Written By Sherwood Kohn
At this time of year tax preparers are always busy, getting ready for the oncoming onslaught of clients filing IRS forms.
But the pressure will be greater in the coming year. Almost the entire income tax scene in 2011 is up for grabs.
Everything, according to Alverta “Sandy” Steinwedel, the executive director of the Maryland Society of Accountants, and Society members Michael Blair of Blair & Associates, Westminster, and Shelby Bowles, CPA, of Newburg, Maryland, is slated to change next year. For openers, President Obama has announced his intention to seek an overhaul of the nation’s tax code.
The IRS is updating its software. Several categories will be affected. The IRS recommends that taxpayers claiming deductions on Schedule A (mortgage interest, charitable deductions, medical and dental expenses and state and local taxes), as well as those taking educator expense and higher education and fees deductions, should wait until mid-February to file.
Eligible taxpayers can still claim an energy credit for 2010, but that may change in 2011. The tax deduction for mortgage interest, available to homeowners for nearly 100 years, might disappear in 2011. The Bush-era tax cuts did not expire at the end of 2010. “The health care issue,” said Steinwedel, “is up in the air.”
When you file this year, though, paid tax preparers, who have not been regulated before, are now subject to regulations and required to have a PTIN (Professional Tax Identification Number).
But, warns the Maryland Society of Accountants, taxpayers should be aware, be very aware. And question, question, question.
Here are some cautionary guidelines:
- If you are employing a professional to prepare your return, said Blair, you should determine if he or she is “substantially participating in the preparation of your return and representing you in its filing.”
- Before using a professional, ask if he or she is registered and ask to see his or her PTIN. Preparers are required to register with the IRS before they can file your return. Preparers can be held accountable under IRS rules. “Consumers should ask,” said Bowles, “are you the person who will be signing my return?”
- The IRS is moving toward predominantly electronic filing. Ask how many returns your prospective preparer is doing. If the preparer is filing more than 100, he or she must file electronically. If you want your tax preparer to file your return on paper, you must sign a waiver to that effect.
“Refund anticipation loans” – loans based on expected tax refunds – are “far from ethical,” said Blair, and should be a thing of the past. If you are promised one, he said, beware. Interest rates on the loans are exorbitant. And the law requires complete disclosure of the terms.
So-called tax resolution firms that advertise that they will represent you in disputes with the IRS are legal, but often unethical, said Blair. “If it sounds too good to be true, it is.” The IRS is cracking down on them.
- You are ultimately responsible for your tax return. Do not sign the document unless you have reviewed it thoroughly.
- Tax-preparation computer programs are not only expensive, said Bowles, but difficult to navigate and may not get you refunds to which you are entitled. If you intend to prepare your own return on line, you can get help by logging onto the IRS web site directly or visiting your local IRS office in person.
If you have not been working on your taxes since September, you are heading into a data jam. “Next year,” said Bowles, “don’t just wait until February, March or April to plan for your taxes.” – S.D.K.
For a list of professional tax preparers in Carroll County, contact the Maryland Society of Accountants (1-800-922-9672 or www.msacct.org) or visit, www.carrollmagazine.com.
