Mar 2, 2008

2008 Tax Rebate- you better have your return correct

The speed to file early this year is being induced by the tax rebate stimulus package. You must file a return in order to get the rebate that is due come in May of 2008. However, about 8% of taxpayers will not file by April 15th due to many reasons- including not having all of their tax information.

A fallout of this is that some people need to file an extension to properly gather their information needed to file their return. The IRS accumulates all information statements on social security numbers and employer identification numbers by the end of May each year. This information is used to compare against the income reported on the tax return. If you have filed without reporting all of your income, you will need to catch it early (within 12 months as this is the usual time frame that the IRS matches your information returns with your tax return) to file an amended return or the IRS will send you an Under-reporter Letter (CP2000).

Missing your return information because you file early can leave you with substantial penalties (i.e. an accuracy penalty of 20% of the tax due). To avoid this penalty, you may want to check your return against the IRS records around the end of the summer or early fall after you file. Do not let the tax rebate payment make you prematurely file your return before you know it is ready. After all, the maximum rebate may not be equal to the amount of penalties that you would have if you failed to report all of your income.

If you need a professional to compare your return with the IRS records (i.e. a "Tax Match" service), please contact a tax pro that has an IRS e-services account or knows how to properly pull IRS IRP data to compare your returns.

2 responses:

Anonymous,  March 3, 2008 at 12:25 PM  

If a person has a trust fund penalty and generally does not receive their refund, will they receive their rebate check?

About IRS Mind March 9, 2008 at 7:54 PM  

If you have a trust fund assessment you will not receive your refund. All rebates are used to pay against any outstanding debt.

Jim

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