Well, here it is, that dreaded season of the year called, “Tax Time”. That’s like saying, “Here comes Trouble, with a capital ‘T’”, right? So, you gather up all of your paperwork.You know, like your W-2’s, your 1099’s from your bank or broker, your 1098-T from your school, and, oh yeah, your kids’ Social Security cards. Then, you load all of that stuff up into your wheelbarrow (well, not really, but it feels like that, doesn’t it?), and you trudge into your local Liberty Tax office to file your tax return.  Your preparer diligently asks you questions about your last name and your kids’ last names, if different, and asks questions for Earned Income Tax Credit (EITC) purposes.

Finally, you get down to the bottom line and you are getting a huge refund of $8000! Wow! That’s more than you’ve seen in a long time and you’ve already got it spent.You leave the Liberty Tax office confident that your return will be processed that day, and feeling pretty sure that you’ll be getting your refund in about 10 – 14 days or so.

A few hours later or the next day, you get a call from your Liberty office. Uh-oh, something’s wrong!  They tell you the IRS has rejected your return!“Rejected my return?” you ask.&; How could that possibly have happened to me?The Liberty Tax person on the other end tells you that, according to the IRS, someone else has claimed one of your children on their return What?! Well, who’s the dirty dog that would do that? How could someone else claim my child? Could it be that your ex- claimed that child?  Or, how about another relative, say, your mother who keeps the child during the day?

“Ok, so, what do I do now?” you query. I’m glad you asked!  Because this is just one of the many reasons why you must file a paper return, that is, if you want to get the refund that you think you are supposed to get.

You cannot re-submit an e-filed return that has been rejected, unless you correct the error that caused the “reject” in the first place. The IRS will take your paper return, give you your estimated refund, and, then, in about July or so, will bring those two returns together to analyze them. They’ll send out letters to you and to the other party (who will remain nameless by the IRS) and make a determination as to who is really eligible to claim that child.

Another reason for a paper return is that someone has claimed you as a dependent on their federal return. You may be living at home and are 18 years old.You’ve earned a bit of money cutting grass this summer or working at the local fast food joint and your friend says he’ll file your return for you.  Your friend, however, failed to ask you if your parents were going to claim you, so you filed claiming yourself. By the time your parents get around to filing, you’ve already gotten (and spent) your refund. Your parents, however, have their return rejected because they claimed you (as they were rightfully allowed to do and should have done!) on their return.  So, guess what, bucko?  If they want to get their refund (and maybe the EITC, too), they will have to file a paper return.  And, YOU should file an amended return (Form 1040X), also a paper return, and pay back to the IRS some or all of that big refund that you spent at the local electronic, gadget store. (Speaking of amended returns, you have 3 years within which to file an amended return and it is always paper.  But, we can talk more about that later.)

If a friend or relative (not your spouse) dies and you are the court-appointed executor or administrator of the estate, you’ll probably want to file a “final” return for the deceased.  In this case, you’ll be filing a Form 1310 to claim a refund for the deceased.  This would also require a paper return.

Finally, you MUST file a paper return if your preparer does not have the capability of e-filing.  This could be because they do not possess an Electronic Filing Identifying Number or EFIN.  They may not have an EFIN because they couldn’t pass the background check required or they may owe back taxes and the IRS will not give them an EFIN.  If you are dealing with a preparer who does not e-file your return, you need to look very carefully at why that is.  Since it takes about 4 – 6 weeks to get your refund when you file with paper, rather than less than 2 weeks when you e-file, you might consider going somewhere else!  Every Liberty Tax office MUST e-file returns, so you know that the owner of that store does possess an EFIN, and, therefore, has passed a background check, etc.

Whew!  I’ll bet you never thought there were so many scenarios where a paper return must be filed, eh?  No one ever said the IRS was a friend of trees, did they?

We’ll catch you next time right here on the Greenhornet Blog!