Tips for choosing a tax preparer
More than 575,000 Kansans will hire someone to prepare and e-file their 2008 tax return this year, according to projections by the federal Internal Revenue Service.
The IRS urges people to be careful in picking a tax professional. The taxpayer is responsible for information that is filed no matter who the tax professional is.
Here are some things to consider when picking a tax pro.
• Do you know someone who has used the tax preparer in the past year? Were they satisfied with the cost and service they received? What were the preparer’s qualifications? • Is the preparer affiliated with a professional organization that holds them to a code of ethics? How long have they been in business? • Avoid preparers who base their fee on a percentage of the refund or claim they can obtain larger refunds than other preparers. • Will the individual or firm be around to answer questions about your tax return months, or even years, after it is filed?
February is always a busy month for income tax preparers, but this year it’s a little busier for some.
“It’s definitely more than normal. More people are wanting to get their tax refunds early,” said Jerrad Humerickhouse, owner of Hume’s Econotax, 305 E. Seventh St.
And that’s because some of those people are unemployed and need their refund more than previous years, Humerickhouse said.
As the nation’s economic recession lingers into 2009, there are several important tax matters that filers need to keep in mind, Humerickhouse and others tax experts said.
Among them are tax benefits for the unemployed who are still paying health insurance premiums. They can withdraw money from an individual retirement account or pension plan and not have to pay a tax penalty if the money is used to pay the premiums, Humerickhouse said.
“That’s something a lot of people don’t know about,” he said.
At the same time, unemployment benefits and severance payments are not tax-free.
“It’s all taxable at this point,” said Debbie Hanson, district manager for Jackson-Hewitt Tax Service in Lawrence and Topeka.
New provisions that would help taxpayers in a recession are being discussed but they won’t have an effect until next year, she said.
“The government is making some concessions in light of the economy,” Hanson said.
One of the biggest complaints from customers heard by Robbie Arney, marketing coordinator for H&R Block in Lawrence and Topeka, has to do with dwindling 401(k) savings and other investments.
If you have money in a mutual fund, however, you may still have to pay a capital gains tax even if that fund lost value last year.
If the fund or a stock paid dividends to an individual holder, that is still taxable, even if the fund’s value took a nosedive.
“They made money, even if they didn’t make a lot of money,” Arney said of the funds.
The Internal Revenue Service urges tax filers to see whether they are eligible for earned income tax credits. If you earned less than $42,000 in 2008 you may be eligible. The average family that qualifies gets about $1,900 back from the IRS.
Last year more than 5,600 Douglas Countians qualified for EITC and received more than $9.05 million. The average refund was $1,597.
You can find out whether you qualify by calling 1-800-829-3676 and request “public 596, earned income credit.” Or you can go to the IRS Web site, irs.gov, and use the “EITC assistant.”
The IRS also urges filers to make sure they have their W-2 forms, which lists their wages, salaries, tips and other earnings. If you don’t have your W-2s by now contact your employer or the IRS at 1-800-829-1040.