The Herald Bulletin

Evening Update

Local Business

February 9, 2013

Is confusion tax-deductible?

Self-filers may have to read between lines

ANDERSON, Ind. — Do you have your W-2? Your 1040-EZ? What about form 1099-C?

Sorry, first-time tax preparers, confusion isn’t deductible. But fortunately, there’s a wealth of information out there to help guide the not-so-savvy do-it-yourselfer in advance of the April 15 federal tax filing deadline.

“There’s a lot coming at you at once,” said H&R Block tax advisor Dan Royer, who gave a seminar on tax preparation at Anderson Public Library last week.

In 2010, the Internal Revenue Service said about 64 percent of individual tax returns filed through April 2 were done by tax pros like Royer, who’s been filing on his own since 1952. Some of the remaining 32 percent “self-filed.”

For some of “self-filers” — including recent college grads, retirees and other likely first-timers — the 4,000-plus-word tax code can be overwhelming, especially when entering the wrong number on the wrong line could lead to missed deductions or an audit.

“Whether folks should attempt to prepare their own tax return depends on a couple of things,” Royer said. “First would be how much they know about tax law and application, and secondly, the complexity of the return they are attempting to prepare.”

All tax returns are relatively complex, but some, like Marla Austin’s, are a little simpler.

Austin’s had her taxes done professionally for years. But this year, she’s considering tackling them herself since her kids have graduated college and she and her husband have retired.

“There are fewer deductions to worry about, I think,” said Austin, 55, of Anderson, who said she’s using last year’s return as a guide. “I’m not as concerned about missing something.”

Missed deductions are most D.I.Y.-ers’ biggest mistake, Royer said.

“The most common problem I have seen with ‘self-prepared’ tax returns is that the taxpayer has failed to get all the credit they have coming to them, thus coming up short on the amount of their refund,” he said.

He advises starting early — collect your work-issued W-2, receipts and find all the forms you need online or at your local library.

“The more time they give themselves, the better their chances of getting everything they have coming to them,” Royer said.

And be aware of changes to the tax code, he said, noting Congress has made over 5,000 such changes since 2001.

In Indiana, there are a few taking effect this year, including a series of 24 “add-backs” — where taxes paid based on income to the state, which were deducted on the federal return, have to be added back on your state return.

To avoid confusion and worry, some 80 percent of 2010 self-filers opted to use tax preparation software or websites that “advertise they’ll ‘guarantee’ their calculations,” Royer said.

However, “If you read the fine print, and you make a mistake filling that thing out, they probably won’t back you up” in the event of an audit, he said.

But even in the most confusing tax situation, it’s possible to get a decent return.

“I had a lady who was newly divorced and had custody of the minor children, very apprehensive and fearful of what the result was going to be,” he said. “When we finished, she got a very nice refund, and she was so relieved and grateful, she started to cry.  Now that’s what I really like about this job, when I can help people like that.”

Find Baylee Pulliam on Facebook and @BayleeNPulliam on Twitter, or call 648-4250.

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