Cracking the tax code: local tax preparers offer advice on how, when to file

It’s that time of year again. Income tax forms are arriving in mailboxes and commercials for tax preparers are on the television, radio and Internet. With all of the information available, some residents may have difficulty deciphering fact from the fiction. Several local tax preparers were able to shed some light on this topic.

Although there are several local options for tax filing assistance, the Internal Revenue Service reported that it is possible to file through one of three avenues: through a certified tax preparer, self-preparation software or the IRS Free File.

This year, in general, any paid tax preparer who is submitting more than 10 returns for clients must file them electronically.

“E-file is the best option for taxpayers. E-file enables taxpayers to file more accurate returns and receive their refunds quickly and safely,” said IRS Commissioner Doug Shulman in a press release.

The IRS reported that last year, more than 112 million, or 77 percent of, income tax returns were e-filed. The fastest way to receive a refund is through e-filing and using direct deposit, which the IRS website said can generate a return in as few as 10 days. Last year, more than 79 million refunds were electronically deposited.

Taxpayers who owe taxes have the option to file now and schedule a payment on the April deadline or pay by check when filing.

The IRS recommended using only certified tax preparers who sign the returns and enter their Preparer Tax Identification Numbers.

According to the consumer bill of rights regarding tax preparers, clients have the right to know if tax preparers are certified, what the rates for a consultation will be, if the tax preparer will represent a client in the case of a government audit and whether the tax preparer is an attorney or a certified public accountant. In addition, clients are entitled to receive a written estimate of all charges, a photocopy of the tax return and an itemized receipt.

It is illegal for tax preparers to ask their clients to sign blank or incomplete tax returns, charge a fee based on the amount of tax owed or refund due, guarantee a specific amount of return, guarantee that no audit will be performed, request payment from a portion of the tax refund or reveal any personal information. These stipulations have been set forth by the New York City Department of Consumer Affairs, and preparers are required by law to abide by them. Preparers are also required to sign the returns they prepare, although taxpayers are still liable for the accuracy of the items on their returns.

The IRS Free-File system can be used by individuals or families with 2011 adjusted gross incomes of $57,000 or less. The free fillable forms, the electronic version of the IRS paper forms, do not have income restrictions.

For most people, the decision comes when it is time to file using either online software or asking a tax preparer for assistance.

“By filing online yourself, you’re following that old adage ‘garbage in, garbage out,’” said Stephen Schunk of Stephen Schunk Financial Services. “Having a professional go through all the different scenarios that are out there means you won’t miss out on exclusions. It takes an expert to sit down and go through it and really know what to look for.”

Springville H&R Block Franchise Owner and Senior Tax Advisor Keith Reynolds said that the benefit of going to a tax preparer is that a person can interpret the client’s answers to tax questions in a way that a computer cannot.

“When you’re doing it online, you can’t talk to somebody,” Reynolds explained. “When you have someone who’s well-trained, they can ask you questions about yourself, your life, your job and associated expenses that a computer won’t know to do. It will only do what you tell it to, but a person can interpret those answers and make sure everything’s correct. The computer program only knows as much as you know, and that’s where you can go wrong.”

Schunk said that the most common mistakes happen when entering information, such as birthdays and social security numbers, followed by forgetting about exclusions, pensions and annuity.

“People do make mistakes because they don’t really understand tax laws. They don’t understand pension and annuity and forget about federal and state credits; credits for energy efficiency. Every year, something changes, and it takes a professional to really keep up,” Schunk explained.

Reynolds also said that forgetting about the earned income credit or entering self-employment incorrectly can cause issues as well, but that going to a certified tax preparer prevents those problems.

“People also will sometimes double-dip their 401K and IRA because they’ll just look at their W-2 and enter it from there. An expert can help interpret the tax code for you,” he added.

When it comes to timing, Schunk said that different people have their own preferences, and it does not necessarily make a difference when taxes are submitted. “A lot of people will wait until the last minute, but some like to get it done right away and just get it over with,” Schunk added. “The IRS is implementing a new system to check people’s information this year, so those who wanted to file prior to Jan. 25 had to wait a few days.”

Reynolds pointed out that those who owe money on their taxes may want to get their taxes done earlier so they have time to save before the April deadline.

“If you file now and you owe, you have time to save for it, whereas if you wait until April, then it’s due right then,” he explained. “If you owe and don’t file, penalties are 10 times more. If you owe and you file but can’t pay, they can set up a payment plan for you.

“Our client service promise is that we’ll explain everything clearly, let you see what we’re doing and allow you to ask questions if anything doesn’t make sense. There’s nothing done that you don’t see, because at the end of the day, it’s your tax return. We enter all the data twice, right here in front of you, so there are no mistakes,” Reynolds said.

Whether residents choose to prepare their taxes themselves online, using available tax software or by consulting a local tax preparer, there are a variety of options available. These also include:

- Choice 1 Bookkeeping and Tax Service is located at 56 East Main St., Springville and is open Monday - Friday, 9 a.m. - 6 p.m. and Saturday, 9 a.m. - 1 p.m. or by appointment.

- Mark Adamchick, CPA, MBA, North Buffalo Street, Springville, open Monday - Friday 6 - 9 p.m., Saturday and Sunday, 9 a.m. - 5 p.m. Appointments recommended.

- EG Tax Service, 65 East Main St., Springville, open Monday - Thursday, 9 a.m. - 9 p.m., Friday 9 a.m. - 5 p.m. and Saturday 9 a.m. - 5 p.m. Appointments are recommended.

- Stephen Schunk Financial Services, 21 East Main St., Springville, open every day 9 a.m. - 7 p.m.

- H&R Block, 9 East Main St., Springville, open Monday - Friday, 9 a.m. - 6 p.m. and Saturday 9 a.m. - 5 p.m.

For more information, visit the IRS website at www.irs.gov.