Important Tax Subjects You Should Know About
The IRS has many programs and processes that can reduce anxieties of taxes. Adescription of some of the more popular ones follows. In most cases, the description lists free IRS publications for additional information.
Amending a Return
If you find that you made a mistake on your tax return, you can correct it by filing a Form 1040X, Amended U.S. Individual Income Tax Return. Generally, you must file this form within three years from the date you filed your original return or within two years from the date you paid your tax, whichever is later. File Form 1040X with the Internal Revenue Service Center for your area. (Your state tax liability may be affected by a change made on your federal income tax return. For more information on this, contact your state tax authority.)
Adoption Taxpayer Identification Number (ATIN)
If you are in the process of adopting a child and are able to claim the child as your dependent, or are able to claim the child care credit, you may need an ATIN for your adoptive child. The Internal Revenue Service can issue an ATIN as a temporary taxpayer identification number for children who are being adopted. Parents will use the ATIN to identify the child on their Federal Income Tax Return while final adoption is pending. See FORM W-7A, Adoption Taxpayer Identification Number, in this section.
When the IRS sends you a notice of tax due, do not ignore it pay the amount owed, or contact your local IRS office by telephone or through written correspondence about the notice. If you believe a bill from the IRS is incorrect, you will need to provide information showing why you think the bill is wrong. If the IRS agrees with you, then your account will be corrected. However, if the bill is correct, interest and penalties will be charged on the amount owed until the full amount due is paid.
If you are not able to pay the taxes you owe in full, IRS staff will work with you to find the best way to meet your tax obligations. This may include an installment agreement or acceptance of an offer to settle the account. If taxes, interest, and penalties are not paid in full, a Federal tax lien may also be filed. Under certain conditions, the IRS may enforce collection and seize personal assets, including income and other property. The collection process can be stopped at any stage if the amount owed is paid in full.
More information about your rights and the collection process are found in Publication 1, Your Rights as a Taxpayer, and Publication 594, What You Should Know About the IRS Collection Process. Both publications are also available in Spanish.
Copies of Prior Year Returns
There are occasions when you may need a copy of your prior year(s) Federal Tax Forms 1040, 1040A, and 1040EZ, a transcript of return, or account information.
A transcript of return contains information from the original return. It does not contain information regarding amended returns or subsequent payments. If amended returns or subsequent payment summary is needed, account informa-tion can be secured.
Examples of when you may need a copy of a return or a transcript of return include applying for a home mortgage loan or financial aid for education. While there is a fee for requesting a photocopy of a return, transcripts are free of charge. Make sure a transcript is acceptable by the company or establishment needing your income information.
You can get a copy of a prior year(s) tax return by completing Form 4506, Request for Copy or Transcript of Tax Form, and mailing it to the IRS address for your area. See Where to File Your Taxes for Tax Year 2000 on last page. There is a fee of $23 for each return requested. Please allow up to 60 days to receive your copy.
For a transcript that reflects most items from your return, send a completed Form 4506 to the IRS address where the return was filed. There is no charge at this time. You should receive the transcript within 7- 10 workdays from the IRS office´s receipt of your request.
For tax account information, you can visit an IRS office or call the IRS toll-free number listed in your telephone directory. This list of basic tax data, like marital status, type of return filed, adjusted gross income, and taxable income, is available free of charge. Do not use Form 4506 to request this information. Please allow 15 days for delivery.
To obtain Form 4506, download from the IRS Web site, use IRS Tax Fax system (See IRS Tax Fax under Ta x Information Available Electronically), or order by calling the IRS at 1-800-829-3676.
The tax laws include a number of credits you may be entitled to take. The following are several of the more popular credits available.
- adoption credit
- child and dependent care credit
- child tax credit
- earned income tax credit
- education credits: Hope, lifetime learning
- foreign tax credit
- mortgage interest
Turn to the Index of Topics and Related Publications section and look under Credits for a list of the credits and the related publications for details.
When property is damaged or lost in a hurricane, earthquake, fire, flood, or similar event that is sudden, unexpected, or unusual, it is called a casualty. Your unreimbursed loss from a casualty may be deductible on your tax return for the year the casualty occurred. If the loss happened in an area the President designated as a disaster area, you may not have to wait until the end of the year to file a tax return and claim a loss. You may be able to file an amended return for last year right now and get a refund of taxes you have already paid. If you were located in a Presidentially-declared disaster area, there will be no interest on taxes due for the length of any extension granted for filing your tax return. For details, get Publication 547, Casualties, Disasters, and Thefts (Business and Nonbusiness). You can also download a copy of Publication 1600, Disaster Losses Help From the IRS, from the IRS Web site.
If you are self-employed or have other income not subject to income tax withholding, you may have to make estimated tax payments. For details on who must pay estimated taxes and how and when to make payments, get Publication 505, Tax Withholding and Estimated Tax.
Examination of Returns
If your return is selected for examination, you may be asked to show records such as canceled checks, receipts, or other supporting documents to verify entries on your return. You can appeal if you disagree with the examination results. Your appeal rights will be explained to you.
You may act on your own behalf or have an attorney, a certified public accountant, or an individual (enrolled to practice before the IRS) represent or accompany you. The Student Tax Clinic Program is available in some areas to help people during examination and appeal proceedings. Call your local IRS office and ask the Taxpayer Education Coordinator or the Communications Manager about this program.
For more information on the examination of returns, get Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund, and Publication 1, Your Rights as a Taxpayer. Also see Publication 947, Practice Before the IRS and Power of Attorney. Publication 1 is also available in Spanish.
Form W-4, Employee's Withholding Allowance Certificate
Each time you start working for an employer, you should complete a Form W-4. The information you provide will help your employer know how much federal tax to withhold from your wages. If your tax situation changes, complete a new Form W-4 so that the correct amount of tax will be withheld. For more information on tax withholding, get Publication 919, How Do I Adjust My Tax Withholding?
Form W-5, Earned Income Credit Advance Payment Certificate In 2001, you may be able to file a Form W-5 with your employer for the Advance EITC if:
- you expect you will be eligible for the Earned Income Tax Credit (EITC), and
- if you will have a qualifying child on your 2001 Federal Tax Return.
Filing for the Advance EITC will allow you to receive partial payment of the EITC during the year rather than only when you file your tax return. The amount of the Advance EITC payments you receive will be shown on your Form W-2, Wage and Tax Statement. For more information, get Publication 596, Earned Income Credit. This publication is also available in Spanish.
Form W-7, Application for IRS Individual Taxpayer Identification Number
If you are required to have an identifying number for federal tax purposes, but cannot obtain a social security number (SSN), the IRS will issue an individual taxpayer identification number (ITIN). The IRS will issue this number for a nonresident or resident alien who does not have and is not eligible to get an SSN issued by the Social Security Administration (SSA). To apply for an ITIN, file Form W-7 with the IRS.
Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions
If you have a child placed in your home for legal adoption, the adoption is not yet final, and you cannot obtain an SSN for that child, you must get an adoption taxpayer identification number (ATIN) if you want to claim various tax benefits (but not the Earned Income Tax Credit). When the adoption is final, you should no longer use the ATIN. Instead, you must obtain a social security number issued by the Social Security Administration and use it.
Late (Overdue) Returns
Sometimes people do not file their tax return(s) because of personal problems, no money to pay, lost records, or confusion over complex tax rules.
If you have not filed your federal income tax return for a year or more and should have filed, IRS staff will work with you to help you get back on track. Copies of missing documents like Form W-2, Wage and Tax Statement, can often be retrieved. If you owe taxes, the IRS will explain your payment options. And if you have a refund coming, they will explain the time limit on getting it.
Call your local IRS office or call toll-free 1-800-829-1040 for assistance. Remember, interest and penalties are adding up if you owe taxes, and time is running out if you are due a refund.
Social Security Number (SSN)
Your SSN is not posted anywhere in your tax package. So make sure you write your SSN on your Form 1040, 1040A, or 1040EZ and on each supporting schedule or form that you include with your return when you file it. List the complete and correct SSN issued by the Social Security Administration (SSA) for yourself, spouse, and each dependent on your tax return.
If your name has changed for some reason, like marriage or divorce, notify the Social Security Administration (SSA) immediately.
If the name and social security number you show on your tax return does not match the one SSA has on record, there can be a processing delay, which could hold up your refund.
If you claim an exemption for a dependent, you are required to show his or her social security number on your tax return.
If you do not list a complete and correct social security number issued by the SSA, the IRS may disallow the exemption for that dependent.
To get a social security number, contact the nearest Social Security Administration office to get Form SS-5, Application for a Social Security Card.
If you are not eligible to obtain a social security number from the SSA, use an IRS individual taxpayer identification number (ITIN) instead of a social security number. To get an ITIN, contact the IRS to get Form W-7, Application for Individual Taxpayer Identification Number.
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