With tax season upon us and April 15 (the filing deadline for U.S. federal income tax returns) just days away, now is the time to file your taxes if you haven’t done so already. EY Tax Guide author and tax partner Greg Rosica joined me for an interview this week to dish on what tax payers need to know about the recent tax law changes, he also dished on the various steps tax payers can take to make tax filing easier, green tax breaks and incentives, the most common filing errors and much more!
Candace Rose: What do taxpayers need to know about the recent tax law changes?
Greg Rosica: “Each year usually comes with new tax law changes, and this year isn’t any different, but not as many as we’ve had in prior years. There were some reenactments of some provisions that had expired during the year, but then they came back, which makes it very similar to the prior year. Something like a deduction that teachers can take for above the line school supplies that they buy, which is always nice to be able to take and help out their students and classrooms; as well as the deduction for sales tax came back in, so you can deduct either sales tax or your state income tax that you have (you choose between the two).
Probably the bigger news that’s impacting almost everyone is the onset of the affordable care act, and really with the affordable care act did is require everyone to have a level of health insurance. Here are a few different situations that are going to impact everyones tax filing:
- Maybe you’re an employee and you got your insurance through your employer and place of work, in which case there’s a new box that you have to check on your tax return indicating that you do have that insurance.
- You purchased health insurance through the market place, and if you did that you probably received a form 1095 in the mail a few weeks ago, and you need to incorporate that into your tax return.
- You simply didn’t get insurance (and that was a requirement) so you’re subject to a penalty, so there’s a form that you need to fill out and a calculation that you need to do to figure out what that penalty is and be able to send that in or have that impact any kind of refund that you might have otherwise received.”
Candace Rose: What’s steps can taxpayers take now that can make tax filing easier?
Greg Rosica: “I think to try and make tax filing easier, you have to look for some type of resource to help you with, whether it’s going to a CPA or if you’re going to do it yourself, using a guide like the EY Tax Guide to help you go through and organize what your documents are to help you find the types of deductions that are appropriate to you, and to help really jog your memory by looking at a list of the 50 Most Overlooked Deductions that we have, as well as 25 of The Common Errors.
In the tax guide we list out in an index life situations that you might be in because each of the life situations has tax implications to it. Rather than you try to figure out the hundreds or thousands of deductions that are out there, what we do is kind of narrow those down so if you’re self employed or have a small business, the types of expenses you should be thinking about. If you bought a house, had a child during the year, what are the relevant deductions for that situation? We try to help narrow it down for you to make it a little bit easier.
Also, as you start, take out last year’s tax return because that’s going to help you out tremendously. There might be items on there that carry over such as a capital loss from last year that you can use this year, or simply just jog your memory as to certain types of income that you had or deductions that you were able to take that you might be entitled to this year as well.”
Candace Rose: How do taxpayers deal with green tax breaks and incentives, tax treatment of mutual funds, gift and estate tax planning?
Greg Rosica: “There’s lots of different things that can impact you. When it comes to green tax breaks – if you’ve bought certain home improvement items for your house that are energy efficient, you may be able to get some tax deductions for that. When it comes to things like a mutual fund and selling a mutual fund, it can be complicated if you’ve held it for a few years because you may actually otherwise pay a higher gain than you need to.
Things like taxes that you’ve paid each year on dividend reinvestment, capital gain reinvestments (where you didn’t actually take the money out) those actually increase your basis which decreases the tax and the gain when you ultimately sell those.”
Candace Rose: What are the most common tax filing errors and overlooked tax deductions?
Greg Rosica: “We have a list of 25 common errors that people make. Some are fairly simple and straightforward – like you’re so excited when you finish your return and you send it off and you forgot to sign it, or you didn’t sit down and really check your math if you did it manually or check the numbers that you inputed if you did it on a piece of software.
When you finish your return, give it a rest for a minute. Set it aside, come back the next day or later that day and do exactly what the IRS is going to do – compare your tax return to the information that’s been sent in to the IRS already. Things like a W-2 that your employers sent to the IRS or a 1099 that your bank sent to the IRS telling them how much interest they paid you. Those items you want to make sure you’ve incorporated those properly in your tax return. It’s clear and it’s minimize any chance of getting a notice from the IRS.”
Candace Rose: Where can we go for more information?
Greg Rosica: “The EY Tax Guide is available at any place where books are sold online or in traditional bookstores, as well as an e-book format that you can download. You can also go to our website at EY.com/EYTaxGuide where you’ll find out any new information that’s come out recently, as well as a list of the 50 most common overlooked deductions and the 25 most common errors.”