Are you planning on working on your taxes this weekend, but feeling overwhelmed? With all the tax changes that have occurred in the last year, doing the dreaded taxes can actually be an understatement for some people. For example, did you win money gambling in 2013? Did you know that you can actually write off the amount you lost when gambling as well? I sure didn’t! This is just one of the most common overlooked tax deductions, Greg Rosica, Tax Partner and contributing author to the Ernst & Young Tax Guide 2014 shared when he joined me for an interview yesterday. Greg also discussed the recent tax law changes, steps taxpayers can take to make tax filing easier, how to deal with green tax breaks, incentives, tax treatment of mutual funds, gifts and estate tax planning, the most common tax filing errors and much more!
Candace Rose: With April 15th quickly approaching, what do taxpayers need to know about the recent tax law changes?
Greg Rosica: “Candace, a lot of changes came through in the beginning of 2013 with the American Taxpayer Relief Act (or ATRA for short) and what that did was brought with it a lot of increased tax changes at different income levels. $200,000, $300,000 and at $400,000 – all of those have different tax increases that occurred, different types of taxes that come into play and that coupled with other increases that impact really anyone that gets a wage, earns a paycheck. They would have seen throughout the year a 2% increase in some of their Social Security withholdings, really and on top of that some additional itemized deduction changes – create some changes that we want to make sure people understand.
In the EY tax guide, again this year we’ve laid out what those changes are, how they’re going to impact people in different tax situations – maybe you’re a self employed individual, maybe you’re a real estate investor…we try to lay out what things you should consider in light of these tax changes and just other deductions that are out there to take advantage of.”
Candace Rose: What steps can taxpayers take now that can make filing taxes easier?
Greg Rosica: “I think really understanding your situation and try to seek out what kind of deductions are applicable to your situation and so in the EY Tax Guide, one of the things we have is a list of the 50 most overlooked deductions and that can help someone to go through and kind of think about whether their situation lines up with some of those items. For example, maybe they volunteer at a charity, when they attend meetings of the charity- if they drive their car there they can deduct mileage associated with that as a charitable contributions. If they buy any supplies for those meetings, those supplies can be deducted as out of pocket expenses as well. Other items – perhaps they’ve won some money gambling, you can actually deduct items that you’ve lost gambling, again, against that income, so that will minimize the amount of income that you have.”
Candace Rose: How do taxpayers deal with green tax breaks, incentives, tax treatment of mutual funds, gifts and estate tax planning?
Greg Rosica: “All of those items affect different taxpayers in different ways. It’s applicable to understand what’s appropriate in your situation and that’s one of the things that we try to do in the Tax Guide. If there’s certain deductions that you may have, maybe they’re education deductions and see whether you’re income levels are appropriate to be able to take advantage of that. Maybe it’s student loan interest that you can deduct if you’re under certain income levels…all of that we lay out in the EY Tax Guide to help you through those situations.”
Candace Rose: What would you say are the most overlooked tax filing errors and overlooked tax deductions?
Greg Rosica: “We like our lists, and we have a list of the 25 most common errors that people make. They’re fairly simple ones like check your math. Look at your W-2 form you received from your employer, look at your 1099 form and look to see if there are mistakes in there because they may not be right. You want to get those corrected before you file.
Also, an error can be too big of refund. You want to make sure if you’re getting a big refund, that’s your money the government has been holding all year, you can get that along the way throughout the year – put that aside for yourself in some type of savings.”
Candace Rose: Do you have any additional tips or information you’d like to share?
Greg Rosica: “You can certainly get the EY Tax Guide online anywhere books are sold or download the e-book version, or you can go to our website to get a free list of the top 25 common errors as well as the top 50 deductions and that’s at EY.com/EYTaxGuide.
Also, don’t forget April 15th is around the corner, you can extend the time to file your tax return…but you can’t extend when you pay. If you’re going to owe money you’re going to need to have it calculated and paid in by April 15th, and then you can still extend when you actually send in your tax return or e-file it…but not when you pay.”