Certified public accountant Jackie Helton joined me on Eyewitness News at 5:30pm on Monday, April 11th. She detailed a few of the changes made from 2009 to 2010 taxes and how they can impact those filing. Read the question and answer below:
ANGELA: What are the changes?
*Business Mileage that can be claimed is 50 cents per mile
*All unemployment benefits taxable
*The adoption credit increased to $13,170 per child
*Traditional IRA to Roth Conversion: Income can be deferred; ½ to 2011 and ½ to 2012. It is the taxpayer’s choice.
*Self-Employed Health Insurance Can be used as a business expense which will decrease the net income of the business, thereby decreasing the amount of self-employed social security taxes to be paid.
*Section 179 Business Expense: Maximum of $500,000 for qualified equipment placed in service during the year
ANGELA:Tell us about the changes to tax day this year.
JACKIE: Tax day is April 18th this year even though the 15th does not fall on a weekend or Federal holiday. The federal government will observe a Washington DC official public holiday, Emancipation Day, which marks the anniversary of Lincoln signing the Compensated Emancipation Act. The holiday does not normally impact the tax return due date because it is celebrated on the 16th; however, because the 16th falls on Saturday, it will be observed Friday, which gives all of us who have procrastinated a little more time.
ANGELA: Regardless of the extra couple of days, some people will still have to file an extension, but the money is still due on the 18th, right?
JACKIE: If you are filing for an extension of time to complete your tax return, it must be submitted on or before April 18th. An extension of time for the return does not mean an extension of time to pay. There are a couple of ways to estimate what your tax liability might be. If you have all of your paperwork together and are waiting on one more piece of information or have just not put it into the tax return, there are tax calculators online if you have access to the Internet. Another option is to pull out your 2009 tax return and go through it line by line noting estimated increases, decreases, new deductions, and non-recurring deductions. Once you come down to your estimated taxable income, you need to use the 2010 tax tables to determine the amount of taxes owed. Then deduct taxes that have been withheld during the year and the bottom line will be the amount owed, or, if you are lucky, the amount of refund you can expect.
If you are unable to pay, contact the IRS at 1-800-829-1040 to discuss payment options. They have options that include an installment agreement and an electronic payment option using your debit or credit card. The IRS does charge interest and penalties, so it is best to pay in full as quickly as possible.
ANGELA: Free E-File is an option. Tell us who can utilize this.
JACKIE: Taxpayers making $58,000 or less may be eligible to use free tax preparation software and electronic filing. The software completes the forms from a series of questions that allow you to input your information.
Those making in excess of $58,000 can e-file for free using free file fillable forms which are forms only and do not include tax preparation software.