Dave Olson, Published February 08 2013
Expert: Many 2011 tax breaks extended for 2012FARGO – Tax season can be, well, taxing, but this time around there are things to be thankful for, Bob Dale says.
Dale, a tax partner at Widmer Roel, a certified public accounting and business advising firm in Fargo, said many tax provisions that were around in 2011 were extended into 2012.
And those, Dale said, “Were really huge; they saved a lot of money for a lot of people.”
One of those provisions was the extension of the child tax credit of $1,000 per child under age 17.
Also beneficial was an extension of a provision that prevented millions of taxpayers from being subject to something called the Alternative Minimum Tax, he said.
“That (exemption) will keep people off the AMT in the future as well,” Dale said.
Also for tax year 2012, Dale said, the Internal Revenue Service is updating a number of forms that won’t be ready until mid-March.
It means tax returns that require those forms can’t be filed until then. Affected returns include any that use depreciation, general business credits, the American opportunity education credit or the domestic production activity deduction, a credit that farmers receive.
In years past, farmers have been required to file returns by March 1, but because of the IRS updating, farmers will have until April 15 to file this year, Dale said.
For people who itemize deductions, Dale said the same general advice that applied in past years holds for tax year 2012: Save receipts for any deduction items, particularly charitable acknowledgements and receipts to charities.
“Since the IRS matches that information, it becomes really critical to be careful that you get those numbers right in your returns.” He said it can help to use last year’s tax return as a guide to identifying deductions.
Dale, who has done tax preparation work for 30 years, said in the past five years or so the tax code has exploded in complexity.
“You’ve got a lot of different phase-ins and phase-outs, credits that apply to certain people and not to other people,” he said.
Still, when it comes to filing simple returns, particularly simple federal returns, Dale said do-it-yourself software programs are usually fine.
Dale said where software programs may have trouble is catching all of the tax credits available in a particular state.
For Minnesota residents with children in school, one thing often overlooked is a tax deduction for money spent on extra-curricular activities not related to sports.
Dale said tax professionals can also help with planning, such as determining when may be the best time to take a capital gain.
The issue was particularly important in 2012 because tax rates and rules will be changing in 2013 for high-income filers, he said.
“It is huge,” he said, adding that tax year 2013 is when all of the tax increases for the wealthy will hit.
“And it’s a big deal,” he said.
Readers can reach Forum reporter Dave Olson at (701) 241-5555