Impact Alabama’s SaveFirst Director, Linn Groft, is featured in WalletHub’s recent study about the best and worst states for finding income tax preparation assistance. The report, “2015’s Best & Worst States for Finding Tax Help” ranks all fifty states and the District of Columbia according to the affordability and availability of tax help in each state.
Ask The Experts: Tax Help Tips
We’re all about community at WalletHub. So, in the interest of helping the community better navigate tax season, we tapped our community of WalletGurus for expert advice on avoiding common mistakes, steering clear of scams, saving money and more.
Linn Groft
SaveFirst Director and Media Production & Online Engagement Director, Impact Alabama
Which are the most common mistakes tax filers make during tax season?
We often see taxpayers make mistakes in determining filing status and dependency exemptions, particularly as children get older, as parents get separated or divorced, and as there are changes in who lives in the household.
Furthermore, there are a significant number of tax credits that could benefit taxpayers that go unclaimed every year. An estimated $133 million of Earned Income Tax Credits alone are left unclaimed by eligible families in Alabama. (Additional credits are left unclaimed nationwide.) Taxpayers are also often unaware of tax credits available to college students, taxpayers who contribute to qualifying retirement plans, and families that pay for childcare services.
What are some tips and tricks for navigating the tax filing process and maximizing refunds?
1. Make sure you go to a reputable tax preparer. If taxpayers earned less than $52,000 during the year, they should find a VITA tax site where IRS-certified volunteer tax preparers can provide high quality tax services with all the benefits of direct deposit and electronic filing completely free of charge. Find a Volunteer Income Tax Assistance (VITA) tax site near you.
There are only 4 states nationwide that provide regulation and training requirements for commercial tax preparers. As a result, we often have taxpayers come in and show us their returns from a previous year where a preparer was either grossly negligent or even downright fraudulent in preparation of the return. Sometimes they’ve received a letter from the IRS or end up owing a lot of money back. If you are not eligible for VITA services, the IRS has published tips for choosing a credible tax preparer on their website: IRS Tips for Choosing a Tax Return Preparer. When in doubt, talk to another preparer, consult VITA site, or IRS representative.
Keep in mind that higher credentials does not necessarily mean higher fees. The average Certified Public Accountant (CPA) charges approximately $165 for an individual income tax return, whereas many uncertified tax preparers would charge as much as $200-$500 for the same individual income tax return.
2. Keep paper records of relevant expenses throughout the year. Out-of-pocket medical expenses, tax preparer fees, charitable contributions, mortgage interest paid, local property and vehicle taxes, and other qualifying expenses could help you reduce your tax liability on the state and/or federal tax return. Talk to a tax preparer or consult the IRS website for qualifying itemized deductions. Teachers should keep records of school supplies they purchase out-of-pocket. College/graduate school students should keep track of required course supplies and books they purchase.
Excerpt from WalletHub.com. The full report can be found here.
