Tips Simplify Income Tax Preparation, May Mean Money in Your Pocket
Friday, March 17, 2006
PAOLA, Kan. - Consider the time invested in income tax preparation as an investment, said Diane Burnett, Kansas State University Research and Extension family and consumer sciences agent in Miami County.
Burnett, who has a master's degree in family financial planning, views income tax preparation as a time to review your income and expenses and balance your account.
"A refund may seem like a windfall. In reality, however, the government is returning money that is rightly yours," Burnett said.
"Adjusting withholding to match your tax liability can make more money available to you throughout the year."
Waiting until a day or two before the April 15 filing deadline can increase stress, particularly if a taxpayer has failed to save - or organize - receipts for tax deducible expenses.
"Start early," said Burnett, who contributes volunteer hours as an income tax preparer for low- to moderate-income taxpayers.
"Seniors are typically more organized about saving receipts, but may overlook key tax benefits, such as the homestead or food sales tax credit that may entitle them to a rebate on real estate taxes or sales taxes paid on groceries," she said.
Workers who fall below the income level at which filing an income tax return is required -- $8,199 if under 65, and $9,400 (not including Social Security) if over 65 -- may still benefit from filing a return, said Susie Latta, K-State Research and Extension family and consumer sciences agent in Marshall County.
Tax laws change periodically and forms can be daunting. Low- to moderate-income individuals (usually $38,000 or less) are eligible for free income tax preparation, either through the Volunteer Income Tax Assistance Program (VITA), which is operated by the Internal Revenue Service, or a similar program offered by the American Association of Retired Persons (AARP). Many Kansas communities offer free services as well, such as the Retired Senior Volunteer Program (RSVP) in Marshall County.
Taking advantage of volunteer income tax preparation services can save taxpayers $50 or more in preparation and filing fees. Trained volunteers also can check whether taxpayers may be eligible for such tax credits as the Earned Income Tax Credit (EITC) and Childcare Tax Credit that offset taxes and can supplement wages for low- to moderate-income workers. Such tax credits often go unclaimed because taxpayers don't realize they can qualify.
According to Carol Young, K-State Research and Extension financial management specialist, a worker raising children and earning about $35,000 in 2005 may be eligible for an EITC of up to $4,400. A worker who earned more than $11,000 in 2005 may be eligible for a childcare tax credit of up to $1,000 per child, Young said.
For more information on free volunteer income tax preparation assistance, Kansans can contact their local or district K-State Research or Extension office.
"Ask whether appointments are needed and for a checklist of documents and receipts needed for income tax preparation," Young said.
Avoid Mistakes That Can Slow Refund
MANHATTAN, Kan. - Tax time mistakes can cost taxpayers time - and money, said Susie Latta, K-State Research and Extension family and consumer sciences agent in Marshall County.
Latta, who has an M.S. in family financial planning and volunteers as an income tax preparer, recommends that parents jot down a child's complete name, birth date and year, and Social Security number before an appointment with a tax preparer.
"It seems unlikely that a parent would forget their child's birth date, but people can get rattled at tax time and inadvertently give incorrect information," she said. "If a name or other personal information doesn't match IRS records, a tax return is likely to be kicked out for closer examination, and that will delay a potential refund.
"Using a nickname - Joey instead of Joseph, for example - may be enough to call attention to your return."
This article was posted on Friday, March 17, 2006, and is filed under College News.