The Internal Revenue Service owes taxpayers more than $1 billion dollars in tax refund money. They actually owe taxpayers way more than that. This $1 billion is the estimated tax refunds for taxpayers who haven’t filed their 2008 income tax return. This is a situation that occurs every tax year.

Taxpayers who haven’t filed a 2008 tax return can do so without penalty, but your time is drawing short. IRS tax law requires that the tax return be properly addressed, mailed and postmarked by April 17, 2012. Taxpayers will be happy to note that the IRS does not levy a tax, penalty or any additional fee for filing a late return qualifying for a refund.

The Internal Revenue generally offers a three year grace period. After that, a giant vacuum is used to suck your money back for use by the government. That money is gone forever and you can never get it back.

The IRS estimates that half of the tax refund amounts are over $600.00.

California leads all states with 122,500 individuals who haven’t filed their 2008 tax return that are due over $122 million. At the other end of the spectrum is the state of Vermont with 1,700 individuals due of $1.4 million.

Why have so many Americans failed to file their 2008 income tax return? The Internal Revenue Service theorizes that some taxpayers didn’t file because they didn’t enough money to require filing a tax return, even though they may have had taxes withheld from their wages.

Here’s an warning to taxpayers who expect a tax return for the 2008 tax year but haven’t filed their tax return in subsequent years. So, even if you are due a tax refund, and you file before April 17, 2012, your check may be held by the IRS. If you have any outstanding debt with the IRS, the amount due will be deducted from the amount you receive. The same goes for any debt you owe for child support and student loans.

There is something very important you need to know if you feel you qualify for a 2008 income tax refund. You stand to lose more than just your tax refund. Your tax refund amount could signficantly increase if your qualify for the Recovery Rebate Credit. In addition, many low-and moderate-income workers may not have claimed the Earned Income Tax Credit (EITC). The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2008 were:

$38,646 ($41,646 if married filing jointly) for those with two or more qualifying children,
$33,995 ($36,995 if married filing jointly) for people with one qualifying child, and
$12,880 ($15,880 if married filing jointly) for those with no qualifying children.
For more information, visit the EITC Home Page on IRS.gov.

If you have any questions about how to file your 2008 federal income tax return, visit the IRS website or call 1-800-829-1040 Monday to Friday 7:00 a.m. to 7:00 p.m your local time.

source: irs.gov

I’m letting everyone know right now! I’m cheating on my income tax this tax season – and you know why? I need the money.

The IRS won’t know that I’m cheating.  I’ll report more charitable contributions than I really did. I’ll claim deductions for the 10 new suits I bought, deduct the mileage for the 100,000 miles I drove, and claim depreciation on my home office equipment, all related to my fake home business.  Heck, I plan on claiming old Aunt Julie as a dependent too!

Just think, the additional few hundred bucks I get will come in handy when I have to pay a tax attorney to keep me out of jail.

That’s if I get caught?

Of course I am only kidding about cheating the IRS.  I would never consider defrauding them in any way. It’s just not worth it!  And I strongly suggest to all you taxpayers, don’t even think about cheating on your taxes.  Here’s why…

The Internal Revenue Service has stepped up it’s compliance with state of the art computer software, and they aren’t targeting the wealthiest taxpayers anymore.  Not only that, as more and more tax returns are filed electronically, the IRS has more time to poke around and review tax returns that deviate from normal computer tax models.  Another great reason not to cheat on your taxes is that the IRS has experienced significant revenue shortfalls over the last few years.  They are putting an emphasis on recovering past due tax debts and squeezing every penny out of taxpayers.

So avoid inflating tax deductions even a little bit, the last thing you want is a tax audit.  If the IRS accuses you of tax fraud, the consequences could be extreme.  If you are found guilty you will have to pay the amount, plus penalties, plus possible interest charges too.  In serious cases, you can be put in jail.  If you’re smart, you’ll want a tax attorney to represent you. You don’t want to know how much that will cost you.

Do yourself a favor, and avoid the temptation to cheat on your tax return.  Better yet, pay for a reputable tax preparer to calculate your tax return for you.  It’s best if the IRS doesn’t know your name!

Expecting a income tax refund this tax year? Do you want your refund sent by check, Direct Deposit or Bonds? That’s right, taxpayers have the option of receiving their federal income tax refund in the form of U.S. Series 1 Savings Bonds.

In order for taxpayers to receive their income tax refund in Savings Bonds, Tax Form 8888, Allocation of Refund (Including Savings Bond Purchases) must be completed.

Here are the guidelines and rules taxpayers should know when contemplating a tax refund in the form of U.S. Savings Bonds:

• Taxpayers must complete and attach Tax Form 8888 Allocation of Refund (Including Savings Bond Purchases).
• Taxpayers can allocate all or a portion of their tax return in the form of bonds.
• Allocation must be made in multiples of $50.
• The maximum dollar amount that can be used to buy Savings Bonds is $5000.
• You can buy bonds for yourself (and your spouse, if filing jointly).
• You can buy bonds for someone other than yourself.
• You can buy bonds for yourself, your spouse and someone else.
• You can indicate a co-owner or beneficiary on the bond registration.
• The bonds will be registered in the name shown in the appropriate lines of tax form 8888.

Taxpayers may not the requested Savings Bond Allocation if:

• Any information on your Tax Form 8888 is crossed off or whited out, the IRS will reject your allocation of refund and savings bond purchases, and send you a check instead.
• The bond request amounts are not in mulitples of $50
• The total amount of all bond allocations is over $5,000.
• Your refund is decreased because of a math error (you will receive a check instead).
• Your refund is offset for any reason (ex: part of your refund amount is deducted to pay past-due Federal Tax amounts).

If you make a math error that increases your tax return amount, the difference will be paid in the form of a check.

So now that you know more about income tax refunds, would you like your income tax refund in Savings Bonds?