ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – TIPS ON FILING YOUR INCOME TAX RETURN AND GETTING YOUR REFUND
By Robert S. Schriebman
The IRS recently published a press release setting forth practical helpful hints and tips on making sure your income tax return will be accepted for processing and you will get your refund (IR-2023-48). These tips are not only valid for income tax returns. Some apply universally for all types of returns including payroll tax returns, claims for refund, and penalty abatements. This article will discuss these basic but often overlooked tips. These tips apply not only to the current filing season but in the future as well.
Gather All Documents
Yes, W2s and 1099s are important. Equally important are documents supporting tax deductions, such as mortgage interest payments, and credits such as the education credit. Save those old returns. If you are audited, these old returns will be required documentation and may even be used by your accountant and tax return preparer. I find that having old returns is very important in payroll audits and worker status audits, such as those conducted by the EDD.
Filing electronically is fast and free. It helps reduce math errors and identifies potential tax credits or deductions you may be entitled to claim. Filing electronically and choosing direct deposit is the fastest, and safest way to receive that refund.
Double-Check Names, Birthdates, and Social Security Numbers
It happens to the best of us, we transpose numbers, and get things mixed up. Double-check your return before you file. If you are not sure of your Social Security number check your Social Security card.
Answer the Digital Assets Question
The IRS is now placing much manpower and great effort to deal with digital currency and digital assets. The IRS wants to know if you received an award or payment for services or for property, sold, exchanged, gifted or otherwise disposed. Do not leave this question blank.
Report All Taxable Income
The issue of what is and what is not taxable income can be complicated. For example, we know that wages are taxable income. However, loan proceeds, gifts and inheritances are not taxable income. Also, monies may be received but are not income but are a return of capital investment. When in doubt, consult a knowledgeable tax professional.
Mail Paper Returns to the Correct Address
Today, the emphasis is on filing electronically. The IRS does not want long lines of trucks full of unopened paper returns and other correspondence. Always make sure you send correspondence to the IRS at the correct address. If you are responding to a letter from the IRS, read it carefully to determine where the response should be sent. Sometimes the response address is different from the address listed in the upper left-hand corner.
Sign and Date the Return
This might seem like a no-brainer, but you would be surprised how many people, including tax professionals, forget to sign or date the return. Always double-check, never make assumptions.
Keep a Copy of the Return
Save those old returns. If you are audited, these old returns will be required documentation and may even be used by your accountant and tax return preparer. You never know when old income tax returns are going to come in handy. For example, prior income tax returns are often necessary in defending clients on EDD audits, especially involving issues of reasonable compensation.
Request an Extension If Necessary
If you feel you need additional time to file your return, don’t be bashful or hesitant – ask for it. However, remember that getting additional time to file does not automatically mean getting additional time to pay your taxes. Taxpayers can also request an extension by paying all or part of their estimated income tax due and indicating that the payment is for an extension using Direct Pay. This way taxpayers don’t have to file a separate extension form and will receive a confirmation number for their records.
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD, and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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