The IRS estimates that 146 million individual tax returns would be filed for tax year 2023 (tinyurl.com/4acck2ja), and as of March 15, more than 71.5 million individual income tax returns had been filed (69.5 million of them being e-file returns), with 49 million refunds (worth a total of nearly $153 billion), according to the IRS (tinyurl.com/3t27nfkv).

One thing that the IRS warns can hinder your receiving a possible refund is an error that leads to a delay in processing your return (tinyurl.com/48z498sz). The following are some things to double-check before sending your return to the IRS:

Correct names, birthdates and Social Security numbers are needed for each dependent that is listed on your individual income tax return. The IRS notes that the Social Security number and person's name "should be entered precisely as indicated on the Social Security card." In cases when the person does not have a Social Security number, an Individual Tax Identification Number (ITIN) should be listed.

As I pointed out in a recent column, make sure to report all taxable income. According to the IRS, "This includes various sources of income such as interest earnings, unemployment benefits and income derived from the service industry, gig economy and digital assets." For more information on what income is taxable, read IRS Publication 525 (tinyurl.com/ycka3r5r). If you have any digital assets, you must answer the question on the tax return that asks about such. See tinyurl.com/25skd7pj.

Other important items you'll need to consider:

-- Remember to sign and date your return. If you are married and filing jointly, make sure both you and your spouse sign and date the return.

-- What if you are self-preparing your taxes and filing your form electronically? You'll need to sign the form and also input your adjusted gross income from the prior year. See tinyurl.com/2ncfw6u7 for more details.

-- The IRS encourages taxpayers to choose electronic filing. According to the IRS, "Electronic filing minimizes mathematical errors and identifies potential tax credits or deductions for which the taxpayer qualifies." Also, "Opting for electronic filing and selecting direct deposit is the fastest and safest way to receive a refund."

-- If you are choosing direct deposit for your refund, make sure that the routing and account numbers are correct (tinyurl.com/2s3bypv3). That way, you can avoid a delay in receiving your refund or having the refund misdirected.

-- If you decide to submit a paper tax return, make sure to review Form 1040 (tax year 2023), Page 114 (tinyurl.com/y8hays3r), to find the correct address for mailing your return, which is based on the state where you live.

Make duplicates of your signed tax return for your personal records. "Typically, taxpayers should retain records supporting income, deductions or credits claimed on their tax return until the period of limitations for that specific tax return expires," according to the IRS. More details on the length of retention for tax records can be found in IRS Topic 305 (tinyurl.com/5duz3fc8).

If you need to file a six-month extension request because you are not able to meet the April 15 tax-filing deadline, you can do so using the IRS Free File (tinyurl.com/2hb5rzaw) or by filing Form 4868, "Application for Automatic Extension of Time to File U.S. Individual Income Tax Return" (tinyurl.com/ycxmrdvk). An important note: While an extension gives you more time to file, "tax payments are still due on April 15 for most taxpayers," according to the IRS.

Taxpayers also can make a full or partial payment of their estimated income tax (indicating that the payment is related to an extension) using Direct Pay (tinyurl.com/5fxzd77d), the Electronic Federal Tax Payment System (tinyurl.com/39j68y24) or a digital wallet or debit/credit card. With this type of payment, a taxpayer will avoid having to file a separate extension form. See tinyurl.com/mryrd25w for more details.

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A reader reached out with a question about interest the IRS charges on tax underpayments.

For the 2023 tax year, "Samuel" paid a larger estimated tax than was due to cover his tax obligation. But the year before, he underpaid, and as a result, he owes the government interest (a penalty) for the underpayment for the 2022 tax year.

Samuel's question really has to do with reciprocity and ultimately, fairness: "Will the IRS now pay us any interest on this overpayment? It seems only fair that if they can charge us interest or penalty on an underpayment, they should then pay us interest for using our overpayment for the year."

In Samuel's case, an overpayment followed an underpayment.

According to an IRS spokesperson, this type of situation "is no different than a wage-earner who overpays their taxes through withholding and gets a refund as a result of filing their 2023 return."

"Normally, a taxpayer won't receive interest on their refund, unless it takes a long time to process their return," the spokesperson said, adding, "That happened a lot during the pandemic, and largely for that reason, the IRS had to pay interest on a relatively large number of refunds."

There is a special provision for those who make estimated tax payments, according to the IRS spokesperson: "If you overpay your 2023 tax, instead of receiving a refund, you can choose to apply that overpayment to your 2024 estimated tax payments. If you file on time, your overpayment will count as an estimated tax payment made on April 15, 2024, regardless of when you would have received it, had you chosen that option."

The basis for how taxes are paid and penalties levied goes back to the "pay as you go" nature of the tax system, which was set by Congress, not the IRS. The Current Tax Payment Act of 1943, passed during World War II, called for withholding taxes from paychecks and paying those taxes to the government (tinyurl.com/38kk2c68).

As the IRS explains on its webpage "Pay As You Go, So You Won't Owe" (tinyurl.com/vzjy8fk2):

"This means that you need to pay most of your tax during the year, as you receive income, rather than paying at the end of the year. There are two ways to pay tax:

"[1] Withholding from your pay, your pension or certain government payments, such as Social Security.

"[2] Making quarterly estimated tax payments during the year.

"This will help you avoid a surprise tax bill when you file your return. You can also avoid interest or a penalty for paying too little tax during the year. Ordinarily, you can avoid this penalty by paying at least 90 percent of your tax during the year."

According to the IRS spokesperson, the tax penalty "is designed to encourage people who either don't have withholding, or don't have enough withholding, to make these payments, make them timely and make them at sufficient levels."

The IRS provides more details on its webpage "Underpayment of Estimated Tax by Individuals Penalty" (tinyurl.com/477e9y4s). Included is information on how the penalty is calculated, interest on the penalty (additional details on interest can be found at tinyurl.com/2b9nsuhn), and removing, reducing or disputing a penalty.

"Of course, as we all know, there are many practical problems with figuring and making estimated tax payments, but that's also why there are thresholds and exceptions in the law that are designed to ease the burden," the IRS spokesperson said, adding that "[t]axpayers can, and often do, vary their estimated tax payments throughout the year to accommodate fluctuations in income."

If you are new to paying estimated quarterly taxes, be sure to review the IRS webpage "Basics of estimated taxes for individuals" (tinyurl.com/3w9ekftz) and IRS Publication 505, "Tax Withholding and Estimated Tax" (tinyurl.com/3mwahezp). Also, if you live in a state that has a state income tax, you will want to review the state's instructions related to who is required to make estimated tax payments.

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Have you seen TV or direct mail ads for reverse mortgages? I'm going to guess that you have, especially recently, since the volume of mail ads has increased dramatically over the last few years.

The most common type of reverse mortgage is the home equity conversion mortgage, or HECM. Insured by the Federal Housing Administration, the program "enables you to withdraw a portion of your home's equity to use for home maintenance, repairs, or general living expenses," per the U.S. Department of Housing and Urban Development website (tinyurl.com/39fcd5n2).

According to the Consumer Financial Protection Bureau, the volume of reverse mortgage direct mail ads increased from 11 million ads per year in 2019 and 2020 to 44 million in 2021 and 48 million in 2022 (tinyurl.com/mrykhpys).

Who is the audience? Largely low- and middle-income households, with 74% of the direct mail ads going to age-62-or-older households with incomes below $75,000. A CFPB analysis of 2021 1-year American Community Survey data indicated that this demographic (age and income) represents 53% of U.S. households. According to U.S. Census Bureau, 78.9% of householders age 65 and older owned their own home as of the second quarter of 2023. (Source: Table 7, Homeownership Rates by Age of Householder, tinyurl.com/32dhy423.)

The ads go beyond acquiring a reverse mortgage. They are also directed to households that already have a reverse mortgage, with offers of refinancing, which raises a concern. About 51% of the ads that went to people in the West region were refinancing ads in 2021-2022.

Overall, about 84% of direct mail reverse mortgage ads went to people living in states in the South and West during 2021 and 2022, "where a somewhat higher share of older homeowners report difficulty making ends meet and difficulty making mortgage payments."

The CFPB cautions: "[T]he increase in ads for reverse mortgage refinances are concerning in that they suggest lenders may be targeting existing reverse mortgage borrowers for costly closing costs rather than providing them with a new product that reduces the effect of economic hardship."

The idea behind reverse mortgages is helping older homeowners with financial needs. However, "[t]ypically, a reverse mortgage is a more expensive product than other home loans. For some older adult homeowners, using their equity to avoid monthly mortgage payments is a tradeoff they are willing to accept," reports the CFPB. "For others, it's a product that jeopardizes their financial security and may prevent them from leaving their home to their heirs."

The CFPB goes further: "Although the intent of the HECM program is to meet the needs of older adult homeowners with lower incomes the data nevertheless suggests that reverse mortgage lenders are potentially targeting vulnerable populations with an expensive product that may not be best suited for their individual housing and financial needs" (tinyurl.com/mrykhpys).

While the recent CFPB study focused on direct mail ads, TV ads for reverse mortgages have been prevalent for some time. In a 2015 CFPB study, focus group participants "reported seeing television advertisements frequently, even several each day" (tinyurl.com/5f7kc4k9). The ads "frequently feature celebrity spokespeople."

However, none of the participants could read the fine print used in the TV ads. Many consumers "expressed surprise when shown a printed ad stating interest rates." Several participants believed that reverse mortgages were "provided by the government and that therefore repayment would not be required."

While reverse mortgages can create a safety net in the right cases, they can backfire in the wrong cases. As always, be prepared to do your homework before getting a reverse mortgage.

How? Here are some resources:

1. If you plan to do a reverse mortgage, participate in a required consumer information session given by a HUD-approved HECM counselor (tinyurl.com/33avv9ku).

2. The CFPB provides an overview of reverse mortgages at tinyurl.com/3456m2jc.

3. The Federal Deposit Insurance Corp. also offers information about reverse mortgages at tinyurl.com/5n6kz5rv.

A reverse mortgage may be the right decision for you, but be sure to do a deep dive into the details before you agree to one.

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