Last minute tax tips from experts
by Mark Andrews
Apr 09, 2012 | 1298 views | 0 0 comments | 14 14 recommendations | email to a friend | print
The deadline for filing taxes and making any payments to the federal government is a little more than a week away, Tuesday, April 17. Local Certified Public Accountant Gary Fox and H&R Block have provided The Daily Tribune News with some last minute advice for those who have yet to see what money they owe or what money is owed to them from the government.

Fox offered tips on how to help shelter one's income during tax time.

"The biggest thing is a lot of people don't realize an [individual retirement account] deduction can help shelter their income, so it's always smart to do a traditional IRA if you can," Fox explained.

He said parents with children in college also are in luck for finding an additional tax credit.

"It's always a good thing if you have a child in college and you're paying tuition for that child, the first four years you can get a tax credit that's up to $2,500 per year for tuition and eligible, course-related material books," Fox said.

As taxpayers face the growing cost of inflation and gas, Fox noted areas considered high-risk that could result in an audit.

"Where they're having most of the trouble with fraud is on Schedule C, which is the sole proprietorship schedule, and people are inflating expenses on their Schedule C that they don't really have to shelter whatever income they have. So that's a pretty dangerous thing to do because that's a big red flag," Fox said. "But basically, as long as what you're trying to deduct is a legitimate expense, you should be safe."

He explained the benefits of using a CPA to file one's taxes.

"A certified public accountant is someone who every year is required to have 40 hours of continuing professional education, and for most CPAs, that tends to be in the tax law area. So they're going to be up to date on all the current tax codes and changes, so they'll keep you aware of all the credits that are available for you and keep you from making mistakes," Fox said. "It's really more of an investment than it is anything. Maybe not every year they'll find something beneficial for you, but they're going to find something every three or four years, I promise.

"... I have seen tax returns that have been brought to me from prior years, because you always want to get a prior year return, and there had been some pretty serious mistakes that weren't in the taxpayer's favor."

He added that while many are struggling and unemployed, such individuals may still be susceptible to filing taxes.

"Only certain government benefits are taxable, for example, unemployment compensation is taxable, so you have to claim that and basically any government money you receive, if you get what's called a 1099 G on it, it's taxable and you need to file a return if it's above $3,700," Fox said.

H&R Block provided the following advice:

* Avoid silly mistakes. In a haste to meet the tax deadline, people often make costly errors such as mixing up names and Social Security numbers, selecting the wrong filing status, claiming ineligible dependents, etc.

* Be aware of commonly overlooked credits and deductions. There have been close to 4,500 changes to the tax code in the past decade. Given the constant changes, it's no surprise some taxpayers miss out on available tax benefits. Tax credits and deductions most commonly overlooked include: education credits, earned income tax credit and energy efficiency credits.

* Seek help from qualified professionals. Whether you visit a tax preparer in person or use a digital tax preparation product, make sure the service you choose is backed by tax professionals. For example, H&R Block offers options for taxpayers to file online, in person or via smartphone and guarantees the maximum refund.

* Filing an extension is not an extension to pay. If you file an extension, you have until Oct. 15 to submit a completed tax return. The new IRS Fresh Start initiative provides some relief for struggling taxpayers who owe but taxpayers should estimate their bill and send at least 90 percent of what they owe by the April 17 filing deadline to avoid penalties and fees.