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CCH CompleteTax Outlines Last-minute Tax Filing Tips and What Taxpayers Say They’re Doing with Their Refunds
Free Extension Forms on CompleteTax for Those Who Can’t Meet Deadline
(RIVERWOODS, ILL., March 21, 2006)– More than 40 percent of taxpayers plan to use their refund to pay down debt, according to a recent CCH CompleteTax survey. However, with tax season now in the final four weeks, many taxpayers still need to complete their tax returns before they can begin planning what to do with their tax refunds.
But rather than panicking, there are two options for procrastinators: one, hunker down and get their returns done over the next few weeks; or two, file for an extension, according to Paul Gada, JD, author of the CCH Toolkit Tax Guide 2006 and Tax Tips newsletter for CCH CompleteTax (www.completetax.com), an online tax preparation and e-filing service for the do-it-yourself taxpayer. CCH, a Wolters Kluwer business is a leading provider of tax and accounting law information, software and services.
According to Gada, there are a few items last-minute taxpayers should keep in mind to streamline the process and avoid errors, most importantly, check their returns and check them again as common errors are a surefire way to draw unwanted attention from the IRS. And, mistakes that result in the taxpayer failing to pay the correct tax liabilities can delay processing the return and issuing of a refund, or could subject the taxpayer to potential interest and penalty charges if the error resulted in underpayment of taxes.
Among the most common errors highlighted by the IRS are: choosing the wrong filing status; failing to include a Social Security number; using incorrect forms and schedules; and forgetting to sign and date returns.
“Online tax software and the use of e-filing does speed refunds and can help eliminate these types of errors because they automatically flag for inconsistencies,” said Gada, “but taxpayers still need to be cautious.”
Another tax-saving option still available to taxpayers to help lower their 2005 tax bill is investing in an IRA. Just as the deadline for filing the 2005 federal return is extended to April 17 th, the deadline for opening an IRA for 2005 also is extended to the 17 th.
For 2005, the most a qualifying taxpayer can contribute to an IRA is $4,000 ($4,500 if they were at least age 50 during 2005). When both a husband and wife file jointly, the limit applies separately to each, so that as much as $8,000 can be contributed ($9,000 if both are 50 or over).
Filing for an Extension
The second option for procrastinators is to file for an extension. To get an automatic six-month filing extension, taxpayers must file IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, by the April 17 due date. CCH CompleteTax will have the downloadable form available on its site, www.completetax.com, for no charge starting April 1.
Gada emphasized that while taxpayers are not required to make an estimated tax payment in order to file Form 4868, any taxes owed after the regular due date of their tax return are subject to interest and possible penalty charges. Additional time beyond the automatic six-month extension also can be requested; however, taxpayers must justify the need for the extra time and seek prior approval from the IRS.
What Are You Doing with Your Refund?
When taxpayers expecting a refund do finally file their returns and receive their refunds, 43 percent expect to use the proceeds to pay down debt while another 29 percent will either save or invest it, according to findings from an online survey of more than 4,900 individuals conducted for CCH CompleteTax from mid-January through March 14, 2006. Twenty-two percent of respondents say they’ll spend the refund on a necessity while just 6 percent expect to splurge and spend it on something they’ve always wanted.
As for why they’d use an online program to do their taxes, the top-three most-cited reasons by respondents, in order, are because online programs are faster, easier and cost less than other methods.
About CCH CompleteTax
CCH CompleteTax (www.completetax.com) is an online tax preparation and e-filing service for the do-it-yourself taxpayer, allowing them to prepare and e-file a federal return for just $24.95 and a state return for $9.95.
About CCH, a Wolters Kluwer business
CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, audit and accounting information, software and services. It has served tax, accounting and business professionals and their clients since 1913. Among its market-leading products are The ProSystem fx® Office, CCH® Tax Research Network™, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill.
Wolters Kluwer is a leading multinational publisher and information services company. The Company’s core markets are health, corporate services, financial services, tax, accounting, legal, regulation, and education. Wolters Kluwer has annual revenues (2005) of €3.4 billion, employs approximately 18,400 people worldwide and maintains operations across Europe, North America and Asia Pacific. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. Its depositary receipts of shares are quoted on the Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. For more information, see www.wolterskluwer.com.
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