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Taxing times

Possible savings, pitfalls prevalent

April 5, 2009
By RICHARD NILSEN/The Leader-Herald

With a recession and economic stimulus package hitting an already complicated income tax process, many need assistance filing 2008 income tax returns as well as planning for next year's taxes.

Certified Public Accountant Peter McNamara of Johnstown said he has been in the tax return business for 41 years and "there's always something new."

CPA Maria Cozzolino of Gloversville said a new wrinkle in 2008 tax returns allows homeowners who use standard deductions to add their real estate taxes (up to $500 for individuals and $1,000 for married couples filing jointly) to the standard deduction.

Article Photos

The Leader-Herald/Bill Trojan

Maria Cozzolino, left, a certified public accountant in Gloversville, works with Amy White, an administrative assistant, at Cozzolino’s office in Gloversville on Wednesday.

"Volunteer firefighters and ambulance workers can also get a $200 credit on their taxes," she said.

Linda Gould of Fort Plain said part of the problem with preparing taxes is the rules keep changing.

"One thing to do is take advantage of energy credits coming back," Gould said.

"Insulate now if you can and put in low-energy glass if you can afford it," she said, referring to new way to earn a tax credit.

McNamara advises people to call their accountant before buying a home or making improvements.

"I have a client who moved here from out of state and could have received a $7,500 interest-free loan," he said.

Diane Wood of Jackson Hewitt Tax Service agreed, adding home purchases made after April 9, 2008, and before July 1 can get a 0 percent loan, which can be paid back over 15 years from tax refunds.

Tax preparer William Auty of Gloversville, an enrolled agent, has advice for tax filers.

"First, if you didn't get a stimulus payment last year, file for it this year," he said. "Second, unemployment benefits are taxable and job hunting expenses are deductible. Third, make sure you have enough taken out of your taxes for 2009. You may get less [of a] refund than you expect."

McNamara also advised against withdrawing money from an Individual Retirement Account, where penalties and lost interest cost the home buyer significantly.

"Call your accountant first," McNamara said. "If you don't know - ask. There are so many situations where an expert can help. Turbo Tax and free tax help [on the Internet] won't advise you on your taxes."

Tax filers

Local tax filers had a variety of approaches to filing their taxes.

Dave Miller of Caroga Lake said he works for the Tire Center in Johnstown and has had the same tax preparer for the past six years.

"I just hand her my paperwork and get a nice check back," he said.

Miller said he didn't investigate the details of tax programs, leaving that to his professional preparer.

"My taxes are pretty straightforward," he said. "It's not complicated."

Lita Hillier of Johnstown is a bookkeeper and is using TurboTax for the second year to prepare her tax return.

"It works good," she said. "It leads you right through the process."

Hillier said she liked that Turbo Tax would red-flag items that needed attention as a person used the program.

Free filing is available at www.irs.gov for those who earn less than $56,000.

Tom Earl of Broadalbin said he used the free tax program provided by the IRS online.

"You just follow the directions," he said.

Looking ahead

Tax preparer Brian Gifford of Mayfield said preparing 2009 tax returns will be more difficult because of added provisions having to do with the economic stimulus package.

"It will be a watershed year," Gifford said.

For many people, less tax money is being taken out per paycheck this year because of the federal government's economic stimulus package.

Cozzolino, along with other tax preparers, said people need to remember that.

"Pay attention to the decrease in taxes withheld," she said. "Don't get stuck paying too much back later."

Richard Nilsen is a general assignment reporter and can be reached at ga@leaderherald.com

 
 

 

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