Tax preparation season gearing up for April 15 deadline
With the April 15 filing deadline beginning to loom larger, accountants and tax preparers in Auburn and around the country are set to move into the crush of tax season.
Iwan Djahjadi, Liberty Tax Service franchise owner for the Elm Avenue branch in Auburn, said that there have been some logistical bumps along the tax pathway this year, starting with the IRS extending its start on e-filings three times after Tax Act negotiations lasted into early January.
Another problem ran through this past Thursday, when people wanting to file for the education tax credit had to wait until forms were available.
“It’s unfortunate because we have a lot of students,” Djahjadi said.
With delays for filing, Djahjadi said there seems to be a pent-up demand from people who are anticipating a refund.
“Everybody keeps asking ‘Where is my refund,’” he said. “Especially with the delay, people are more and more desperate to get it as quickly as possible.”
As the deadline approaches, Djahjadi said filers should be reminded that they can get their taxes calculated now and if they owe the government money, they have until April 15 to pay.
And to keep things moving at Liberty Tax, Djahjadi said his advice is for people who qualify for earned income tax credits to bring along proof that each dependent lives in the same location. That could come in the form of mail to the address with the dependent’s name printed on it.
“It would save a trip,” he said. “The IRS has a $500 penalty for tax preparers if they fail to include it.”
Ken Tokutomi, of Auburn accounting firm Tokutomi & Caruthers, said that up until Thursday, clients were being held back from electronically filing some of their forms as the Internal Revenue Service and software companies played catch-up with new tax regulations passed Jan. 2.
“We had to sit on them,” Tokutomi said.
One of the bigger impacts has already hit taxpayers in the pocketbooks, with the decision that started after the new Tax Act was approved by Congress on Jan. 2 that returned the Social Security payroll withholding to 6.2 percent of wages – a 2 percent increase from 2012.
“Technically it was a tax increase but social security isn’t considered a tax,” Tokutomi said.
But the hit could have been more for taxpayers – and Congress could have instituted more changes during “fiscal cliff” negotiations. Among the possibilities on the bargaining table was increasing taxes for couples earning more than $250,000 a year. There was also talk about stopping some deductions for mortgage interest and charitable giving.
“They were talking about cutting a lot of the credits,” Tokutomi said. “But the political reality for something like mortgage interest is that Realtors, bankers and other lobbying organizations will be pushing to keep it.”
Tokutomi, who calculates he has been preparing tax returns for 35 years, said that this year’s number crunching will be far less taxing for accountants than years such as 1986, when massive changes took place in the Tax Act.
At Bobs Brook & Briel, accountant Suzanne Briel said that it’s not unusual for Congress to wait until the bitter end of the deadline period to make a deal and hold some parts of the filing process up.
“We’re used to having forms delayed but this seems to be the first year they’ve delayed the e-filings this long,” Briel said. “The result has been a lot of everyday taxpayers waiting to e-file.”
Briel said that Bobs Brook & Briel of Auburn also noticed the jump in Social Security payroll withholding in the form of customer inquiries early in the year as the new numbers translated into fewer dollars in take-home pay.
“It threw people for a loop,” Briel said. “But it was a case of taking away a temporary tax holiday.”
Concerns about possible tax increases during fiscal cliff negotiations had people concerned.
“But it turned out to be a whole lot of panic over nothing,” Briel said. “Congress tends to do this every year – and they’ll do it again next year. As CPAs, we get used to it but it really concerns everyone else.”