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What taxpayers need to know

April 13, 2016

Ohio State experts share tips on maximizing your refund, late filing, identity protection and more.

The April 18 tax filing deadline is fast approaching. Whether you’re scrambling to get your return filed on time or are all done and would like some guidance to take into account for next year, Ohio State’s business and law experts have some words of wisdom to share.

Stephanie HofferStephanie Hoffer, professor, Moritz College of Law
Expertise: Federal income taxation


What happens if I file late?

Although it’s against the law to file late, and to pay late, if you’re expecting a refund there’s no financial penalty or other penalty for filing late. But if you owe money, you have to think about it differently. When it comes to penalties, people should probably know that there’s a difference between filing late and paying late. If you file your form late, you’ll owe a penalty of 5 percent of your unpaid tax bills. But if you pay late, you’ll owe a penalty of only 0.5 percent. You can avoid filing late by requesting an extension. That extension is six months long and automatically granted. But getting an extension to file doesn’t mean that you have an extension to pay. If you’re going to use an extension to file late, you should estimate how much you’ll owe, and pay it by April 18.

What should I do if I’ve made a mistake on my tax return?

When that happens, you should file an amended return. The form is called 1040X, and most tax preparation software will help you work through that form.

How would I get selected for audits, and how long does the IRS have to audit me?

The auditing process isn’t random. The IRS actually has secure algorithms that detect unusual patterns on tax returns. When your data goes to the IRS, it goes through algorithmic functions that rate the likelihood that you’ve cheated on your taxes. If that likelihood is high, you may be selected for audit. In a normal case, the IRS has three years from the date that your return is filed to audit you. If you’ve seriously understated the amount of tax that you owe in an honest mistake, and not because of fraud, the IRS has six years to do the audit. If you’re outright lying, the IRS can audit you at any time. There’s no time limitation if you’re actually engaged in fraud. 

How can I avoid and detect identity theft?

Oftentimes when someone else has been using your social security number for tax purposes, it will turn out that there will be more than one tax return for you. You might think you’re getting your refund but instead you get a bill from the IRS because somebody else has collected your refund. Or, sometimes IRS records will show that you’re receiving interest from a bank that’s not your bank. If you get communications like that from the IRS, it suggests that you’ve been a victim of identity theft. The best way to avoid this is just to protect your personal information. You should be especially careful about emails and calls that claim to be coming from the IRS. The IRS will never ask for your social security number by email or over the phone, because they already have it. There are forms that you can fill out on the IRS website that can get the process started if you think you have been a victim of identity theft.

Stephanie LewisStephanie Lewis, senior lecturer, Fisher College of Business
Federal taxation and financial accounting


What tips do you have for taxpayers to maximize their refunds?

There are frequent changes to the tax law, so it is wise for taxpayers to seek assistance from professionals, tax-preparation services from programs such as VITA, or even use tax software to help ensure they are receiving every tax benefit possible. 

How can the IRS website help people when doing taxes?

The IRS could be more helpful than many people realize when taxpayers have a balance due when filing their tax return.  They will allow taxpayers to pay their balance in installments (with interest, of course). If a taxpayer owes back taxes and is facing an extenuating hardship, the IRS will in some instances reduce the amount he or she must pay.

Taxpayers who have not filed tax returns put themselves in the best possible position by filing, rather than continuing not to file, and they can request information from the IRS (i.e., information on their wages and tax withholdings) that will help them prepare taxes for prior years for which they may not have proper records.

How long should taxpayers save their tax returns from previous years?

Taxpayers should save their tax returns and supporting documents no less than three years.

How can the Volunteer Income Tax Assistance (VITA) program help taxpayers?

VITA is an IRS sponsored program that provides free tax preparation services to taxpayers with household income of $54,000 or less. Some VITA sites also provide financial planning resources. Those qualifying for services can visit Ohio State’s Fisher/Ohio State Tax Clinic for VITA assistance.