Finally, you should know that if you are owed a refund, you won’t be penalized for not filing. However, Uncle Same will not send you your refund until you file your taxes. And if you keep missing tax day, you won’t get your refund back, period. If you ignore April 15 for three straight years, the IRS will keep your money.
SKIP: Are there any surprises in store for those who haven’t filed yet?
Some people might be surprised by the impact of some of the new provisions in the Affordable Care Act. A recent study came out estimating that half of the individuals who receive healthcare coverage through ACA exchanges are expected to owe the IRS money. The reason?
Because the ACA subsidy system requires customers to estimate their income for the upcoming year, those who end up earning more than expected will end up getting more subsidies than appropriate. The report estimated that 50% of enrollees will owe $794 on average, according to a new study. However, on the positive side, 45% are expected to have overestimated their income and should get extra money back from the government, for an average refund of $773.
SKIP: OK. Let’s hope we estimated conservatively! Anything else we need to know?
MELLODY: Just remember to keep copies of all of your tax documents. It can help you in the coming years. This is important, as the IRS is allowed to audit your return for up to three years from your filing date, or more if they suspect problems were intentional. Keeping your records for 7 years is a safe time period. Tax court is one of the few places where failure to report proof of claims results in an assumption of guilt. So, the burden of producing justification rests on you, so its always better have your documentation in order, just in case!
Mellody is President of Ariel investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts. Additionally, she is a regular financial contributor and analyst for CBS news.
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Money Mondays: Wednesday Is Tax Day was originally published on blackamericaweb.com
