April 15 is a very important deadline, and not just in terms of filing your 2002 tax return. The IRS says 1.9 million Americans should have received a refund on their 1999 taxes, but because they didn't file a tax return for that year, they haven't received their money. We're not talking peanuts here. The total which could be returned is $2.5 BILLION!
In some cases, you might have been eligible for the "earned income" credit, but didn't know about it. The IRS says other cases involve individuals who had taxes withheld from their paychecks, but didn't submit a tax return because their total income fell below the level at which you must file.
The IRS estimates about half of the folks eligible would get a check in excess of $511. However, in order to collect, you've got to submit your 1999 tax return by the 3-year deadline of April 15, 2003. There's no penalty for filing late if you are due a refund.
Residents of every state are eligible. Here's just a sample of the total estimated refunds awaiting those who file:
I bet I know what you're thinking: "Well, if the IRS knows people are owed this money, why don't they just send it back?"
Not that simple, my friend. While the folks in Washington can estimate what your income might be based on W-2 information from an employer, 1099s received for income and dividends, and other sources, the IRS does not know for sure what your total income and deductions were. For example, they would not know you had a loss on an investment you sold or income for which you did not receive a W-2 or 1099.
In the words of the IRS, "Our tax system is one of voluntary compliance and individual reporting." This boils down to: If you want the refund, you've got to submit the return. Make sure you file for 1999 on a 1999 tax return -- not on the one for 2002. You can download tax forms for prior years by visiting the IRS website (www.irs.gov) or by calling 1-800-829-3676.
Even if this doesn't apply to you, check with other members of your family. Elderly parents, for instance, might have been told they didn't need to file because their income fell below the filing threshhold. What about teenagers who only worked part-time or over the summer?
If this money isn't claimed by April 15, it becomes the property of the U.S. Treasury.
I've read that if I'm a sole proprietor and I'm the only one in the business and I set up a Keogh plan, that those assets may not be covered under ERISA. Is this true?
A "Keogh" is a retirement savings plan for a self-employed person. Frankly, it's not used much anymore since the introduction of SEPS (Simplified Employe Pensions) and SIMPLEs (Savings Incentive Match Plan for Employees), two other retirement plans for small busineeses.
Nevertheless, your information is correct: in general, a Keogh does not enjoy the protection from creditors that a "qualified" retirement plan, such as a 401(k), have. Thus, if you were sued and lost the case, your retirement account would be at risk of confiscation if you didn't have other assets to cover the claim.
Here's where the "in general" part comes in: While Keoghs typically just cover the self-employed business owner and, perhaps, a spouse who works for the business part-time, they can be expanded to include other employees. Once a Keogh includes what are called "common law" employees (anyone other than the owner and his or her spouse), then it is subject to all of the reporting, non-discrimination, and coverage rules of the Employee Retirement Income Security Acty passed in the 1970s. In addition, it would receive the same level of creditor protection as a "qualified" plan.
But if you are the only employee of your company, Chris, this is not available.
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