By: Marlana Ward
When most people think of spring, thoughts of flowers, birds, and warm weather come to mind but for some spring brings anxiety and stress over the April 15th tax deadline. With only a few weeks remaining before the IRS deadline, many Americans are scrambling to find receipts, check stubs, W-2s, and hoping for any deductions they may be entitled to take.
The IRS website, www.irs.gov, reports that as of February 28, over 58 million returns have been filed. Tax preparation offices have been busy since W-2s began arriving in mid-January even though some people had the misconception that because the IRS was postponing accepting returns, that they could not prepare their forms early. Our office has been very busy this year, said Jerry Fritz of Fritz Tax Service in Abingdon, Virginia. We have seen a substantial growth of new clients as we have for the past several years.
Over half of Americans choose to have their taxes prepared by professionals. With tax laws ever changing, the option of having someone trained to interpret these laws is a very attractive choice. According to the IRS website, average return amounts are higher for those who have used a professional tax preparer. All of our preparers have had at least seven years experience in our office, said Celeste Simcox of H&R Block in Mountain City. Our preparers are required to complete at least 80 hours of tax law review, update, and program training each year.
This year there has been an increase in citizens choosing to prepare their taxes at home with free or purchased tax software. The IRS reports that self-prepared returns have increased over six percent for 2014. With IRS.gov offering its own program for free filing, the convenience of filing your tax return has never been easier. Individuals have to be careful though because the programs can only be as accurate as the information the user enters. If you do not know the tax code, you can interpret something totally wrong, or you can not put something in that would give you a credit or deduction that you dont know about, warned Simcox.
This year, there were no major tax law changes to speak of. However, next years returns will be complicated with the implementation of the Affordable Care Act and the fines associated. Fines will be assessed on the federal tax return of those who choose not to have health insurance.
The most important documents to retain for tax purposes are income documents. Any information used on a tax return should be kept by the taxpayer for seven years, Simcox reminded. Information on investment property should be kept until it is sold or disposed of. Receipts for deductions are also very important, especially for farmers and other self-employed individuals, Fritz added.
Common deductions missed by many taxpayers are energy efficient home improvements including energy efficient appliances, education expense deductions such as books and tuition, Earned Income Credit for those with no qualifying children, and the savers credit where you may be able to take a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan. Other deductions that can be taken but are often overlooked include out of pocket charitable donations, student loan interest, and childcare credit.
Those with the most complicated returns could be the self-employed. There are many deductions that can be great for the self-employed but great care must be taken in claiming those deductions. As far as home office deductions, you must have a specific place in your home used regularly and exclusively for business. A spot at the kitchen table does not qualify but if you have the area that does, you can use a percentage of all your home expenses for this deductions, Simcox explains. Other home expenses that may be included in your deductions if you qualify are insurance, property tax, utilities, repairs and maintenance, security, and pest control. Again, you must be cautious when filing as self-employed and claiming deductions as the IRS is closely monitoring due to abuse.
The IRS has issued a warning to all taxpayers about tax scams occurring this year. The scams are targeting taxpayers by threatening individuals into giving personal information that is then used for identity theft. These offenses are perpetrated by phone or online. The phone scams can be quite elaborate with some going so far as to mimicking the IRS phone number on the caller id, giving false IRS identification numbers, and even using others to give the impression of call center activities in the background. Do not give any information to callers requesting personal or financial info. Call the IRS at 800-829-1040 and let them determine if there is an issue.
Online phishing schemes are also a tricky way for identity thieves to take advantage of taxpayers. Sites can be designed to look legitimate and once your information is entered, thieves can access your accounts or set up fake accounts in your name. The IRS states that they never request financial or personal information through emails. You may report any suspicious emails you receive to [email protected]
Even though many dread it, there are some great things about April 15th. Jackie Robinson made his debut with the Brooklyn Dodgers on April 15th, 1947 where he scored the winning run. Its also recognized as National Rubber Eraser Day. Also, dont forget to look for the freebies and discounts that many national merchants offer the bewildered and exhausted on Tax Day as a cup of coffee or small dessert might be just the thing to get you through the day.