Submitted your tax return? You should have, seeing that tax day just passed. For many taxpayers, it’s now the start of other problems ranging from the likelihood of an audit to penalties and interest charges. In my decades-long career in handling tax problems, I’ve come across myriads of tax return problems and devised countless solutions and strategies to overcome these problems for my clients. Now I’m going to share with you some of the most common tax return problems and their solutions for free. You will get access to the actual advise I have given my clients without paying a dime. Consider it my favor to you.

Here’s the first common tax problem I’d like to share – the fear of audits. You are afraid you will be flagged for an audit, so you avoid claiming any deductions, even those you are legitimately entitled to. Does that sound familiar? Read on.

Some so-called tax professionals will discourage you from making claims that are “too high” lest you trigger and audit. In reality, you should not do that. You would be doing yourself a disfavor because you would pay more taxes than you should be paying. All you have to do is claim every deduction you are legally entitled to claim and by doing so reduce your taxes to its lowest legal level. This way, you would never run the risk of an audit.

Here’s a little tip that I tell my clients who fear audits or who have been given the wrong information to avoid claiming deductions. Fill up IRS Form 8275, Disclosure Statement. This form is not found in the IRS' forms package simply because it actually helps you save on your taxes. IRS Form 8275 allows you to provide information with your tax return that answers any potential questions in the return. By filing Form 8275 along with your return, you give the IRS the answers to their questions even before your case is assigned for a face-to-face audit. How cool is that?

So all you have to do is use Form 8275 for any claim you feel may be considered “high” or questionable by the IRS. Now let me put the record straight. I am not saying you should use Form 8275 to claim any deduction you are NOT entitled to. That is not the purpose of Form 8275. It is to be used to facilitate claims to deductions to which you are legally entitled.

Today is tax day. You should have already filed your 2012 tax return by now. But if you have not, today is the last day. Today I’m going to share the first of a series of articles on tax return problems and their solutions. If you cannot make the deadline today, you would have a problem. So if your tax problem is filing your tax return late i.e. not being able to file on time, your solution is to apply for an extension of time. You will be granted an automatic 4 month extension till August 15, 2013 if you file an extension application. You do not even need to provide a reason for your request.

All you have to do is file Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return. But you have to submit your Form today, the deadline for tax return submissions. But bear in mind this is a request for extension to submit your tax return, NOT an extension of time to pay. So you must still pay your taxes by the original deadline, April 15.

So you should mail the estimated tax you owe with Form 4868, the request for extension and your tax return form. Form 4868 allows you to estimate the amount of tax due. By doing so, you avoid the risk of the IRS disapproving your extension application.

If, come August 15, you are still unable to file your tax return, you may apply for another extension of time to submit by filing up Form 2688, Application for Additional Extension of Time to File Individual Income Tax Return. This second extension is not automatic and will grant you a maximum two-month extension if approved. You should file Form 2688 before the expiry of your first extension.

Now if your problem is not being able to afford the tax you are liable for, you should still apply for the standard extension to file your return. This obviously gives you more time if you cannot pay the full amount by today (tax day). In addition, here’s what to do to solve this problem of inability to pay – seek an extension of time to pay. This is NOT the same as an extension of time to file your return.

While Form 4868, the filing extension, does not provide an extension of time to pay, for an extension of time to pay you must use IRS Form 1127, Application for Extension of Time for Payment of Tax. Note that the IRS would often deny there is such a thing as IRS Form 1127, but it actually exists and you have the right to use it.

But you have to show the IRS that you are unable to pay the tax on time even though you exercised reasonable care in providing for your tax debt but due to circumstances beyond your control, you cannot afford to pay your taxes by tax day. You must also show that coming up with the money will cause a financial hardship and that you have little or no financial resources and assets that can be liquidated.

If the application is granted, you can be granted up to six additional months to pay the taxes, without penalties.

With the spiraling increase of healthcare and medical costs in the country, health insurance is no longer an option for most people. Some taxpayers are fortunate enough to be covered in their companies by their employers but not everyone has that benefit. If you are paying for your own health or medical insurance coverage, you should be aware of the health coverage tax credit you may be eligible for.

The United States government in association with other federal agencies, state governments and private healthcare groups has formulated this credit to enable people to afford basic healthcare insurance coverage. If you are eligible, this tax credit may include your family members as well. Eligibility for this credit also depends on what type of health insurance you have. The health plan must be approved by the IRS in order for you to qualify for the health coverage tax credit. Also, you have to be paying at least 50% of the qualifying health insurance premium.

If you are eligible for it, the credit will pay 72.5% of your healthcare insurance premiums every year. Some categories of taxpayers are ineligible. These include those who are already enrolled in Medicare Part A, B, or C, Medicaid or the Children's Health Insurance Program (CHIP). In addition, they cannot be enrolled in Federal Employees Health Benefits Program (FEHBP) or already be receiving military healthcare benefits under the US military health system (TRICARE).

Those who are incarcerated in federal, state or local prisons are not eligible for the health coverage tax credit, neither are those who are being claimed as a dependent on someone else's return. Another category of those taxpayers who are ineligible are those receiving a 65% COBRA Premium Reduction.
On the other hand, you must also be

• a beneficiary under the Pension Benefit Guaranty Corporation (PBGC) or other trade-related government agency who is 55 years old or older

• a recipient under the Trade Adjustment Assistance (TAA), Alternative TAA (ATAA), or Reemployment TAA (RTAA) or

• a qualified family member of a taxpayer who is eligible under one of the categories listed above at the time of Medicare enrollment, death, or divorce.

If you are eligible for the health coverage tax credit, the IRS will mail you a kit for you to claim your credit. To do so, complete IRS Form 8885 and submit it with their personal tax returns. You may claim your credit in monthly installments or collect it yearly. If you choose the yearly option, you pay your insurance premium first then fill in and submit IRS Form 8885 to claim the refundable credit on your federal income tax return.

If your tax refund is late, there could be one of two reasons.  Firstly, there has been a computer glitch at some tax-preparation companies including industry leader H&R Block that affects some 600,000 taxpayers claiming for education credit.  The IRS has been working with tax-preparation businesses to deliver the refunds as soon as possible and by now most of the refunds have been sent.  H&R Block has since rectified their computer glitch and all systems are back up and running.  Other major tax preparation companies including Jackson Hewitt Tax Services and Intuit Inc were not affected.  None of their customers experienced delays getting their tax refunds.

The second major reason for refund delays this year is the increased scrutiny the IRS has given to cases claiming the Earned Income Tax Credit (EITC), a tax benefit that has been sorely abused by tax fraudsters.  Due to this IRS employees have been carefully reviewing returns with claims for the EITC.  However, IRS spokesman Terry Lemons told Reuters that ‘fewer than 5% of filings claiming the EITC have been delayed’.  The small percentage of returns that got delayed due to this reason are being processed and the taxpayers concerned will soon be able to track their refund on the IRS website, www.irs.gov by going to the ‘Where’s my refund’ link.

According to the Treasury Inspector General for Tax Administration (TIGTA), more than 13 million Americans claimed the EITC in 2012 at a cost of $38 billion last year.  The EITC is very popular among the lower income group because it is an anti-poverty program started in 1975.  Only those who meet the income, age and employment prerequisites may apply for the EITC.  Many of the claimants are resident aliens holding low-paying jobs.  One of the ways these people abuse the EITC is by submitting a claim for children who do not even reside in the United States.

To deter this fraud, the IRS this year is asking EITC taxpayers working with a preparer to prove a child is living with them by providing a report card or doctor's bill.  But only returns filed with a tax preparer need provide this information.  A taxpayer claiming EITC benefits can obtain an average of $3,452 for three or more children.

The increased incidents of such tax fraud have resulted in some delays in obtaining tax refunds.  To find out the status of your refund, click the ‘Where’s my Refund?’ link at www.irs.gov.

The IRS’ newest program to nab identity thieves in collaboration with law enforcement officers, Law Enforcement Assistance Program, has been extended to all 50 states including District of Columbia. This program overcomes the major hurdle that all law enforcement officers have been unable to surmount – the inaccessibility to personal tax information of victims of identity theft. The reason for this is the law that prohibits the IRS from sharing these personal details to third parties. But now with this program, the IRS is able to divulge personal tax information vital to law enforcement officers for investigation and prosecution of identity thieves.

Seeing that identity theft spikes every tax season, it is no surprise the program is seeing spectacular success. Under this new program, taxpayers who have fallen victim to identity theft can waive their rights to privacy and allow the IRS to share their tax info to law enforcement officers investigating their cases. Since the program began in Florida last year, the IRS has received more than 1,560 waiver requests from more than 100 state and local law enforcement agencies in the nine states participating in the pilot. Due to that, the pilot program was expanded to all 50 states with effect from last Friday, March 29.

According to IRS Acting Commissioner Steven Miller, “The results of the pilot illustrate that this works as an innovative tool for law enforcement to help pursue tough identity theft situation. This program is an effective way for law enforcement to work with the IRS to pursue identity thieves and protect taxpayers. Expanding the program and making it permanent on a nationwide basis makes sense for victims as well as law enforcement and tax administration.” Since the beginning of this year, the IRS has worked with victims to resolve and close more than 200,000 identity theft cases.

Under the new Law Enforcement Assistance Program, state and local law enforcement officers with evidence of identity theft through bogus income tax returns can get permission from the victim by having them complete a special IRS disclosure form that allows the IRS to release the fraudulently filed tax return to law enforcement officers. Furthermore, the IRS will also help the officers locate the taxpayers and obtain their consent.

The Law Enforcement Assistance Program is just one of a slew of initiatives by the IRS to address the issue of tax fraud. Besides the Law Enforcement Assistance Program, there is also the expanded Identity Protection PIN (IP PIN) pilot, an initiative to protect victims with previously confirmed cases of identity theft by creating an additional layer of security on these accounts. The IRS has issued more than 770,000 IP PINs to identity theft victims since the start of this tax filing season.