Tax season is right around the corner. This is a time where you don’t want to get caught off guard and unprepared. Tax filing can be a very complicated process, but the information and resources you need are available. You just need to use them! Here are some lesser known facts that you should know about this tax season.
Even if you can’t pay, you should still file a tax return. The penalty for late payment is only a fraction of the larger penalty for NOT filing a return. You can get free tax help from the IRS. Most metropolitan communities have trained IRS personnel who conduct free tax clinics. For more information, call the IRS hotline at 1-800-829-1040 or log on to www.irs.gov.
If you have outstanding debts, your refund can be intercepted. For example, if you’re behind in your child support payments, the US Treasury Department has the right to intercept your tax refund – even if you file for bankruptcy. Your refund can also be intercepted if you default on a student loan.
Back taxes can be discharged. It’s a commonly held myth that back personal income taxes can never be discharged in bankruptcy. Not true! Generally, the Bankruptcy Code allows an individual to discharge an income tax if all of the following requirements are met:
- the tax return was filed more than two years before the bankruptcy filing
- the tax return was due more than three years before the bankruptcy filing
- the tax liability was assessed more than 240 days before the bankruptcy filing
- the taxpayer did not file a fraudulent tax return or engage in tax fraud or evasion
- a tax return was actually filed for the delinquent tax liability
You can have representation if you are audited. Low Income Taxpayer Clinics (LITCs) represent low income taxpayers who go before the IRS in audits, appeals, collection issues, and federal tax litigation – for little or no fee. Call the Taxpayer Advocate Service Case Intake Line to see if you are eligible: 1-877-777-4778.
These are just a few helpful facts that are good to know. For more information, visit www.irs.gov. Anyone have some other little-known tips to add?