0

Time counts down to tax season, new tax laws

By Johnny Jackson

jjackson@henryherald.com

Though taxpayers can't file their taxes now, it is not too early to start thinking about the upcoming tax season as new tax laws could make the filing process a little more complicated, officials say.

Organizing receipts and planning now could save taxpayers time, money, and many headaches later, according to IRS spokesman Mark Green.

"Taxpayers can take the first step now by organizing, planning and reviewing tax law changes featured on the [Internal Revenue Service] web site," Green said.

The web site includes information about what tax laws have, and will be, changed in coming days. One such law that will affect taxpayers is the free online filing limit.

In 2007, the free online filing limit included those with incomes under $52,000. With factors like inflation, that limit will increase this year to $54,000, Green said.

One new law states that charitable contributions can be tax deductible only with proper records that support the deductions.

Those contributions must be made no later than Dec. 31, in order to be deducted for 2007. Exceptions are donations charged on credit cards by Dec. 31. And there must be a bank record, or written communication from the charity showing its name, the date, and the amount of the contribution.

Under the new law, donations of used items not in good condition are not deductible.

Green says that taxpayers should also be mindful of good financial practices, particularly when it comes to filing their income taxes.

"I've been noticing a trend that taxpayers start [calculating] their taxes early in order to take out loans," he said. "Some tax preparation companies promise an early loan for Christmas gifts for a percentage of their projected tax returns."

Green advises taxpayers not to file their tax returns before Dec. 31, using their last paycheck stub. "It's a risky move," he said. "The last paycheck stub will have different information than the W2. Wait until you get your W2, that's my advice. Once you do get your W2 and you have a question, talk to your employer."

He said some may end up with less, or more, from their tax returns than they calculated. Those who end up with less than they expected could be left with little money to pay back the typically high-interest loans.

"I don't recommend it all," said Allen Watts, an accountant for The Tax Pros in Stockbridge. "In fact, my firm will not do it. All it is, is a loan with an exorbitant interest rate."

Watts says the W2 form gives a truer picture on what's required on the tax return.

Another issue taxpayers must deal with is recording their deductible assets, from medical bills to investments. "They ought to be aware of deductions that might serve them better to pay their bills now," Watts said.

The IRS suggests that taxpayers start keeping records, placing everything that relates to their 2007 taxes in one place. For deductions and credits, officials say taxpayers should keep bills, receipts, invoices, mileage logs, canceled checks, or any proof of payments. Tax records should be kept for three years or longer.

And those having long distance phone records dating back to 2003 may still be eligible for a long-distance excise tax refund. In 2007, 29 percent of Georgia filers did not request the Telephone Excise Tax Refund. Those who are eligible for the refund can file an amended tax return (Form 1040X, completing line 15) and can request a standard refund that ranges from $30-60, or file for the amount they paid in long-distance excise tax between Feb. 28, 2003, and Aug. 1, 2006.

The tax season typically begins in mid-January, when employees begin receiving their W2 forms. But, IRS spokesman Green says, there are always last-minute filers, who can take advantage of e-file. And he expects the number of people who e-file to increase this upcoming tax season.

Of the 139.3 million returns filed in 2007, 79.9 million (57.4 percent) returns were filed electronically."I anticipate more people will file more on their own," Green said, adding that as many as 3.5 million Georgians could e-file this year compared to the nearly 2.6 million in 2006.

More on amended tax laws is available at the IRS web site.

-

On the net:

Internal Revenue Service: www.irs.gov