Howard Abrams, co-owner of PBS Tax & Bookkeeping Service in Tarzana, Calif., which serves 700 owner-operators, reviewed the few options you have in playing the end game with Uncle Sam when your tax bill overwhelms you.
HOW CAN I AVOID GETTING RIPPED OFF IN PENALTIES? Anyone can request a filing extension. That gives you until Aug. 16. It also saves you a late filing penalty of 5 percent for each late month, capping at 25 percent. The catch is it’s just the paperwork, not the money, that’s being pushed back. You need to estimate your taxes due and pay them with the extension request. Otherwise you face a late payment penalty of a half-percent for each month you’re late, also capped at 25 percent.
BUT YOU DON’T UNDERSTAND. I’M REALLY BROKE. OK, send no money, but file: either your normal return or an extension. At least you won’t get slapped with that late filing penalty.
WILL THE IRS AGREE TO INSTALLMENT PAYMENTS? Yes, but you still face the penalty – and interest – on amounts underpaid. First check on getting a private loan, which should be less expensive.
I HAVEN’T BEEN PAYING MY QUARTERLY ESTIMATED TAX. WILL THAT PUT THE IRS AT ODDS WITH ME? It might. “The more you comply, the easier it is to deal with them when you do get into some trouble,” Abrams says. Another reason to keep up with the quarterly tax – in addition to it being required by law – is that you’re much less likely to be surprised by a whopper of an annual bill if you’ve been paying smaller increments.
I’VE HEARD YOU CAN FILE FOR SOMETHING IF YOU’RE REALLY IN BAD SHAPE AND THEY SLASH YOUR BILL. That’s a request for an offer in compromise, which is usually rejected. Your tax bill needs to be quite high, say, more than $10,000. If you have a house or other significant assets other than your truck, the IRS might want them liquidated. Furthermore, “There are a lot fewer compromises – 10, 20 cents on the dollar – than you hear about,” Abrams says. The ones that go through are discounted much less. “Most offers in compromise end up in collection, just monthly payments.”