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For Procrastinating Taxpayers, ThereS Still Time, Hope CCH Offers Tips On Overlooked Savings, Audit Avoidance
(RIVERWOODS, ILL., April 1, 1999) With only two
weeks until the April 15 tax filing deadline, its
normal for some procrastinating taxpayers to get a little
frazzled. Some become downright fearful thinking about
the paperwork of filing, cash needed to pay their tax
bill or the unpleasant possibility of an IRS audit. Here
are some last-minute tips from CCH INCORPORATED (CCH), a
leading provider of tax and business information.
Stay Up-To-Date To Save
Its too late now for sophisticated tax planning,
but its not too late to claim whats coming to
you. Each year brings some change in the tax law that can
save some taxpayers money, and individual circumstances
can change, making someone eligible to itemize or to
claim deductions for the first time. Here are some simple
things to review:
- If buying a house has changed you from a
"standard deduction" filer to an
itemizer, review expenses like charitable
contributions that may now reduce your tax bill.
You may never have paid attention to them before,
but now they can produce real savings.
- If youve been paying interest on a
student loan, for the first time on the
1998 tax return, you may be eligible for a
valuable, "above the line" deduction
a deduction that reduces your adjusted
gross income. Check out IRS publication
970, "Tax Benefits for Higher
Education," for details.
- If youre self-employed, tax
law changes in recent years have made you
eligible for "above the line"
deductions for one-half of your
self-employment tax and 45 percent of your health
care premiums. That health care premium deduction
increases to 60 percent in 1999.
Dont Invite Undue Attention, Delay Your
Some of the items that "red flag" your
return and slow down your refund are the easiest to
- Include all Social Security numbers -- for
yourself, spouse and any dependents.
Dont overlook a spouse receiving alimony or
a child receiving child support payments.
- Accurately report (or explain) all
statements (W-2 forms, 1099 forms, etc.) to the
IRS. If the numbers dont
match, your return could be flagged for an audit.
If you think there has been an error on a form,
use the number you know to be correct and attach
a short note to the return explaining the
discrepancy. Then, ask the issuer of the form to
file a corrected form with the IRS.
- Include all of the necessary forms with
your return. That includes W-2s and all
the extra tax forms and schedules required by
your return. Forms are available at many banks,
libraries, Post Offices, and, of course, IRS
offices. Or, try the IRS fax on demand system at
703-368-9694 and Internet site
- If you know something looks suspicious,
explain it up front. A short explanation
or informal schedule attached to the return and
keyed to the line on the form can avoid audits.
Typical examples are unusually high deductions
for medical or business expenses.
- Substantiate before
you file. Knowing that you can
document your deductions will let you sleep
easier. If this is your first time around
claiming business expenses, for example, and you
havent been conscientious about saving
paperwork, you might contact suppliers for
duplicate statements to verify payment of
- Double-check your math. Addition
and subtraction errors are common, and though the
IRS will correct the errors, it will slow down
your return and your refund.
- Sign It. Make sure youve
signed your return. And, if youve had your
return prepared by a tax professional, make sure
you both have signed the form.
If You Need More Time
If you can pay your anticipated tax bill (or already
have through payroll deductions), but you need more time
to complete your return, you can request an automatic
four-month extension. But, you still must file for the
extension (Form 4868) by April 15.
Remember, you have to pay at least 90 percent of your
eventual tax bill when you file for the extension, and
you will owe interest from April 15 on any additional tax
If You Cant Pay
Do file, but dont bother asking for an extension
if the real problem is that you dont have the
funds to pay the taxes you owe. Instead, CCH suggests you
consider one of three courses:
- Let the IRS bill you. The IRS
charges fairly reasonable interest, and even with
the penalty for underpayment you may find the
- Request an installment payment schedule.
File Form 9465, showing how much youd like
to pay on a monthly basis. Be aware that you will
be charged a $43 fee if your request is approved.
Also, you have to be on the straight and narrow
with the IRS until the debt is paid, through
proper withholding and estimated tax payments on
your future liabilities.
- Use plastic. If youd rather
not have Uncle Sam as a creditor, you can charge
your tax bill to MasterCard, NOVUS/Discover or
American Express but youll be
charged a "convenience fee" by the
vendor (and interest).
If you know youre going to be down to the very
last minute on filing, consider:
- Many Post Office locations accommodate last
minute filers by staying open late on April 15.
Check with your local branch and find out how
late you can mail your return and still ensure an
April 15 postmark.
- Taxpayers now may use express delivery services
to send their tax return to the IRS, including
various services offered by Airborne, DHL,
Federal Express and United Parcel Service.
- If you are filing electronically from your home
computer or plan to use the Telefile system, you
should assume thousands of other taxpayers will
be trying to do the same thing and at the
same time. Anticipate that phone lines could be
very busy. And you may send your return
electronically at the last minute, but it
isnt considered filed until it is
"postmarked" with the date and time by
the electronic return transmitter.
What Are Your Chances?
What are the chances that the IRS will want to have a
chat with you about your 1998 return? Based on latest
available (1997) IRS data, CCH says your chances of being
audited are low if your income is exclusively from wages,
interest and capital gains already reported on
information returns like W-2s and 1099s.
- Audits were especially low less than .8
percent for taxpayers with incomes between
$25,000 and $100,000.
- Below $25,000 the chances of audit increased, to
1.21 percent for non-1040A filers and 1.44
percent for 1040A filers in part because
of misuse of the earned income credit and because
thats where the IRS classifies non-filers.
- Above $100,000, chances also increased, but only
to 2.27 percent.
- You were most likely to be audited as an
individual if you had a small business with gross
receipts of more than $100,000 reported on your
Schedule C. But still, only 4.13 percent of such
business owners were asked to explain items on
About CCH INCORPORATED
CCH INCORPORATED, headquartered in Riverwoods,
Ill., was founded in 1913 and has served four
generations of business professionals and their
clients. The company produces more than 700
electronic and print products for the tax, legal,
securities, human resources, health care and small
business markets. CCH is a wholly owned subsidiary of
Wolters Kluwer U.S. The CCH web site can be accessed
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