MARQUETTE - Income tax officials and preparers have provided some tips and helpful aids for taxpayers contending with several changes in store for filing income taxes this year.
The Internal Revenue Service said the filing deadline this year is April 17, with the agency encouraging taxpayers to electronically file their returns as the best way to ensure accurate returns and faster refunds.
Taxpayers requesting an extension will have until Oct. 15 to file their 2012 tax returns. The IRS expects to receive more than 144 million individual tax returns this year, with most of those being filed by the April 17 deadline.
Betty Heikkinen-Greenleaf, owner and president of Northern Tax and Accounting in Marquette, said if you don't file for an extension -if you can't file by April 17- penalties if you owe money on your return range from one half of one percent to five percent per month.
Northern Tax and Accounting is one of several firms in the area able to provide tax return preparation, filing and assistance.
Electronic filing is available beginning January 17.
"So file early if you have all of your documents," Heikkinen-Greenleaf said. "File by Wednesday and generally your refund will be direct deposited Friday a week later."
Heikkinen-Greenleaf said there are several additional reminders important to consider:
- The standard deduction has increased by $100 for single filers and $200 for those married, filing jointly
- Exemptions have increased by $50 per person
- There is a new form for reporting capital gains; do not use Schedule D as in the past
- The standard mileage rate was 51 cents through June 30, 2011, but increased to 55.5 cents for the rest of the year.
- In 2010, people were allowed to roll money from a pension or traditional IRA to a Roth and pay the tax in 2011 and 2012, half each year. Remember to add this to 2011 tax returns
- First time home buyer credits are gone except for a few military personnel
- Self-employed people were able to take a deduction for their health insurance in determining their self-employment tax. This is no longer available.
- If you are self-employed, you have to file a return if earned income is over $455.
Heikkinen-Greenleaf said there are major changes for 2012 regarding Michigan taxes, so plan now.
Some of these include:
- Contribution credit to public charities and homeless shelters has been eliminated
- Earned income tax credit reduced from 20 percent to six percent
- Special exemptions for seniors eliminated
- $600 child exemptions eliminated
- Some or all of pensions will be taxed, depending on age
- Political deductions have been eliminated
- Unemployment exemption eliminated
- The homestead exemption computation has been revised where losses from business and rentals are not allowed
Officials with the IRS recently announced a number of improvements to help make this tax season easy for taxpayers, including new navigation features and helpful information on IRS.gov and a new pilot to allow taxpayers to use interactive video to get help with tax issues.
"At the IRS, we're working hard to make the process of filing your taxes as quick and easy as possible," said IRS Commissioner Doug Shulman. "Providing quality service is one of our top priorities. It not only reduces the burden on taxpayers, but also helps in filing an accurate return right from the start."
IRS officials said the best way for taxpayers to get answers to their questions is by visiting the IRS website at IRS.gov. The IRS has updated the front page of the IRS website to make it easier for taxpayers to get key forms, information and file tax returns. The front page also has links to taxpayer-friendly videos on the IRS YouTube channel. More improvements are planned for IRS.gov in the months ahead.
Last year, the IRS unveiled IRS2Go, its first smartphone application that lets taxpayers check on the status of their tax refund and obtain helpful tax information. The IRS reminds Apple users that they can download the free IRS2Go application by visiting the Apple App Store and Android users can visit the Android Marketplace to download the free IRS2Go app.
Individuals making $50,000 or less can use the Volunteer Income Tax Assistance program for free tax preparation and, in many cases, free electronic filing. Individuals age 60 and older can take advantage of free tax counseling and basic income tax preparation through Tax Counseling for the Elderly. Information on these programs can be found at IRS.gov.
For tax law questions or account inquiries, taxpayers can also call our toll-free number (7 a.m. to 7 p.m. local time) or visit a taxpayer assistance center, the locations of which are listed on IRS.gov.
The IRS has begun a new pilot program where taxpayers can get assistance through two-way video conferencing. The IRS is conducting a limited roll out of this new video conferencing technology at 10 IRS offices and two other sites, and may expand to further sites in the future. A list of locations is available on IRS.gov.
Once taxpayers file their federal return, they can track the status of their refunds by using the "Where's My Refund?" tool, which taxpayers can get to using the IRS2Go phone app or from the front page of www.IRS.gov.
John Pepin can be reached at 906-228-2500, ext. 206.