- Days left

5 Things Tax Preparers Wish You Knew About Taxes

×
Tax preparation items including a pencil, calculator and tax forms
Alamy
Less than two months remain before the IRS's income tax filing deadline, and taxpayers across the United States are scrambling to compile receipts, deductions, charity giving and, of course, income statements. Since the ides of April can strike fear into even the most organized taxpayer, we asked accountants and other tax professionals to share their insights for easing the pain of tax time.

1. Don't Try to Deduct Your Grown Children

Is your post-college child living at home while job searching? Odds are they won't count as a dependent. "Your idea of supporting your adult child is different than the IRS's idea," says Kristin Roberts of the Roberts Tax Group in Torrington, Conn. "Many parents who have adult children living with them say, 'He lives with me. I pay the rent. I support him. I can claim him.' But that's not so in most cases."

Explains Anabella D. Hampton, president and CEO of TBRE Consulting Co. in Oxford, Pa.: "If your child is 19 or over years old and does not go to school or goes less than half time, but works at a grocery store and made $4,000 last year, you cannot claim him as a dependent, even though you feed him and put a roof over his head."

2. Keep it Truthful

"When you ask a licensed tax professional to prepare your tax return, they are swearing that, to the best of their knowledge, their client has told them the truth," says Rhonda A. Mannes, a certified public accountant in Las Vegas, N.M. "Please do not ask us to lie for you. The IRS will impose penalties and in some cases bar us from preparing tax returns in the future. This is our livelihood, and we are not willing to risk it."

"There is no accountant or tax preparer/client privilege when it comes to the IRS," says Scott Patterson, a certified financial planner in Anderson, S.C. "If you don't want me to know, keep your mouth shut."

3. Forget About the Joneses

"Don't compare refunds with your friends," says Roberts. "I hear often "I make the same as my friend. Why is his/her refund bigger than mine?" Refunds are indications of nothing. They often try to use refund amounts as a way to gauge how "bad" they have it compared to their friends. But it is really like comparing apples to freight trains."

"No, your tax situation is not 'just like' your friends'," says Patterson. "Tax law is complicated, and every situation is unique. Stop trying to keep up with the Joneses."

4. Leave Your Retirement Accounts Alone

Feeling a financial pinch? It might be tempting to dip into retirement funds, but Hampton says that short-term solution could have longer-term consequences.

"If you take money out of your 401k or IRA, and are under 59½, you will be stuck with a 10 percent penalty, and it may put you into a different tax bracket," she says. "I can't tell you how many people do this, and then are shocked to find out they owe half of what they took out in taxes between federal and state.

5. Know When to Get Help

"Doing it yourself [with a tax preparation software] is an option only if you have a very simple return or are willing to put in some serious time learning the tax laws that might affect you," says Dan Connors, a CPA in Granite City, Ill.

"Most returns are not easy or quick," says Patterson. "While what we do may seem like it's those things, it's truly because we're just that good. Michael Jordan makes a three-pointer look easy; Tiger Woods makes golf look easy; and I make taxes look easy. Just claiming someone as a dependent has 12 separate rules."

For those still worrying about tax season, Connors has this advice. "You can't avoid death or taxes. Don't let worrying about them rule your life. Do your best to pay your share and get on with your life and follow your dreams."


New Scam Ahead Of Tax Season Targets Victims Via Phone

Increase your money and finance knowledge from home

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

TurboTax Articles

Are You Exempt From Health Care Coverage?

The Affordable Care Act, or Obamacare, is an individual mandate that requires all eligible Americans to have some form of basic health coverage by 2014. Those without insurance will receive a penalty when they file their tax returns ? that is, unless they have an exemption. TurboTax's Exemption Check can help you find out whether or not you qualify for an exemption.

Essential Tax Forms for the Affordable Care Act

The Affordable Care Act (ACA), also referred to as Obamacare, affects how millions of Americans will prepare their taxes in the new year. The law now includes penalties for all who haven?t obtained health insurance -- and those penalties are expected to be paid at tax time. The ACA also provides tax credits to help people pay for insurance, and you can claim those credits when you file your taxes. The Internal Revenue Service (IRS) has introduced a number of tax forms to accommodate the ACA.

Mortgage Refinance Tax Deductions

When refinancing a mortgage to get a lower interest rate or obtain more favorable loan terms, you're really just taking out a new loan and using the money to pay off your existing home loan. In general, the same tax deductions are available when you're refinancing a mortgage as when you're taking out a mortgage to buy a home.

How to Determine if You Have Minimum Essential Coverage (MEC)

The Affordable Care Act, also known as Obamacare, requires most Americans to have health insurance that meets a government standard known as "minimum essential coverage," or MEC. Whether your insurance qualifies as MEC depends not on the plan itself, but on how you obtained your coverage.

Rental Property Deductions You Can Take at Tax Time

Rental property often offers larger deductions and tax benefits than most investments. Many of these are overlooked by landlords at tax time. This can make a difference in making a profit or losing money on your real estate venture. If you own a rental property, the IRS allows you to deduct expenses you pay for the upkeep and maintenance of the property, conserving and managing the property, and other expenses deemed necessary and associated with property rental.

Add a Comment

*0 / 3000 Character Maximum

3 Comments

Filter by:
wrench701

One thing they don't want you to know is that with a fifth grade reading level and third grade math skills, you can do it yourself. Yes that's 1040 EZ for sure. You can also do 1040, 1040A, 1040B, 1040D (form 8949 included), 1040E and save hundreds of dollars.

February 18 2014 at 9:36 PM Report abuse rate up rate down Reply
betty_brock

Pay your taxes honestly and no need to worry.

February 18 2014 at 2:54 PM Report abuse rate up rate down Reply
1 reply to betty_brock's comment
scottee

how does one interpret 73,000 pages of tax code?

February 19 2014 at 1:05 PM Report abuse rate up rate down Reply
Joyce

can you make payment if i owe irs, iam 79 work as clerk, i drew socuity pension small pension from gm worried worried

February 18 2014 at 1:28 PM Report abuse rate up rate down Reply
1 reply to Joyce's comment
wclark3350

If your income plus 1/2 of your SS is less than 32K, you do not need to file.

February 18 2014 at 1:33 PM Report abuse +1 rate up rate down Reply
Mary

#2 should be titled, Please Lie to Me, lol.

February 18 2014 at 11:12 AM Report abuse rate up rate down Reply
chakeetalee

Very Informative!

February 18 2014 at 10:57 AM Report abuse rate up rate down Reply