Friday, April 4, 2014

Terrence Rice, CPA shares tax tips for 2014

As the filing deadline looms, income tax professionals are urging residents to
not delay.
According to Terry Rice, Milwaukee CPA, people most often delay preparing their
taxes because they’re afraid they owe money.
“The one thing I’d love for taxpayers to understand is the biggest penalty is
failure to file,” he said. “File even if you can’t pay, or if you can’t pay immediately.”
The IRS notes on its website that a failure-to-file penalty is generally more than the
 failure-to-pay penalty. Usually, filing penalties are around 5 percent per month taxes
are unpaid, while payment failure penalties are 0.5 to one percent per month. The
IRS will work with taxpayers who have trouble making payments, like setting up
installments.
As more and more taxpayers turn to software or online programs to help them
 prepare taxes, Rice said he’s also noticed more calls from people wanting free
advice. But Rice urges those people to set up appointments to speak with tax
professionals instead.
“It’s like calling the doctor and saying, ‘my left knee hurts, give me pain pills,’”
 he said. “It’s hard, really hard, when people ask a blind question with no context.”
Rice said that with those blind questions, he doesn’t know what software the
taxpayer is using or their income complexities. His office still uses specialized
 software, making it difficult for him to provide any advice. Tax preparation
software and websites usually have toll-free customer service numbers
customers can call for better assistance, he said.
He acknowledged these digital products are good tools for people with easy
 taxes. When taxpayers run into wrinkles, however, he said it’s best to consult
a professional. They’re usually more up-to-speed on complex tax law, tax
credits and deductions. They can also help if a taxpayer received a letter
from the IRS or state after filing.
“It’s scary to get a letter … but they can make mistakes, too,” he said.
“It’s good to have the assurance of someone who’s objective and will file
a letter or send papers on your behalf.”
Fees for tax preparation at Rice's office are comparable to H&R Block.
The Health Care Act factor
Rice also said the biggest change taxpayers can expect will actually
come next year, when the IRS begins assessing penalties for those without
health insurance. For the 2014 tax year, that penalty will be $95. The
following year, it’ll jump to $695 and keep rising annually after that.
“Right now, the Affordable Care Act is a law without a lot of teeth,”
he said. “Your penalty of $100 is a lot less than the $2,400 you might
 pay for the year if you carry insurance. Although, if something happens
 to you, that’s the other piece.”

Terry Rice can be reached at 414-507-2414..