It’s tax season in July.
Given that the Internal Revenue Service has been dealing with a backlog of unprocessed paper tax returns, it may be even wiser at this point to e-file your 1040 by July 15, especially if you want to collect a tax refund as quickly as possible and use direct deposit to a bank account.
The tax filing deadline, which was extended because of the coronavirus crisis, is fast approaching for millions of taxpayers who have yet to file their 2019 federal income tax returns.
Oddly enough, some people may have little choice but to file a paper return for 2019 because of a computer headache triggered by the use of an online IRS stimulus tool for “non-filers.” It’s not a glitch that will hit everyone, but it’s certainly odd enough to worth noting.
The rollout of the stimulus payments, officially called the Economic Impact Payment, included two online tools at IRS.gov that were designed to help in the process.
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One tool for non-filers was supposed to help some lower-income people who typically don’t make enough money to be required to file a tax return but would qualify for the Economic Impact Payment. They’re unlikely to be filing 2019 tax returns because they don’t have to do so.
If non-filers haven’t yet received an Economic Impact Payment, they should look into using this tool at IRS.gov to provide information online. “The only way they can get this payment is to register with the IRS by using this free tool,” according to the IRS. The registration deadline is Oct. 15.
Unfortunately, some people who are regular tax filers used the non-filers tool in the spring and they’re running into problems now as they try to meet the July 15 deadline for filing their tax returns.
Some people may have been confused about when to use the non-filers tool; others may have been impatient about getting their stimulus check money and opted to use the non-filer tool when they ran into glitches elsewhere on the IRS platform.
A reader in Albany, New York, alerted me to the problem. Mike Rubenstein typically files a tax return — so he would not be considered a non-filer. But he rationalized that he and his wife had not yet filed his 2019 tax return as of late May. They did file a 2018 income tax return.
Why did they use a tool for non-filers?
Well, several glitches had people pulling their hair in the spring trying to figure out how to use another “Get My Payment” tool also at IRS.gov to figure out how to give the IRS bank account information for direct deposit of stimulus checks or how to track their Economic Impact Payment.
The upstate New York couple ran into some trouble trying to use “Get My Payment” to determine when they would receive their stimulus payment. The “Get My Payment” tool at IRS.gov kept telling them they didn’t qualify or their information was not available. They knew that wasn’t true.
After being unclear on how what to do, the 63-year-old state retiree decided to enter information in the “Non Filers: Enter Payment Info Here” section. He’s not the only person to try this trick, and said he read about it somewhere.
Unfortunately, the IRS treated his information as if a 2019 return were already filed and rejecting an e-file return. He said he confirmed that no one filed a return in his name using a stolen identity.
Many people ran into trouble once they tried to eventually e-file their 2019 income tax return using TurboTax or other tax software.
H&R Block posted an alert Friday on its web site relating to those rejected returns. Some people used that non-filer tool but others filed a much abbreviated 1040 in the spring, say claiming $1 or $2 in income. If they need to file a return now, they may need to file an amended return or a paper return, depending on what they filed earlier.
The IRS considers a stimulus registration via its non-filer tool as a federal tax filing, according to tax experts.
As a result, tax filers who typically file a return but registered their information with the IRS for a stimulus payment through the non-filers tool before filing a 2019 return, essentially are being treated as if they already filed a federal tax return when they really didn’t.
“A tax return that is filed after a stimulus registration is seen by the IRS as a duplicate, because there is already a tax return with that Social Security Number on file, and will be rejected,” according to Ashley McMahon, a spokeswoman for Intuit, maker of TurboTax.
What do you do?
“According to the IRS, tax filers in this situation will need to print and mail their tax return with the words ‘Amended EIP Return’ written at the top of their 1040/1040-SR,” McMahon said.
“Tax returns must be mailed by the July 15 deadline.”
H&R Block noted online:
- “If you used the IRS non-filer tool or filed a return with $0 or $1 of income, then you need to file a new tax return by U.S. mail instead of electronically with “Amended EIP Return” written or printed at the top.”
- “If you filed your 2019 return with $2 or more of income, you should file your 2019 taxes using Form 1040-X to amend your return.”
July 15 is a deadline you don’t want to overlook.
Can you wait even longer?
It is possible to file a Form 4868 by July 15 to receive a three-month automatic extension to file, until Oct. 15. See IRS.gov. Taxpayers still must estimate their tax bill on this form and pay any amount due. If you don’t pay the taxes due, penalties and interest may build.
You could face a failure to file penalty if you don’t file a return or request an extension by July 15.
Can I still make a contribution to my IRA?
Yes, you can still make a contribution for the 2019 tax year to individual retirement accounts, Roth IRAs and Health Savings Accounts if you do so by July 15.
Eligible taxpayers can usually contribute up to $6,000 to an IRA for 2019. Or if you were age 50 or older by the end of 2019, you could contribute up to $7,000.
The rules regarding what might qualify for a tax deduction get complicated very quickly. Be aware of the income limits, especially if you or your spouse are covered by a workplace retirement plan. Deductions made to Roth IRAs are not tax deductible but income limits still apply for making those contributions.
What if I owe money?
Well, you have options. See IRS.gov/payments for some how-to-pay programs offered through the IRS.
Options include Direct Pay, which allows taxpayers to pay online directly from a checking or savings account for free, and to schedule payments up to 365 days in advance. They will receive an email confirmation of their payments.
The IRS notes: “Those who owe a 2019 income tax liability, as well as estimated tax for 2020, must make two separate payments on or by July 15, 2020. One for their 2019 income tax liability and one for their 2020 estimated tax payments. The two estimated tax payments can be combined into a single payment.”
Contact Susan Tompor at [email protected]. Follow her on Twitter @tompor. Read more on business and sign up for our business newsletter.
This article originally appeared on Detroit Free Press: July 15 tax deadline: Some late tax filers could face stimulus glitch