Local experts offer tax season advice
Published 12:06 am Sunday, February 23, 2014
When dealing with contracts, it’s often said the Devil is in the details.
When filing a tax return, it may be the dollar that’s hiding in the details.
Taxes aren’t due until April 15, but the Internal Revenue Service and independent tax preparers alike agree that filing earlier is better. According to the IRS, three of four filers will get a refund, with 90 percent of refunds being issued within 21 days.
In 2013, the average refund was $2,755.
But while most people are aware of deductions they can make to increase their refund — or at least reduce their tax liability — there are a few areas that are overlooked, volunteer tax preparer Sondra Redmon said.
Working with the Volunteer Income Tax Assistance program on behalf of LaSalle Community Action in Concordia Parish, Redmon said she often sees people missing deductions that can make a big difference.
For example, if someone has moved more than 50 miles to take a new job, they can deduct a huge range of the costs incurred doing so, she said.
“They can deduct the cost of a moving van, the mileage they incurred if they used their own vehicle and any expenses they had in transition, for example if they had to stay in a hotel along the way or if they had to rent temporary storage,” she said. “If you’re moving, hold onto all receipts and keep mileage information, because it can make a difference.”
Likewise, many filers don’t know they can often claim head of household if they are supporting someone, even if that person is not their child or a direct relative, Redmon said.
In some instances, that could include a live-in paramour, she said.
“Often being able to claim head of household will depend on if that person is making any income, but it is an option many people miss,” she said.
Those seeking to make deductions for charitable contributions need to make sure the contribution is clearly documented, said Moses Ard, a certified public accountant with Silas Simmons.
“The IRS is getting a little more picky about looking at charitable contributions and making sure certain legal texts have been included by the charitable organization on the documentation,” he said. “If that text is not included on the document, (the deduction) is subject to being denied.”
Whether filing taxes by yourself or taking them to a tax preparer, a key to making sure things move quickly is being organized, Ard said.
“People will occasionally bring items in, and they are just kind of strewn together, and I have to spend a decent amount of time looking through them. If they are organized it definitely helps speed things along,” he said.
“The most time-consuming thing is when we have to track down information.”
The biggest change in tax preparation this year is a net investment income tax for those who make more than $250,000 married filing jointly, Ard said.
“The tax actually came into effect with (the Affordable Care Act) in January 2013, but we are really just now encountering it,” he said. “It is essentially a 3.8 percent tax on investment income, applicable to investment income, interest and dividends.”
What it will mean for the process of filing taxes, however, is still a question that will have to be answered.
“To this point, the IRS still hasn’t released the instructions on how to complete it,” Ard said. “We have the forms, and a lot of the forms say, ‘see instructions,’ and we don’t have the instructions.”
For those whose income isn’t at the $250,000 level or who are just self employed, it’s important to remember to document all income, whether tips from service industry jobs or cash paid for independent work.
“I think one of the major concerns is that they will bring W2 (forms) and may not realize that Social Security is also taxable, unemployment (benefits are) also taxable,” Redmon said. If they earned money doing anything for which they do not receive a W2, they still have to report it.
“If you have done housekeeping for your neighbor and they paid you, that is reportable income.”
For those who feel comfortable filling their taxes themselves, the IRS offers a free online filing service for those whose income is less than $58,000 annually at irs.gov/uac/Free-File%3A-Do-Your-Federal-Taxes-for-Free.
The IRS also offers electronic filing for those whose income exceeds $58,000 at the same address.
For those who may need some help with filing their taxes, VITA will have representatives at the Ferriday and Vidalia branches of the Concordia Parish Library Tuesday, and Redmon said the program will return to the library twice in March.