The fiscal cliff negotiations put a new spin and new rules on ‘tax-time headaches'!
Many of the deductions families are used to filing were not accepted on the same schedule as previous years. The last minute negotiations in Washington changed many aspects of filing this year, but tax experts I talked with, told me, it's the more basic filing mistakes that typically cost us.
Markeeyah Lowery with Rapid Tax on North Tryon told me some of the simplest mistakes are costing tax payers thousands of dollars.
She said if you're using tax software take time to really understand it.
"Many of these programs are question based, and if you don't answer the questions correctly, you could miss out on some serious deductions. That's why tax professionals are here. We understand all the yearly changes, and there are many," she said.
Lowery says oftentimes she'll find the lay person doesn't understand the nuances of deductions when it comes to searching for work.
"If you've spent money updating your resume, if you've traveled to and from the job site to apply, those are things that can be filed as deductions. For some people searching for work has been a year-long process and the money adds up. We also encourage people who are getting unemployment benefits to consider asking for taxes to be taken out before you get the check. If not some people aren't prepared for the taxes they'll owe at the end of the year," Lowery said.
Organizations and banks are required to mail out any tax related paperwork to you by the end of January. But if you haven't received documents by February 14, it's your job to produce the paperwork.
"Say you made a 100 dollar donation to United Way and they haven't sent you the paperwork. You can use your canceled checks or bank statements to show your contribution. The main thing with the IRS is documentation," Lowery insists.
"I had a client come in here who had been filing his taxes with Turbo Tax the past three years, and he didn't realize he could deduct the mortgage interest and the real estate taxes from the previous year," Lowery told me.
She said so many people will bring in their previous years' tax returns, and her tax professionals will find numerous opportunities for deductions that were missed.
"It's hard for people who don't do taxes day in and day out, year after year, to know about all the changes in the tax laws. There are changes every year. That is what we do," says Lowery, who is President of Rapid Tax.
Lowery and I both had a giggle when I asked her about the most common question she gets about claiming dependants.
"People ask if they can claim their pet as a dependant. I ask them, ‘Does your pet have a social security number?' No, then we have a good laugh about it! I get that more than one time every tax season," she told me.
To learn more about the changes to IRS filing deadlines and forms, click here.
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