Q. I am waiting for my tax refund from the government. Is there any way to know how long it will take the Internal Revenue Service to process my return and mail my check? A.N.R .
A. In general, you can expect to wait up to eight weeks after filing to receive your refund. (Three weeks is average if you filed your return electronically.)
You can find out if the IRS has received your return and where it is in the review process by calling the agency’s toll-free, touch-tone number: (800) 829-4477.
Have a copy of your return on hand. You will be asked to punch in your Social Security number as well as the exact amount of the refund you believe is owed you.
You may wonder why you get your refund faster if you file electronically. The answer is that electronic returns--that is, returns filed via computer and modem--are easier for the IRS to process, so the agency is trying to encourage this new form of transmission.
You should know, however, that the IRS does not provide the personal computer software needed to generate these forms, but has allowed a handful of private companies to advertise their products as “IRS accepted.”
The programs are sold in software stores for about $30 to $100. All of them generate the special forms taxpayers most often need, in addition to the standard Form 1040.
Also be aware that only accountants and tax preparers with the special filing software can file your return electronically. So you can expect to have to pay a professional $25 to $35 to file the return you prepared on your personal computer in order to get a quicker refund.
If you do your own taxes, you may decide you are better off pocketing this money and waiting the extra month or so for the refund. But if you want that money right now, electronic filing may be just the thing for you.
For further information about Form 1040PC filings, taxpayers can call the IRS at (800) 829-4477. The code for an audio explanation of 1040PC is 106; the code for information on electronic filing is 112. For written information, call (800) 829-3676 and ask for Publication 1673.
Law Requires Prompt Posting on Pensions
Q. I recently learned that my company has been delaying the recording of my contributions to my 401(k) plan. What is the law? Is there any way I can file a complaint about how my employer is handling these accounts?-- T.G .
A. Section 2510.3-102 of the Department of Labor regulations requires employers to credit employee contributions to pension plans on the “earliest day” those deductions can be “reasonably segregated from the employer’s general assets.”
The regulation further stipulates that this period must not exceed 90 days from the time the money is withheld from the employee’s paycheck.
Obviously, the intent of the regulation is to ensure that employees are credited as soon as possible with any interest their pension contributions earn, and to keep employers from taking unfair advantage of their employees by keeping a portion of those interest-earning contributions for themselves.
Workers who suspect that their 401(k) or other pension accounts are being mishandled by their employers should complain directly to the Department of Labor’s Pension and Welfare Benefits Administration.
In Southern California, workers can write to David Ganz, area director of the Pension and Welfare Benefits Administration, 790 E. Colorado Blvd., Suite 514, Pasadena, CA 91101.
Be advised: This office is set up to investigate only potential abuses. It cannot handle benefits disputes or other pension issues.
Luck Can Trap One in a High Bracket
Q. I cannot believe what my accountant made me do. Because of a onetime fluke-- my wife and I won $171,000 in a contest--our combined income for 1993 was over $200,000. I paid estimated taxes on the winnings, but my accountant told us that we lost some of our mortgage interest deductions as well as our personal exemptions. The result is a total state and federal tax bill of $74,000! I can’t believe that because of a once-in-a-lifetime win, I am suddenly lumped in the same tax bracket as the truly rich. Do I have any recourse?-- R.S .
A. Realistically speaking, no.
Under the new tax law, married taxpayers filing jointly with an adjusted gross income of more than $108,450 lose 3% of most of their itemized deductions on the amount exceeding that limit.
Alternatively, you can give up 80% of your itemized deductions affected by the limits. These include state and local taxes, mortgage interest, charitable gifts, moving expenses and miscellaneous deductions.
Additionally, married taxpayers filing jointly with an adjusted gross income of more than $162,700 lose 2% of their personal exemption deductions for every $2,500 their adjusted gross income exceeds that limit. The deduction is wiped out if your income exceeds $285,200. You have no legal recourse.
For further information about the new tax rules, read Internal Revenue Service Publication 17. To order it, call (800) 829-3676.
NOTE: A recent column on reporting stock sales to the IRS may have confused some readers. Let me elaborate. Most 1099 forms are not filed with a tax return and should be kept with a taxpayer’s records. These include forms 1099-B, 1099DIV, 1099-G, 1099-INT, 1099-MISC and 1099-OID. However, where income tax has been withheld from the payment and the taxpayer receives a 1099-R form, it must be filed with the tax return.