Tax experts say prepare now for 2009 filings
Published 5:18 pm Saturday, December 20, 2008
BY KENDRA MAJORS
With only about a week and a half left in 2008, the Dec. 31 deadline is quickly approaching for many tax-planning issues.
The Internal Revenue Service is expecting more than 2.1 Alabamians to file tax returns and estimates more than 1.5 million of those to be filled electronically.
“E-filing is so widely used because it helps ensure that you take advantage of tax benefits and end up with a virtually error-free tax return,”said IRS spokesman Dan Boone. “You may even be able to e-file free using IRS Free File.”
For the 2008 tax year there are several new tax deductions or credits.
First-time homebuyers tax credit is one that applies to primary home purchases between April 9, 2008 and June 30, 2009.
Usually this credit must be paid back in equal payments over the next 15 years.
The credit can be up to $7,500 in available credit.
This credit is for homebuyers who have not owned a home in the three years prior to the purchase.
David Nelson, CPA at Haisten, Shipman & Wiggins, PC said it is helpful to let tax preparers know about possible tax credits you may be eligible for.
Nelson also said that putting any bonuses into 401K to max it out is beneficial, as well as any contribution you can make to an IRA.
Another tip Nelson gave is paying fourth quarter state estimates prior to Dec. 31.
Some other deductions and credits to take into consideration include, the new real estate tax deduction. This deduction is available for the 2008 and 2009 tax years. It can help increase standard deductions if the taxpayer doesnt itemize deduction, but pay real estate taxes.
For those who did not qualify or did not receive the maximum amount for the 2008 Economic Stimulus Payment, there is a possibility that the taxpayer may be eligible for a Recovery Rebate Credit.
Remember to know the amount of payment you received. It can be found on the Economic Stimulus Payment Notice.
For those who are attending college or have dependents attending college there are options for tuition and fees deductions.
Some taxpayers may be eligible to deduct qualified tuition and fees up to $4,000.
Still, the taxpayer cannot take both the tuition and fees deduction and education credits such as Hope and Life Time Learning Credits for the same student in the same years.
Nelson says it varies by each circumstance as to which will be more beneficial toward taxes.
Among other helpful deductions and credits are the Educators Out of Pocket Expense Deduction and Earned Income Tax Credit.
Its helpful for taxpayers to have well organized tax records. This will help cut down the time it takes to file and helps reduce stress.
All tax forms and publications can be accessed through the IRS Web site at www.IRS.gov. or by call 1-800-TAX-FORM.
Beware of e-mails claiming to be from the IRS. The IRS does not send e-mails about your taxes.
Forward any suspicious e-mails to email@example.com. It could be an attempt to steal your identity.
Do not open any attachments.
Taxpayers with various types of retirement savings plans should remember when the deadlines for contributions are. For example 401K contributions must be made by Dec. 31, but the deadline for IRAs is not until April 15.
An important tip, for those who have given birth or adopted a child, get a Social Security number as soon as possible in order to count the child as a dependent for the 2008 tax return.
Also, having or adopting a child in 2008 may mean you will receive a larger Recovery Rebate Credit.
In addition to these tips, your personal accountant my have more tips to help you prepare for the tax season. These tips could help both the taxpayer and the tax preparer.
If you have questions or concerns you should speak with an accountant.
Or consult the IRS Web site, it has a plethora of information for tax planning and filing needs.
The latest tax changes are also available at IRS.gov.
Remember to electronically file to help ensure you get all the tax deductions, benefits and credits you are eligible for.