For seniors, the Internal Revenue Service is divided into 2 parts:
(1) The Good IRS and
(2) The Bad IRS
The Bad IRS – that’s the one we are all familiar with – its job is to try to take as much money from you as it can.
The Good IRS – we don’t hear too much about them – its job is to save you as much money as it can.
This is the first in a series of articles about the Good IRS and information and resources it makes available to help seniors through the onerous task of filing their tax returns.
The Good IRS gives out a lot of great information to help ensure that seniors know what special tax breaks are available. The best place to start is Publication 554 – Tax Guide for Seniors http://www.irs.gov/pub/irs-pdf/p554.pdf. Publication 554 provides a general overview of some of the topics that are of interest to seniors and references other IRS publications that give more detail on these topics if you need it. These are some of the things Publication 554 says you must know or should know before filing your 2011 return.
You are responsible for the accuracy of your return – choose your preparer carefully. If you pay someone to prepare your return, the preparer is required to sign the return and fill in the other blanks in the Paid Preparer’s area of your return. Remember, however, that you are still responsible for the accuracy of every item entered on your return. If there is any underpayment, you are responsible for paying it, plus any interest and penalty that may be due. According to the IRS publication, Common Errors Made By Tax Payers 65 and Older, calculating taxable social security benefits and failing to take the higher standard deduction for persons age 65 years or older are the two most repeated errors made by seniors who file paper tax returns. Calculating the tax on qualified dividends and incorrectly writing the social security numbers of dependents are also among the top errors made by persons 65 and older.
You can authorize the IRS to discuss your return with your preparer. You can check the “yes” box in the “Third Party Designee” area of your return (just above your signature) to authorize the IRS to discuss your return with your preparer, whether that be a friend, family member, or any other person you choose. This allows the IRS to call your designee to answer any questions about your return. It also allows your designee to perform certain actions. See your income tax return instructions for details.
Employment tax withholding. Wages are subject to withholding for income, social security, and Medicare taxes even if you are currently receiving social security benefits.
Part 2 of “What Seniors Must Know Before Filing Their 2011 Tax Return” will discuss tax counseling and other services available to seniors to help prepare tax returns.
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