The thrills of refunds, the agony of taxes

  • Published
  • By Capt. Stephen Braunlich
  • 341st Missile Wing legal office
MALMSTROM AIR FORCE BASE, Mont. --  For most Americans, tax season will end on April 15. However, two groups will continue the thrill of the chase for deductions and the agony of taxes owed: those who have not yet filed their return and need an extension, and those who need to amend an existing tax return because of new information.

Filing for an extension
All taxpayers may file a paper or electronic IRS Form 4868 requesting an extension, provided such filing is made prior to April 15. Service members may also benefit from special rules for those serving in combat zones or on contingency operations.

Service members who have served in combat zones or a contingency operation may receive an extension to file certain tax documents. To calculate the extension, begin with the automatic extension of 180 days from the date you return from deployment. Then add an additional extension based upon the time remaining to take action when you entered a combat zone or began serving in a contingency operation. However, if this total extension ends before the end of the filing period, you still have until the end of the filing period. Two examples make this clear. Both involve deployments that start in 2012 and apply to the 2012 tax return. The filing period of a 2012 tax return is the 105-day period from January 1, 2013, to April 1, 2013.

Example 1: An Airman deployed on October 1, 2012, and returned on April 1, 2013. Under these facts, the member would receive an extension for filing their 2012 tax return. The length of their extension would be the automatic extension of 180 days plus an additional extension of 105 days (the number of days remaining in the 2012 filing period when they deployed). The total 285-day extension would not start to run until their deployment ended on April 1, 2013. Therefore, they would have until January 11, 2014, to file their 2012 tax return.

Example 2: An Airman deployed on January 1, 2012, and returned on June 1, 2012. Under these facts, the member would not receive an extension for filing their 2012 tax return. The total extension would still be 285 days, but it starts to run on June 1, 2012. Therefore, it would end on March 13, 2013. Because the extension ends before the filing period ends on April 15, 2013, their deadline remains April 15, 2013.

It is important to note that extensions can apply to more than just a standard tax return. For example, extensions are available to file an amended return that claims an additional credit or refund. These extensions can be lengthy if there was a great deal of time remaining to take action when the member deployed, and may be a powerful way of ensuring that no money is left on the table.

Amending returns
The IRS provides a simplified form for filing an amended tax return: the IRS Form 1040-X. The form simply reflects "bottom line" changes to taxes: increases/decreases in income, adjustments, deductions, exemptions, withholding, credits and, finally, the amount owed by the taxpayer to the IRS or the IRS to the taxpayer. The applicant then provides a justification for why any change occurred along with the appropriate paperwork to justify the change (such as a new W-2 or amended tax credit worksheet).

It is important to keep in mind that timeliness plays an important role in filing an amended return. In general, if an Airman expects a refund, they must postmark the return within the later of 1) three years of the due date of the original return or 2) two years after the date they paid the tax. While there are a handful of exceptions to this rule, they are not applicable to the most common credits and deductions. If Airmen expect to owe money on an amended return, they should file their return as soon as possible because the IRS will collect interest on the taxes due and may assess additional penalties. Of course, the Airman may qualify for an extension if they deployed to a combat zone or a contingency operation.

While the 1040-X is a simplified form, Airmen should also keep in mind that a change in one section of their return can have an impact elsewhere. For example, adding a W-2 will increase the total income. This, in turn, will increase the Adjusted Gross Income, which is calculated by subtracting adjustments from the total income. AGI, in turn, affects the taxes owed, the size of some deductions and tax credits, and, ultimately, the refund or taxes owed. Thus, Airmen may find that they're facing a double whammy: not only will that new W-2 increase their AGI, but it may also increase their taxes while decreasing their tax credits.

If filing for an extension or amending returns seems overwhelming, there is help. Even though the tax center at the Grizzly Bend has closed down for the season, individuals eligible for legal assistance may still make an appointment at the Judge Advocate General office for help in filing an amended tax return or requesting an extension. Appointments can be made by calling 731-2878.