By Robert Carter
North Jefferson News
The battle between President Barack Obama and the Republican majority in the U.S. House of Representatives over the so-called “fiscal cliff” resulted in several changes for the 2013 tax year, but it also caused some changes that affect the tax returns you’ll be filing soon for 2012.
The biggest issue was the filing date — not the traditional April 15 deadline, but instead the first day that the Internal Revenue Service could accept returns. That date was Jan. 30, and was caused by the down-to-the-wire negotiations between the two sides in Washington, and the time needed to implement the changes.
That’s meant business has been slow at first for tax preparers such as Doris Melton, who runs the Liberty Tax Service franchise in Fultondale.
“It’s been a very, very slow start — an absolute crawl,” Melton said. “People are very apprehensive about owing taxes. They don’t know how soon they’ll get their refund back.”
That’s due in large part because the IRS has chosen not to use a refund cycle chart as it had in the past, which helps taxpayers know when their refund would arrive.
“In the past, their chart said that if you file within a certain date range, you would get your refund by ‘X’ date, and now they have chosen not to do that,” said Kevin Green, CPA, president of McAnally Tax Service in Gardendale.
As for changes that affect upcoming returns, Melton said the most significant was increased diligence on the earned income tax credit, which is for low- and medium-income families with dependent children. This sometimes results in a negative tax — in other words, a payment from the government.
“You have to verify that you are the head of household, and can provide documentation with bills and invoices, and also that the children lived with you at that house all year,” Melton said.
“The IRS is asking us to do a lot more work to prove that people are eligible,” Green said. “The primary thing is that there’s a lot of fraud out there, and they are trying to combat that.”
Melton added that sometimes more than one adult would be living in a house with children, and each would try to claim head-of-household status. “Diligence on this was not pushed as much last year as it is this year,” she said.
Delays in handling certain forms means that some taxpayers can’t file a full return just yet. For instance, forms for tax credits which benefit taxpayers with tuition expenses won’t be accepted until mid-February because fraud-detecting systems are being retooled, Green said.
The Form 4562 for depreciation and amortization won’t be accepted until sometime in March, which delays things for business owners who write off part of their equipment costs each year, Green added.
And for those who have to pay additional estimated taxes on a periodic basis, tax preparers can’t even issue payment coupons yet. “That still hasn’t been approved. We didn’t get word on that one,” Melton said.
Green said the IRS has a great deal of information about filing taxes on its website at www.irs.gov.