Tax deductions, changes to check out
Plenty of tax deductions get overlooked each year.
Those who worked, bought a car, went to school or tried to be more energy-efficient this year, though, should be able to find some amount to cut off their tax bill.
The Making Work Pay credit is one of the most commonly overlooked deductions, according to Dorothy Stevenson, co-owner of Tax Time, 627 24 1/2 Road, Unit E. The credit can be worth up to $400 per person for working adults making less than $75,000 on their own or $150,000 as a married couple. Those with salaries above that point may still qualify for the credit, but will get less than $400.
Stevenson said many people also mistakenly believe energy credits are just for large installations.
“People forget to put it on their taxes if they did little things, like adding a storm door,” she said.
Another big deduction that often gets overlooked, according to Chris West, principal in charge at Dalby, Wendland & Co., 464 Main St., is one for automobile ownership tax, which appears on a driver’s vehicle registration.
Credits are available for people who went to school last year, including the Lifetime Learning and American Opportunity tax credits, or for people who paid interest on student loans from previous schooling.
There’s not much new to learn about filling out tax forms this year. But there are a few changes to know about before the April 18 filing deadline.
West said some of the more noticeable changes for tax year 2010 include the ability to write off more business equipment and vehicle purchases and the option of splitting the tax for rolling over an IRA into a Roth IRA between two tax years.
The Affordable Care Act created a small-business health care tax credit for businesses that offer health insurance to employees and pay at least half of the cost for that insurance.
“I’m not seeing a lot of people that qualify” for the credit, West said, mostly because employers must pay annual average wages of less than $50,000 per worker and have fewer than 25 employees to qualify.
Patti Reece, an enrolled agent and office manager at H&R Block, 2452 U.S. Highway 6&50, said the one difference that sticks out in her mind this year is the ability to add up to $500 in real estate taxes to a standard deduction is now gone. That one-time deal was for 2009 only.
“(Taxes) didn’t change a whole lot because they extended the Bush tax cuts for a few years,” Reece said. “In a few years, we’ll probably see more changes.”
Tax forms haven’t changed much this year. But some filer’s circumstances have. Anyone who has experienced a short sale, foreclosure, personal bankruptcy or had credit card debt forgiven may want to consider seeking professional tax help, according to West.
“Those tax laws are complicated, and you can sometimes be surprised to find you have income to report,” West said.
Those who lost employment in recent years and have yet to find a new job should note filers can not leave their first $2,400 of unemployment compensation off tax forms like they were allowed to for 2009. All unemployment payments have to be reported this year, Stevenson said.
West and Stevenson said they’ve noticed more people seeking assistance with tax filings this year than last year.
The cost of tax preparation depends on the amount of time it takes to complete a filing, West said. And each year he expects some “doozies.”
“We’re a large firm, so we deal with a lot of large businesses, real estate professionals and high-income individuals, so we’ll certainly have some complicated forms,” he said.