By Debbie Gardner
debbieg@thereminder.com
Eli J. Baron, E A, of Accounting & Tax Associates Inc. of East Longmeadow, Massachusetts,has more than 15 years experience preparing tax returns of all types, garnered while running his own practice, as well as more than a decade assisting various firms as a freelance tax consultant before joining Accounting & Tax Associates.
Prime tapped his expertise for advice for tax procrastinators, and insights into how to prepare for changes that will be coming for the 2018 tax season. Here are his tips:
Q: It’s almost tax filing deadline. What are some of the mistakes people make when rushing to file in the final days?
“The biggest common mistake I’ve seen is people rushing to do their taxes in the first place. Thinking ‘I have to do this quickly’ causes more problems than it solves … people forget to put in items of income – that they have a bank account with interest – or a deduction they can take or a tax credit they can do.
“Another common error is that people incorrectly input their Social Security numbers – or their kids’ Social Security numbers. Also they often lose out on things that, if they didn’t rush at the end, they would be able to look into. For example there are certain opportunities and options when it comes to your taxes – you could fund an individual retirement account for that year, maybe, or put money in your health savings account – there are certain things that you have until tax filing day to do for the prior year, and if you rush and totally forget about that, or you ignore it, then you lose that opportunity to reduce your taxes.
“Also, people doing their own returns commonly overlook deductions – such as the retirement savings contribution credit, which is something individuals in lower income brackets can claim, or the circuit breaker credit certain older taxpayers in Massachusetts can claim – and they leave money on the table.
“And as you get older, there are definitely things that can affect your taxes – taking money from retirement accounts to pay down debt before retiring, putting homes in trusts, gifting to children or grandchildren. You need to think, even last-minute, is there any tax consequence to this?”
Q: There’s been lots of talk about 2018 tax changes – but are there tax law changes people should be aware of while preparing last-minute 2017 returns?
“There are some tax law changes that happened in early February when Congress put back in some provisions that had expired. These are the four that will affect the typical taxpayer:
“1. Tuition and fees deduction, which gives you options beyond just the education credits.
“2. Mortgage insurance deduction – not homeowners insurance, but mortgage insurance – some people get a deduction for that.
“3. Energy efficiency home improvement credit – for things such as buying energy-efficient heating systems and some solar. There is a lifetime cap of a $500 credit, and if you have used it up in the past, you can’t apply it again.
“4. For people had their homes foreclosed on, Congress put back the primary residence mortgage debt exclusion on the Federal level. This exclusion does not exist for Massachusetts, however.
“Also, for those who itemize, the medical-dental-health expenses deduction has been recalculated from 10 percent to 7.5 percent of income, which means if your medical and dental expenditures for 2017 exceed 7.5 percent of your gross income, you can claim the excess. This change expires in 2019.
“As always, it is always advisable to consult a tax professional to determine if you qualify for these deductions and exemptions.”
Q: How can last-minute filers be better prepared to do their taxes next year?
Are there strategies that can help?
“There are checklists and organizers available to use. Another option is to use your last tax return to collect documents. The big thing is for people to set a date to start working on their taxes and not leave it for the last minute. If you start earlier and have a question or need to find a document, there’s time.
“Thinking ahead, 2018 will be very different on the federal tax level. Numerous things have changed – the calculation for standard deduction vs. itemized deductions, the tax rates themselves have changed, certain deductions and exemptions and certain other things have gone away, and certain credits have expanded, like the child tax credit.
“Once you have completed your 2017 taxes, you can look to see how 2018 may be different and how it may affect you. Definitely you should consult with a trusted professional with any questions.”
