Scheffel & Co. Preparing for Another 'Taxing' Season
Scheffel & Co. P.C.�s Tax Team is headed by Principal and Certified Public Accountant Michael E. Fitzgerald, seated, out of the Alton office, and includes CPAs Kathy Fitzgerald, left, and Cory Gallivan.
(Alton, IL - January 26, 2010) � Calculating taxes may �tax� the brain and maybe even the wallet, but Scheffel & Co. P.C. takes it in stride as the tax team prepares for the inevitable tax season that rolls around every year.
Mike Fitzgerald, principal and head of the tax department at Scheffel & Co., said that working with taxes and interacting with people is a fun and an enjoyable way to do business.
Fitzgerald has been with Scheffel & Co. for 27 years, and said he finds taxes interesting because there is always something new - and a constant need to stay updated.
Along with totally new laws there are also those that are simply changing or updating old ones. And paying attention to the constantly changing or evolving tax laws like simplifying the distribution of Individual Retirement Accounts and pension plans or applying appropriate deductions takes a lot of due diligence. The Scheffel tax team constantly monitors the changing tax laws and familiarizing themselves with changes not only at tax time, but throughout the year.
There are many things that people need to be looking for. Some that might be particularly beneficial to many average taxpayers include: 1. Education credits for the state of Illinois, which includes a percentage of what is paid for books and tuition over a minimum amount, including public school book payments. 2. Earned income credit. This credit is a refundable credit as long as the taxpayer has had some earned income but falls below a certain level. Individual situations would need to be looked at specifically, but Fitzgerald said this is something to be aware of.
A new twist to an old rule allows taxpayers who purchased a new car, light truck, motorcycle or motor home after Feb. 16, 2009, to potentially deduct the sales and excise taxes, even if the taxpayer claims the standard deduction.
Lifetime Learning Education Credits and the Hope Credit, which may be modified by the American Opportunity Tax Credit, depending on individual circumstances, are areas to take a look at for those who attended or had dependents attending post secondary school in 2009.
An $8,000 tax credit for first time home buyers was extended retroactively to the beginning of 2009 and extended forward into 2010. A new $6,500 credit was created for existing homeowners who have lived in their existing home for at least five of the past eight years, who buy a new home. The income limits for new home buyers has also been expanded to allow more to qualify for this credit. Childcare credits for dependent care can be used even if one spouse is attending school while the other is working.
�That�s something that I think a lot of people are unaware of,� Fitzgerald said. �Cafeteria plans for child care are something to definitely utilize if it�s available through an employer. Employees are allowed to set aside part of their salaries as pre-tax dollars, and it�s a great deal.�
Energy credits are a big deal for 2009. In most cases, taxpayers can claim up to a $1,500 credit of the price of a 2009 installation of a new furnace, insulation or windows that meet energy standard requirements.
�Along the same lines, qualifying energy-efficient hybrid vehicle purchases can also be used to claim a credit,� Fitzgerald said. �The amount of the credit depends on the efficiency of the vehicle.�
The Alternative Minimum Tax was originated to target a small number of high-income taxpayers who could claim so many deductions they owed little or no income tax. But Fitzgerald said a growing number of middle-income taxpayers are discovering they are subject to the AMT.
In some cases, taxpayers may need to file extensions if for some reason they do not have all the necessary documents. Fitzgerald said this sometimes occurs for owners of a partnership or �S� Corporation and though it doesn�t stop the need to make payments by April 15, these payments are usually made by providing an estimate, and the final tax documents are given an extension.
�It doesn�t increase chances of an audit or do anything detrimental,� Fitzgerald said. �But if a payment was due on April 15 greater than what was paid, there could be interest or penalties associated with that amount.�
A few years ago the Internal Revenue Service began providing a deferred or installment payment plan agreement where a taxpayer who is unable to pay all taxes owed at one time can fill out a Form 9465 for qualification. If the taxpayer meets the requirements a plan is agreed upon to pay owed taxes in installments.
Electronic filing is now practically the standard, and Fitzgerald said the nice thing about electronic filing is that you know it has been received by the IRS.
�They accept it, meaning that it adds and subtracts correctly and you know they have it,� Fitzgerald said. �It doesn�t mean it will never be audited or will be treated any differently, but you know it�s there.�
