New Castle News
NEW CASTLE —
These are times that try men’s souls.
At least those without accountants.
Tax season 2013 is upon us. It’s a confusing time for many Americans, including men and women who prepare returns for a living.
Some area experts agreed to share tips and information for those of us who are trying to make sens of it all.
“Nobody realizes the amount of reading necessary to stay abreast of major tax changes,” said Doug Gardner of Gardner’s Tax & Financial Service.
“It used to be you could go four or five years without major changes, but in the last 15 years, things seem to get more complicated every year.”
The IRS released new information about Medicare surcharges. Beginning Jan. 1, two new tax “surcharges” will apply to individuals making more than $200,000 per year as part of the Health Care Reform Act.
“It’s hard to do any strategic planning when you don’t know until the end of the year what the tax rules will be,” Gardner said.
Debbie Germani, who works at Gardner’s, said they have been flooded with calls from people with questions regarding income from property leases for Marcellus Shale and well drilling.
Germani touched on other issues.
She noted the government is in need of money and is reviewing claims more closely. Maintaining accurate books is a must for businesses.
Small businesses especially need to keep adequate records that will allow an auditor to quickly review. Without proper records, the government will disallow deductions and impose additional taxes, plus penalties,” she said.
In regards to corporations, owners believe they can avoid tax by not drawing a paycheck, but the IRS is watching for that and is actively pursuing those who are not taking a “reasonable compensation” for their work in the corporation.
Incorrect penalty letters from the IRS are on the rise. Germani advises that if you receive such a letter, take it to a tax professional for review.
Energy credits were retroactively extended through 2013. If you put in new windows, doors or water heaters, you may qualify for up to $500. Another aspect of this credit covers GEO thermal heat pumps, wind energy and solar, it is a much more generous credit.
Germani also noted that identity theft in tax returns has become a problem. If you attempt to file your return and it is rejected because the IRS says it has already been received, contact a tax professional for guidance.
Earned income credit fraud issues are a complex topic. If done incorrectly, you are subject to fines and penalties. Be sure you are only claiming a qualifying child for earned income credit. Tax preparers will likely ask for additional information this year.
Education credits have been extended through 2017. Many taxpayers incorrectly assume they don’t qualify because student loans are paying for tuition.
Railroaders and truck drivers are accustomed to taking a per diem for their nights away from home while working. Pennsylvania no longer permits using the per diem. You must have actual documented expenses.
The $250 educator credit has also been retroactively extended.