By Johnny Jackson
Jan. 30 could be a busy day for most tax preparers.
The days leading up to Jan. 31 the deadline for employers to have W2 forms mailed out, are typically the busiest days of the season, according to Del Prowant, office manager of H&R Block in Stockbridge.
Then, tax preparers get their largest influx of customers - most of whom are young taxpayers, who may not itemize their tax returns, or benefit from the earned income tax credit.
"If they don't have to wait for other financial documents, they can come in as soon as possible," Prowant said. "The majority of them come in January."
This year, the number of early filers is expected to be higher than last, due to the struggling economy. Many are looking to benefit quickly from potential income tax refunds. For those taxpayers, Prowant offers several steps that may reduce their 2008 tax burden.
"[First,] taxpayers should review their withholding allowances," he said. "By reviewing one's W-4, they can determine if they're withholding enough for income taxes."
However, much about withholding allowances depends on the individual taxpayer's situation.
"It makes a difference also if they just take a standard deduction, or if they are itemizing," Prowant said. "Each taxpayer is different."
Secondly, having receipts from charitable contributions made in 2008 can help lighten the income tax burden as well. To claim a charitable-contribution deduction, a donation must be substantiated. There must be, at least, a bank record or written acknowledgment for monetary gifts less than $250. Gifts of more than $250, should include a written acknowledgment from the recipient organization.
Older taxpayers may consider beefing up their retirement accounts, Prowant said. Taxpayers can contribute $4,000 to IRAs until April 15, and still affect their 2008 returns. Deductible IRA contributions reduce adjusted gross income, and an individual's overall tax bill.
Taxpayers, who are at least age 50, may contribute an additional $1,000 as a catch-up contribution.
Taxpayers, who turned 70.5 years old in 2008, may take the required minimum distributions from their IRA account. Those taxpayers must take a minimum distribution (or payout) from their traditional IRA no later than April 1, even if they are not yet retired.
Failure to take the required amount could result in a costly tax penalty of 50 percent of the amount which should have been withdrawn, Prowant said.
The Internal Revenue Service suggests that taxpayers look into the numerous tax breaks available this year, and take every credit, deduction and exclusion for which they qualify.
People who had less income in 2008 could find they qualify for credits for which they previously did not qualify, according to IRS Spokesman Mark Green.
Among this year's new credits are those for first-time home buyers, a recovery rebate, a standard deduction for real estate taxes, and mortgage workouts.
Tax preparers and officials urge taxpayers to research, and learn, more about how they can benefit.
On the net:
H&R Block: www.hrblock.com