That’s right, the 2012 act not only affected 2013 and subsequent tax years, but some rules were retroactive for 2012, which means a delay for both taxpayers to file and for the IRS to process the returns. If you are taking advantage of the expanded American Opportunity Tax Credit for education expenses, the IRS will begin accepting returns mid-February. Filers taking business credits, residential energy credits or depreciation deductions likely will have to wait even longer to file. In fact, there are 30 forms listed on the IRS website that 1040 filers may need to file that may not be accepted until March.
Creating another potential impediment for those hoping for a quick refund check, the IRS has expanded their fraud prevention efforts this year. The storied government agency has added more than 1,500 employees to work on identity theft and refund fraud issues.
The aforementioned delays may cause tax advisers, preparers and CPAs to be pressed for time if they are unable to file some returns until mid season. To get the most out of your tax expert, preparation on your part will likely make a difference.
Start by segregating your records into related categories. The less your tax preparer has to search for a document, the more time he should be able to spend making sure you harvest all the deductions you are entitled to make. If you are unsure of what documents you need to collect, start by reviewing 2011’s tax return. If you had similar expenses in 2012, look for the documents to substantiate those claims. Some tax preparers offer a questionnaire or organizer that will walk you through the process of collecting your data.
Make sure you have all the needed tax reporting forms from your employers. Some employers may be late sending W-2 or 1099 forms, because they too had to adjust their processes thanks to the last-minute tax act. Once you receive the forms, make sure they reconcile with what you earned. If you notice a mistake, you’ll want to obtain a corrected form before you submit your records to your tax preparer.
While not every receipt or document will result in a deduction, you should still alert your tax preparer to the following: medical expenses incurred during the year; a change in marital status; new additions to your household whether it is the birth of a child or a dependent parent who moved in; mortgage interest and refinance statements; receipts for energy-efficient home improvements or vehicles; work-related receipts; moving expenses if you moved for work; student loan statements; Roth conversions; inherited property or investments and receipts or proof of donations you made.
William G. Lako Jr., CFP, is an executive in residence at Kennesaw State University’s Coles College of Business and a principal at Henssler Financial. Lako is a certified financial planner.The MDJ will periodically publish columns from KSU business faculty.