Taxpayer Snafus

Tax Prep & Filing

Taxpayer Snafus

About 40 million filers need to fix their returns; 100 million need new W-4s.

Now that the tax deadline has finally passed -- unless you were affected by the weekend Nor'easter and get a couple of extra days -- we can divulge a dirty little secret ... or two: As many as 40 million taxpayers need to do their 2006 returns again, and 100 million workers should file new W-4 forms at work.


Get Next Year's Refund Now

Taxes: Buy More Time

Dial M for Mistake

The latest batch of tax returns is building an airtight case that millions of individual taxpayers blew it when it came to collecting their share of $10 billion of illegally collected telephone tax. The money was supposed to be refunded this spring via credits on our income tax returns. Although nearly everyone who had a phone at any time between March 1, 2003, and July 31, 2006, deserved the credit, the IRS says that 30% of taxpayers failed to claim it. That means 40 million taxpayers missed the boat ... and a chance to boost their refund (or cut their tax due) by $30, $40, $50 or $60.

The individual amounts might seem small, but, all together, taxpayers left several billion dollars on the table.

All is not lost

It's not too late to claim that credit. The passing of the tax deadline did not slam the door on taxpayers' rights to get their money back. If you failed to claim the refund on your 2006 return, you can file an amended return using Form 1040X to claim it now. That form can be intimidating, but we've prepared step-by-step instructions for completing the form within 15 minutes or so.


If you didn't file a return -- perhaps because your income was too low to demand one -- you can get your phone tax refund by filing an easy-to-complete Form 1040-EZ-T. Because the EZ-T is used by folks who didn't need to file a return, you don't need to worry about missing the April 17 deadline. It doesn't apply. You have three years to ask for your money back, but do it as soon as possible.

Your reward? The refund is based on the number of exemptions claimed on your tax return. If you get $30 if you're single, $40 if you are married, $50 if you're married and claim one child as an exemption, $60 if you're married and claim two or more kids.

Start getting next year's refund

The latest crop of tax returns is also proof that more and more taxpayers continue to have too much money withheld from their paychecks. At the current pace, more than 100 million taxpayers will get tax refunds -- incontrovertible proof that too much tax was withheld form their paychecks. And it appears that 2006 refunds will once again set a new record for the average refund size: more than $2,300.

If you get an average-sized check, it means you're letting the IRS take nearly $200 a month too much out of your paychecks. You can correct the overwithholding-and get more of your money when you earn it-by filing a new Form W-4 with your employer.

We've created an easy-to-use calculator to show you how many extra "allowances" you should probably claim and how much you can add to your paychecks by doing so.