NAMPA — While many residents have already filed their income taxes and possibly received their refunds, others will wait until the April 15 deadline to file.
The Idaho State Tax Commission expects more than 275,000 returns will be filed in April, with most arriving on the 15th.
The Tax Commission suggests filing taxes in March instead of waiting until April to avoid the rush and receive refunds faster.
Free tax help is available for senior citizens and low-income taxpayers at sites around Canyon County through the Volunteer Income Tax Assistance Program sponsored by the IRS or Tax-Aide, which is run by certified volunteers from the AARP.
The help is designed for people who are filing simple federal and Idaho tax returns or are submitting state returns only to receive the grocery credit refund and for those filing a federal return only to claim the Earned Income Tax Credit.
Some of the sites are self-preparation only, which means volunteers will help people use online software to prepare and e-file their returns. A list of sites can be found at bit.ly/1cWmTOT.
Some taxpayers may also qualify to e-file their taxes for free. A list of websites that offer the service is available through the Tax Commission’s website. In order to e-file both a state and federal return for free, the links must be accessed through the Tax Commission’s website, tax.idaho.gov.
• Tax preparation software does the math for taxpayers
• E-filed returns take about seven weeks to receive a refund, while paper returns take about 10 weeks
• Direct deposit also gets refunds to taxpayers faster
• Make sure your Social Security number is correct and there are no typos or errors.
• Check the Employer Identification Number and state ID number listed on W-2s. Incorrect numbers will delay a refund.
• Attach all of your W-2s and a complete copy of your federal return if filing by paper. Also make sure both spouses have signed if filing a joint return.
Where does the refund go?
So Uncle Sam owes you money. Now what to do with it?
According to the IRS, the average tax refund this year will be $3,116, which is up 4.2 percent from 2013. As of Thursday, 62.2 million individual income tax earners had e-filed their returns.
So where will it all go? This year’s “Capital One Taxes and Savings” survey shows 52 percent will spend the majority of their refund as opposed to saving it, but 58 percent of those people will use it to pay down debt or pay off bills.
The survey showed other uses include:
• Everyday expenses or necessities – 15 percent
• A vacation – 7 percent
• Major purchase, such as a car or appliances – 7 percent
• New clothing or accessories – 1 percent
• Electronics such as a new television, iPad, smartphone – 1 percent
Though most taxpayers won’t receive a huge amount, some do wind up with a lump sum and may not know exactly what to do with it. Eric Boyum, a financial adviser at Fortify Financial Services in Caldwell, said the best approach in that case is to take some and enjoy it, and then save and invest some.
“If you don’t have a plan together already, (now) would be a good time to start putting a plan together,” Boyum said. “If you have kids who are going to college, or are young and you want to start saving for college, put it into a 529 college savings plan for your children.”
On the other hand, it may also be wise to use it to fund retirement, or to invest in an IRA or Roth account. When it comes to investing in the stock market, Boyum said don’t venture into the unknown.
“Buy what you know and know what you buy, meaning if you’re going to buy stocks, buy stocks in something that you use every day, and of companies that you know,” he said. “People get into problems when they buy speculative stuff that they know nothing about.”
WHAT YOU SAID
We asked Facebook and Twitter fans what they plan to do with their refund, if they expect to receive one. Here are a few responses.
“Pay bills.” - Carri Lyn Cooper
“Pay off debt.” - Carlos Soriano
“ I have it divided up and planned out. Some of the money goes to bills, some to savings, some to vacation fund, and some to items we need. We try not to waste any of it on unnecessary stuff. Getting bills paid off is a better feeling than blowing it on dumb choices.” - Carie Lawrence
“Pay for my kid’s travel for free-ski competitions (halfpipe & slope style).”
- Sam Sandmire
“Get a house. Start a savings account. Buy a computer. And decorate.”
- Kimberly Inman
Don’t wait until the last minute to file
Procrastination. It could be considered an American epidemic, or maybe a pastime — especially when it comes to filing taxes. There are those who like to file their taxes on the last day.
Trina Steelsmith-Queen has been an accredited tax preparer for 25 years. During her time, she has seen the usual last-minute rush to file before the April 15 deadline, or even the Oct. 15 deadline for extensions.
People expect tax preparers to be sitting there ready for people when they come in with a huge stack of paperwork, Steelsmith-Queen said. But the reality is that preparers are probably already busy with someone else.
One time, a woman came in on April 15 and was trying to call people to get her deductions filed, Steelsmith-Queen said.
Even though people may know better, it is worth repeating: Don’t wait until the last minute.
“The earlier they get in, the better, because we aren’t backlogged yet,” Steelsmith-Queen said. Around the second week in February is a good time to start coming in.
Always keep receipts. People who don’t could be losing money.
“It’s kind of a shame if it’s something you can get a deduction for,” Steelsmith-Queen said.
But on the flip side, people also need to know what can and can’t be deducted. Some come in with a stack of papers, only to learn that most things won’t end up on their deduction list, Steelsmith-Queen said.
One of the more interesting deductions she saw was for a hot tub. A woman once wrote it off as a medical deduction after her doctor wrote a note saying she needed it for her arthritis.
A common misconception or mistake Steelsmith-Queen sees is that when young people come in, they don’t know the difference between standard deductions and itemizing. And while people might like to do their own taxes, a professional could help them make sure they get all of their deductions, she said.
Withhold more or less?
When it comes to deducting money from your paycheck for taxes, is it better to take out more money throughout the year or try to be spot on?
“It’s better to be as close as you can and get back a small refund,” Steelsmith-Queen said.
While people might like to use tax withholdings and a refund as a type of savings account, it would be better to have that money throughout the year, she said.
Internet sales tax
The Idaho State Tax Commission is reminding people to pay sales tax on untaxed purchases. If the good was used, given away, stored or consumed in Idaho, a 6 percent use tax is owed.
When a shopper buys goods over the Internet, by telephone or though a mail-order catalog, sellers won’t charge a sales tax. So it is up to shoppers to pay taxes to the Idaho State Tax Commission.
The commission estimates that Idaho loses around $46.4 million per year in revenue because of unpaid taxes from online sales. Last year, more than 9,600 Idahoans paid use tax, totaling about $544,000.
The subject of Internet sales tax has been a hotly contested issue.
The U.S. Senate passed the Market Fairness Act in May 2013 in order to give states the power to make online retailers collect sales tax at the time of transaction, no matter where the retailer is located. But states would only be able to do this after they simplify their tax laws. A House version is currently in the works.
In December, the Supreme Court decided not to hear a New York case regarding the issue.
The New York Court of Appeals ruled both companies had enough of a presence in the state to pay taxes.
In 1992, the Supreme Court did hear a case regarding a company that sold office equipment through catalogs, flyers, advertisements and telephone calls in Quill Corp. v. North Dakota. The court ruled Quill did not have a substantial nexus in North Dakota for the state to collect a use tax for property purchased for use or consumption within North Dakota.
A University of Tennessee study in 2009 shows e-commerce sales grew from $995 billion in 1999 to $2.385 trillion in 2006. It also projected national, state and local taxes not collected from e-commerce sales to be $11.4 billion in 2012.