Scott: Hello, thank you for joining us today. I’m Scott Tennell with DCC, a Financial Freedom Community. Since tax time is around the corner, we’ve got certified public account, Thomas A. Abblett, from Boca Raton, Florida here to address a few common questions that might help you this tax season. Tom, thanks for joining us.
Thomas: Hi, Scott. How are you doing?
Scott: Very well, thank you.
Scott: Thank you very much. What are the most commonly missed deductions for most tax preparers?
Thomas: Some of the most common things are the Dependent Care expenses and Dependent Care credits, and also the Earned Income Credit, is commonly miscalculated on the returns. If somebody is itemizing, especially in a state that does not have a state income tax, the state sales tax is deductible, and a lot of times that is missed also.
Scott: When should they take a standard deduction versus maybe an itemized deduction? How do they make that determination?
Thomas: It all depends. If your itemized deductions would exceed the standard deductions, that would be the time to take it. The main standard deductions are going to be real estate taxes, mortgage interest, charitable contributions. If you’re in a state that has a state income tax, then that also would be deductible too.
So you would want to look at what the standard deduction limits are for your filing status, and then determine that from there.
Scott: Would you suggest maybe people, and maybe possibly as a shortcut, is actually look to see what the standard deductions are, and if they already know they’re not going to hit those limits, to just kind of streamline possibly that process?
Thomas: Absolutely. Usually the basis, if somebody owns a home and has mortgage interest, most likely they’re going to be able to use the itemized deductions. If they don’t, and they have other higher deductions, like state income tax and charitable contributions, then they may.
Scott: If you’re taking a standard deduction only, is the 1040EZ form the best filing form to use?
Thomas: It certainly the simplest form to use, but there are some other qualifications for it. Very simple. They’re found on page 2 of the 1040EZ form. Income has to be under $100,000, and a couple other things there too.
Scott: Okay. Which is the best website or websites where people can file taxes electronically?
Thomas: The best way for somebody to do it would be go to www.irs.gov, G-O-V, and from there, there is a link on the right hand side that says “Free File.” If they go there, the IRS has partnerships set up with some of the major tax preparers for free filing.
Scott: Okay. If you file electronically, how quickly can they expect to get their refund?
Thomas: Normally, if you file electronically and you have them direct deposit the money back into your bank account, you should have the refund within ten days. The one thing to mention, though, right now for electronic filing, is the IRS is not accepting any electronically filed tax returns before January 31st of this year, just because they’re getting their processes in place.
Scott: Okay. Obviously, the question varies from person to person’s situation, but when does it make more sense to use a tax professional versus maybe doing the taxes yourself? Whether it’s a tax software program or doing it the old fashioned way, the old paper and pencil.
Thomas: Well, as a tax professional, I would say you would always use a professional, but …
Scott: Of course.
Thomas: … But the honest answer would be, if you have a relatively simple return, then it’s fine to use some of the tax software that’s out there. They’re all pretty good. A lot of them have an interview process that you go through. So it asks you some standard questions and things like that, so it can help you through. If you do have any business income or rental properties, things like that, I would say always seek the advice of a tax professional though.
Scott: Okay. Excellent. Very good. I think those probably are the big questions, probably the most common questions for most people today. So, Tom …
Scott: … Thank you for sharing your information and expertise with us.
Scott: And remember Thomas Abblett, certified public accountant. I’m Scott Tennell, DCC, a Financial Freedom Community. Enjoy your day. Thank you.
Thomas: Thank you.