Tips for a mistake-free tax return
Editor's Note: There is no extension granted to pay taxes. Tax balances are due on April 18, unless a payment plan is granted by the IRS or state. This information was incorrectly reported in the original story.
The 2017 income tax filing season is a procrastinator's delight.
Since April 15 falls on the Saturday of Easter weekend, a special federal rule dictates the deadline be extended this year to April 18. Despite the extra three days, local tax preparers urge Berkshire and Southern Vermont residents the time is now to ensure you have all your proof of earned income for 2016 and review the applicable state and federal tax laws that pertain to you.
Waiting until April 17 is not a good option, according to Don Keelan, a certified public accountant in Arlington, Vt.
The veteran CPA says start working on your tax returns now, beginning with a refresher of how you filled out previous state and federal forms.
"Always use last year's tax return as a guide to jog your memory," he said. "And if you find you won't have the money to pay, if you owe, get an extension."
CPA Barry Clairmont, from the Pittsfield, Mass., firm Lombardi, Clairmont & Keegan says the best advice he can give before filing:
"Don't take tax advice from a friend. Don't rely on someone who is not a professional."
With that in mind, the local tax pros offer the following basic tips for a successful — mistake-free — tax return.
Make sure you have all the W-2s, 1099s and any other documentation that shows income earned. Report other profitable ventures such as stock dividends, money from interest bearing accounts, pensions, capital gains etc.
"No matter what you earned, you're supposed to declare all your income," Clairmont said.
When filing the federal return, you must claim any state refund check from the previous year and vice versa is true in Vermont and usually in Massachusetts; any federal refund must be claimed on the state return.
New this year in Vermont, when filing for a state refund, you need to provide information from your driver's license or state-issued identification card.
"The Vermont Department of Taxes wants to verify those filing for a refund aren't committing fraud," Keelan said.
DEDUCTIONS AND EXEMPTIONS
What expenses you can claim to boost your refund or decrease what you owe depends on a variety of factors such as marital status, what state you reside in and/or whether it's the state or federal return.
Keep in mind that not all deductions allowed on your federal tax return are necessarily going to be allowed on your state tax return.
When itemizing deductions, consider including interest on home mortgage, property taxes, charitable contributions, certain medical expenses, investment fees and rent paid. The one credit many fail to take, if applicable is the on retirement savings contribution, according to Clairmont.
"If you're on a lower income scale and give 'x' amount, you might get back up to 50 percent," he said.
Unlike the federal, Massachusetts and Vermont don't have a standard deduction, a set amount that makes it easier to file an IRS return.
Another difference is the IRS and Massachusetts allow for claiming dependents and personal exemptions, but not Vermont.
For the low down on filing tax returns go online to www.irs.gov, www.mass.gov/dor and www.tax.vermont.gov
SELF-FILE OR PROFESSIONAL
Since 2001, electronic filing of federal income tax returns has gone from roughly 50 percent to 91 percent, according to several websites that track Americans filing habits. Increased use of digital tax preparation tools, such as Turbo Tax, H & R Block and other online services are cited as a big reason for the high-tech filings in hopes of getting an anticipated rebate faster than through the U.S. Postal Service.
The digital filing usually comes with a fee, but Keelan says its worth it for many filers.
"It eliminates a lot of the drudgery; you put in the information and it cranks out the return figure," he said.
If you have zero faith in doing your own taxes, professionals are a viable alternative, according to Clairmont.
"If you have no clue, have someone do it for you," he said. "CPAs are more affordable than you think."
Reach staff writer Dick Lindsay at 413-496-6233
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