The taxman answereth: Tax tips for 2008
With tax season barreling down and the usage of Internet tax preparation Web sites rising, some tax preparers could be worried about a pinch in their own pocketbooks.
But Norm Riggitz Jr., president of Accounting Associates in West Chicago, has been helping individuals and small businesses with tax preparation since 1987, and said his tax preparation business hasn’t seen a decrease in customers through the years.
Q Have there been any new laws or changes in the way taxes are filed in the past year that could change how people go about filing in 2008?
A The Alternative Minimum Tax was passed by the House in mid-December. It provides a one-year fixed rate for first-time AMT payers. Most people who will have to pay the tax are middle-income families. Taxpayers with a lot of deductions compared to their income are likely to pay the tax.
The PMI, or Private Mortgage Insurance, will require a deduction for new mortgages that were started in 2007. People who refinance still wouldn’t qualify for that deduction. The capital gains rate for the population in the bottom 15 percent of the tax bracket will be zero. Their capital gains in 2008 will be tax free.
Q What are some of the biggest problems people run into when filing their taxes?
A A lot of times they don’t claim all their deductions or they are missing credits, such as education credits, residential energy credits, etc. They go through the forms too quickly and sometimes oversee important items. Some of the forms change on a yearly basis and the new ones can be confusing. Sometimes there are just minor changes to the forms, and other times the whole form is different.
Q Do you recommend that everyone sees a professional to help them file their taxes, or are there cases when it is advised they do it themselves?
A A single person who rents can probably do it on their own because it’s not too complicated. Those who own (homes) or have families should seek a professional because deductions can get confusing. A professional can also give useful hints on tax planning. Also, if you use electronic filing with a professional, you will know for sure whether or not the Internal Revenue Service accepted your return.
Q What are the benefits of filing electronically?
A It takes between one and two weeks to receive your return. If it’s done on paper, which I call the old-fashioned way, you can expect it to take between four and eight weeks.
Q What is the window to file taxes in 2008?
A The first date to file is Jan. 12, and it closes Apr. 15.