Stim­u­lus glitch hits late tax fil­ers

Best so­lu­tion is to mail in an amended pa­per re­turn

USA TODAY US Edition - - MONEY -

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.

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 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.

The Michi­gan state in­come tax re­turn and the City of Detroit re­turn are due July 15, too, for those who have not yet filed.

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.

Am I still able to 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.”

Su­san Tom­por

GETTY IM­AGES

Today is the dead­line to file your 2019 tax re­turns, which was ex­tended by the In­ter­nal Rev­enue Ser­vice in the wake of the coro­n­avirus pan­demic.

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