Tax changes face '07 filers

As the time approaches to file income tax returns, tax preparers are reminding people about changes in the law since last year.

There are also some problems that the Internal Revenue Service is having that could affect many taxpayers.

According to Susan Ward at Liberty Tax Service's Tunkhannock office, that situation involves people who apply for certain types of income credit in order to reduce tax liability.

Ward said taxpayers who use additional forms to apply for those credits will have to wait a few extra weeks before filing their returns. That's because the IRS delayed making adjustments to tax regulations this year.

The delay will affect more than 13 million taxpayers nationwide, Ward said. Those people will have to wait until at least Feb. 11 before filing.

Included are taxpayers who file for education credits on Form 8863, residential energy credits on Form 5695, and mortgage interest credits on Form 8396. Also, taxpayers who deduct child and dependent care expenses using Schedule 2 of the 1040A form are affected. (In addition, taxpayers in Washington, D.C. applying for first-time homebuyer credits on Form 8859.)

Ward said there are ways taxpayers can avoid these delays. For example, she said people seeking credit for child care should use form 1040 and its schedules instead of 1040A. And for the education credit, they can file a regular return and then seek the credit on an amended 1040X return afterwards.

There are a number of other changes in the tax laws as well, Ward said, as there are every year. She advised that taxpayers who are uncertain about their returns should seek the advice of a professional tax preparer.

For example, when it comes to deductions for charitable contributions, Ward said taxpayers must have written proof of all contributions no matter what the amount if they are deducting them. In the past, that applied only to contributions of $250 or more, she said.

Barb Pollock and Dawn Weller of the H&R Block office in Tunkhannock said there were a number of new tax credits that went into effect a year ago that many people forgot. They said they wanted to remind people not to omit them again.

For example, they said there are substantial benefits to people who made their homes more energy-efficient. That includes homeowners who added insulation, doors and windows, they said.

"That's something a lot of people aren't aware of," Pollock said.

Weller added that people who purchased a vehicle that uses a hybrid fuel such as ethanol may also be eligible for an energy tax credit.

Another change that happened last year that a lot of people missed was in the tax/rent rebate program, Ward said. She said that program is designed to help reduce the tax burden for renters and homeowners age 65 or older. Widows and widowers age 50 and older, and disabled people age 18 and older are eligible.

The maximum income level for that credit was raised last year to $35,000, and only half of Social Security income must be counted.

Tax preparers noted that every year they have taxpayers come in who are unprepared, and who aren't getting as much of a refund as they could.

"There are probably a lot of people out there who could itemize and they don't," Pollock said.

It may be too late to help taxpayers for their 2007 returns, Weller said, but in the future, she said proper record-keeping throughout the year is important.

"Keep all your paperwork together," Weller said. "A lot of people come in here and they're returns are put on hold because they're missing something."

While getting a professional to do your taxes is recommended by most tax preparers, not everyone can afford a service such as Liberty, H&R Block or a private accountant. There is two services in the area to help those people.

The Commission on Economic Opportunity will be providing free income tax preparation assistance each Wednesday afternoon during February, March and April at the Wyoming County Human Services Building on Route 29 in Eaton Township, next to Wal-Mart.

According to Carrie Bachman of CEO's Wilkes-Barre office, the program is available to senior citizens and low-income families. A tax preparer will be available from 1 to 4 p.m., but appointments are required. Call Bachman at 1-800-822-0359 ext. 264 to make an appointment or for more information.

The free assistance is for individuals and families with basic federal and state tax returns, such as 1040, 1040A and 1040EZ, Bachman said. No business forms will be prepared.

Also, Keystone College will again assist taxpayers through its VITA (Volunteer Income Tax Assistance) program.

According to Keystone accounting professor Kevin Vinson, who coordinates the program, VITA provides free tax return preparation of federal and state returns for low-income people.

VITA uses trained student volunteers to help taxpayers find ways to reduce their tax burden, such as applying for earned income credit, child care credit and credit for the elderly. Tax returns are filed electronically to speed processing.

Appointments for the VITA program will begin in February, Vinson said. To schedule an appointment, call 945-8445.

BY MICHAEL J. RUDOLF, Wyoming County Press Examiner

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