The annual tax-return filing season wraps up Monday, on April 18, unless you request a six-month extension. Here are some timely tax tips and other observations as we head to the wire.
Are post offices staying open late?
Phoenix-area post offices are mostly keeping normal hours on April 18 to handle last-minute returns submitted by mail, with the exception of the Phoenix Main Post Office at 4949 E. Van Buren St., said Rod Spurgeon, a spokesman for the Postal Service. That office will stay open until 9:30 p.m.
“If someone would like to send their tax forms later this evening, our Phoenix Main Office is the best option,” he said. ”We don’t have drive-up lanes this year, but we do have extra staff to handle any and all volumes for tax day.”
Anyone needing to find a nearby post office can check locations at usps.com or more specifically, https://tools.usps.com/find-location.htm, he added.
Where should I mail a federal return?
It depends. There are at least four different destinations — none in Arizona — depending on the situation.
For example, most individual Form 1040-series returns claiming a refund or no balance due are to be mailed to Department of the Treasury, Internal Revenue Service, Austin, TX 73301-0002. The same forms, with a payment, go to Internal Revenue Service, P.O. Box 802501, Cincinnati, OH 45280-2501.
But some individual returns from Arizona also could go to locations in Ogden, Utah, or Charlotte, North Carolina. Specific mailing instructions can be found at irs.gov.
This is a first for mailing Arizona returns to the Austin location, said Phoenix tax attorney Bob Kamman, and it could cause problems if ice storms or utility cutoffs in Texas again cause disruptions, as they did early in 2021. The Austin IRS office is nearly 900 miles from downtown Phoenix.
For people submitting forms electronically, no mailings are required. That’s one advantage of filing electronically, along with quicker processing, less chance for errors and reduced identity theft dangers, as potential thieves would have less time to file a return in your name with the hopes of grabbing your tax refund.
What about Arizona returns?
Most individual Arizona tax returns with a refund or no tax due should be mailed to Arizona Department of Revenue, P.O. Box 52183, Phoenix, AZ 85072. Those with payments should be sent to Arizona Department of Revenue, P.O. Box 52016, Phoenix, AZ 85072.
However, there are a few exceptions that can be seen at azdor.gov.
Are extensions available?
If you haven’t yet filed your tax return and don’t think you can make it by midnight April 18, this year’s filing deadline, automatic six-month extensions are available. Sounds easy enough, but there are a few caveats.
First, it’s important to file your extension request on time, by April 18. You can submit IRS Form 4868 electronically through irs.gov or make sure it is postmarked by then. More information on doing this is available at irs.gov.
If you mail it, Rob Cordasco, a certified public accountant, recommends doing so with proof that you got it in on time, given what he calls staffing problems, delays and general “dysfunction” at the IRS. The agency has had paperwork processing issues and is still working to clear its backlog, he noted.
Second, it’s important to realize that an extension gives you more time to file but not more time to pay tax liability. You still need to pay your estimated tax by Monday, April 18, and it might be wise to pay a bit extra to avoid an underpayment penalty, he suggests.
Third, filing with or without an extension is preferable to not filing at all, even if you can’t pay the full amount right now. The penalty for not filing can be 10 times as costly as the underpayment penalty, the IRS said.
Most taxpayers don’t take it to the wire and, instead, file early in the year. This makes sense if you’re expecting a refund. It’s also a wise move to thwart potential identity thieves. Submitting your tax return early “prevents others from filing under your identification and getting your refund,” Cordasco said.
Still, many taxpayers can’t file early and might not even make the deadline. Cordasco estimates at least 40% of his clients require an extension.
An extension this year gives you until Oct. 17 to submit your return. That’s also true for Arizona tax-return extensions.
Looking for your tax refund? Deadlines, free help, extensions and what else to know about filing
Where is my tax refund?
The IRS offers a link to check on refunds at irs.gov. The agency said most refunds still are issued in fewer than 21 days. The azdor.gov website has a similar “Where’s my refund? link. Through March 25, 71% of individual taxpayers were receiving federal refunds, averaging $3,263, the IRS said.
A last-minute tax-shaving opportunity
Relatively few Americans contribute new money to Individual Retirement Accounts these days. Why? Because there are confusing rules, eligibility restrictions and sometimes better options — namely, 401(k)-style workplace plans with employer matching funds.
Still, IRAs remain a viable strategy, especially this time of year, for eligible individuals who might need a last-minute deduction to shave their 2021 tax liability by April 18. Contributions of up to $6,000 (plus another $1,000 for people 50 and up) still can count for the 2021 tax year.
Through March 15, IRA contributions were flat compared with the same time last year but contributions were up nearly 9% compared to the same span in 2021, Fidelity Investments reports.
While IRAs might make sense for reasons beyond deductions, such as long-term tax-sheltered growth, it’s the deduction component that sparks interest.
Workers not covered by a workplace retirement plan like a 401(k) program, and with no such spousal coverage, can get full deductions with no income limitations. For people with workplace coverage, deductions generally are at least partially available with income below $76,000 (singles) or $125,000 (married filed jointly). The Fidelity.com website, and other sources, provide more details.
Arizona also offers some tax breaks that are still available for 2021, including the qualifying charitable and school contribution credits. Donations in support of these programs must occur by April 18.
IRS refunds from 2018 still available
The IRS said it has unclaimed income tax refunds totaling almost $1.5 billion nationally, including about $34 million for Arizonans. The catch? The roughly 1.5 million Americans who might be eligible to claim their money by filing a 2018 federal tax return must do so by April 18, 2022.
The deadline affects people who didn’t file returns for 2018. The IRS estimates the midpoint or median potential refund for 2018 at around $813.
In cases where a federal income tax return was not filed, most taxpayers have a three-year window to claim a refund. For 2018 returns, the window closes April 18 (Maine and Massachusetts residents have until April 19).
Refund amounts will get applied to any money still owed to the IRS or a state tax agency and may be used to offset unpaid child support or past-due federal debts such as student loans.
By failing to file a return, people could lose more than just a refund of taxes withheld or paid during 2018. Many moderate-income workers also could be eligible for the Earned Income Tax Credit, which for 2018 was worth up to $6,431. Eligibility depends on income and the number of children in a household.
You can request a free wage and income transcript to help in filing past-year returns. These documents show wage information received by the IRS, such as on Forms W-2, 1098 and 1099. Use the “Get transcript online” tool at irs.gov or file Form 4506-T.
IRS urged to start scanning
While it encourages taxpayers to file electronically, the IRS has fallen way behind in processing paper tax returns. As of mid-March, the backlog stood at nearly 15 million. But who outside of tax circles realized the IRS doesn’t use scanning technology?
Erin Collins, the National Taxpayer Advocate, cited this deficiency in urging the IRS to adopt scanning to process returns and refunds more quickly.
“The reason paper returns are so challenging is that the IRS still has not implemented technology to machine read them, so each digit on every paper return must be manually keystroked into IRS systems by an employee,” she wrote in a recent blog.
“During the past two decades, state tax agencies have been using scanning technology to automate the processing of paper tax returns,” Collins continued. “During that time, the IRS has considered, rejected, proposed, reconsidered, partially implemented and deferred the question of whether to implement scanning technology.”
Scanning technology, she added, “would speed return processing, substantially reduce or eliminate transcription errors and enable the IRS to reassign employees from data-entry jobs to other positions, ultimately saving tens of millions of dollars in labor costs.”
While too late for the current filing season, Collins hopes to see the IRS embrace scanning next year.
Reach the reporter at [email protected].
Support local journalism. Subscribe to azcentral.com today.