When it comes to filing your taxes this year, it may pay to hesitate.
Several brokerage firms are delaying, by up to a month, mailing out 1099 forms that their clients need to file.
Separately, the Internal Revenue Service is encouraging certain taxpayers – teachers and students, in particular – to file electronically after Feb. 3 in order to claim all the deductions available to them. That’s because printed forms mailed out are missing information to make key deductions.
And, you may not know this, but most taxpayers are eligible for a refund on their federal telephone taxes of $30 to $60 or more. Just don’t go overboard in calculating it, or you could trigger an audit.
Here’s the good news: The normal April 15 tax deadline falls on a Sunday this year and is followed by a Washington, D.C., holiday on the 16th. That means state and federal taxes don’t need to be filed until midnight April 17.
More details on what to watch out for:
Some large brokerage firms have asked the IRS for another month beyond the Jan. 31 deadline to mail out 1099 forms that report dividend and interest income, delaying when their clients can file.
Brokerage firms are getting bogged down by a requirement that they list how much tax-exempt interest income from dividends and bonds is subject to the alternative minimum tax.
Edward Jones, Morgan Stanley, Merrill Lynch, Raymond James and Wachovia Securities are among the larger securities firms that have asked the IRS for another 30 days to get their 1099 forms out.
Others may join them before Wednesday, cautioned Jean Carl, an IRS spokeswoman based in Denver.
Tens of thousands of taxpayers nationally could be forced to wait until March to file, depending on how quickly brokerage firms send out the needed paperwork.
Congress extended some tax breaks late last year – too late to get them included in printed federal forms for the 2006 tax year. About 1 million returns may be affected, which equates to less than 1 percent of the total.
Those likely affected are taxpayers seeking to deduct state and local general sales taxes; educators seeking to deduct out- of-pocket classroom expenses; and students seeking to deduct higher-education tuition.
The IRS advises that such taxpayers should file electronically to reduce their chances of missing a deduction. But since the IRS isn’t set to handle those specific returns now, the agency recommends filing electronically after Feb. 3.
Federal courts last year threw out a federal excise tax on long-distance phone calls, which got its start as a funding mechanism for the Spanish- American War in 1898.
The government decided to return the 3 percent tax levied on long-distance telephone charges, but only for the time between March 2003 and July 2006.
Most taxpayers are expected to take the $30 to $60 standard refund, but taxpayers with proof can request a refund based on actual taxes paid.
A number of early tax filers are getting the telephone tax refund wrong, leaving them at risk of an audit, the IRS warned Monday.
Some early filers are claiming refunds based on the value of their entire phone bills, not the taxes they paid. A few refund requests are so large that filers would have had to spent more on long-distance phone calls than what they reported in income, according to the IRS.
The agency is warning consumers to watch out for tax preparers promising them hundreds of dollars in refunds on the telephone tax.
“People requesting an inflated amount will likely see their refund frozen, may have their entire tax return audited and even face criminal prosecution where warranted,” IRS Commissioner Mark Everson warned in a statement.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
SOME TAX BASICS
Filing deadline: Midnight Tuesday, April 17, thanks to April 15 falling on a Sunday and a Washington, D.C., holiday on April 16
Telephone tax: An excise tax dating to the 19th century was thrown out last year, worth a $30 to $60 refund
Tax breaks: Deductions extended late in 2006 don’t appear on forms, including state and local general sales taxes, out-of-pocket expenses for educators and higher-education tuition
