- The Washington Times - Monday, March 16, 2009

DES MOINES, IOWA (AP) - We’re at T-minus one month and counting until taxes are due. So far the government says more of you are doing your own taxes, and getting bigger refunds this year than last.

The IRS data compiled through the first week of March shows already this tax season refunds are higher than last year averaging $2,800.

Self filing is up 20 percent to more than 18 million as of March 6, the IRS said.

“I think people are becoming more familiar with computer use and have become more comfortable with doing financial transactions on the computer,” said Nancy Mathis, an IRS spokeswoman. “This has been one of our big growth areas for the past several years.”

Whether you do your taxes yourself or rely on a professional, there are several things to keep in mind as you prepare.

FREE TAX FILING

_This Saturday, March 21, between 9 a.m. and 2 p.m. free tax help will be offered at 250 IRS taxpayer assistance centers and 1,000 community sites across the country. If you earn $42,000 or less, you’re eligible for the free tax return preparation. Locations and details are listed by state on the IRS Web site at: http://www.irs.gov/individuals/article/0,,id204165,00.html

_The Free File Alliance is a federal tax return service available to about 98 million taxpayers who have an adjusted gross income of $56,000 or less. It’s a coalition of 19 private tax software companies that have partnered with the IRS to provide the service. More than 24 million taxpayers have used the service since it began in 2003. Through electronic filing, refunds can be delivered in as few as 10 days. A link is provided on http://www.irs.gov on the left side of the screen. Many of the companies also provide state tax filing for which they will charge a fee.

_Major tax software companies including TurboTax and H&R; Block also offer a version of free filing for the simplest federal returns. You should be sure these services meet your individual circumstances.

MISTAKES TO AVOID

_Avoiding E-filing

Many people are still nervous about filing taxes online. But mistakes are much easier to fix if you file electronically, said Jackie Perlman, a tax analyst at the Tax Institute at H&R; Block.

A mistake such as a transposed Social Security number for a child would result in an alert within 24 to 48 hours on an electronic filing. You could fix it, send it back and be done with it, Perlman said. On a paper filing, the IRS would consider it a math error and likely remove that child and any exemptions or child tax credits claimed. “It would take weeks and maybe months to straighten out,” she said.

_Not filing a return

The IRS said many taxpayers are under pressure this year because of the economy and it’s extending an offer to work with those who owe taxes but can’t pay.

“People can get a little nervous if they’re a little short of cash right now,” said Mathis of the IRS. “When people cannot pay their taxes in full by April 15 they need to come in and talk to us. There are things they can do such as an installment plan. The worst thing they can do is not file a tax return.”

_Taking a refund anticipation loan

These loans cost 8.7 million taxpayers about $900 million in fees in 2007, said Laura Fisher, director of the American Bankers Association Foundation. The loans typically carry high fees and can be risky if you make an error on your tax form or for some reason your refund isn’t as much as you expected.

“You still have to pay back the bank for the loan,” she said. Filing tax forms electronically and using direct deposit can get you a refund in a week or less.

_Seeking help for complicated returns

Although most over-the-counter or online tax products walk you through many scenarios that help you do taxes on your own, that may not be enough. If you experience significant changes such as marriage, divorce, having a child or buying a house, you may want to seek the advice of a preparer.

In some cases, it’s even advisable to get a second opinion.

Just ask William Danner, of Columbus, Ohio, who discovered this when he decided to have his 2007 taxes double-checked last year. The result was he refiled his returns for three years and recovered thousands of dollars.

Danner, 44, a metal fabricator for Columbus Sign Co. said his 2007 return initially had him owing as much as $15,000 before he took it to an H&R; Block office, which was offering a second look for $29.

Danner said money he receives to care for his handicapped sister had been categorized incorrectly by his previous preparer, an accounting firm, in way that increased his tax burden. In the review, it was determined that income was considered “difficulty-of-care” payments by the IRS and weren’t required to be reported, reducing his tax burden and providing him a refund instead of a payment.

He refiled for 2005, 2006 and 2007 and recovered $20,000.

Doing his own taxes now would be too scary, he said.

“Now that I have a family, I have other deductions, kids in school, it just makes it too complicated,” he said. “It’s always good to do that second look, to have another person look at your taxes.”

The Tax Institute’s Perlman said doing your taxes yourself is a subjective decision based on an individual’s level of comfort.

With the changes many people are seeing this year _ loss of a job, a move to take a new job, changes in home ownership _ could mean they’ll need more than the standard do-it-yourself program.

“For anything that’s out of the ordinary, it has a very good idea to talk to a tax professional,” she said.

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