For local residents who file their own tax returns, what they don?t know can hurt them ? in the wallet.
When sitting down to do your taxes, many choices abound, like whether to file online, send your return in the mail, do taxes yourself, do them with a computer program, go to a certified public accountant or utilize a “chain” company such as H&R Block. These decisions, along with what expenses are deductible or can be used as tax credits, often result in improperly filled out forms.
“Overall, most people that fill out their own tax returns lose a lot more money than they were entitled to because they weren?t aware of the reductions,” Maryland Society of Accountants Executive Director Donald Hull said. “These are things that an accounting firm, CPA or agent should know the answers to.”
Different than deductions, many filers are unaware of claiming tax credits on their return. A tax credit is a direct dollar-for-dollar reduction in your tax liability, Maryland Society of Accountants member Gene Utterback said. Tax credits are usually better than tax deductions, which only reduce your taxable income.
Things that can count as tax credits on people?s applications include refinancing mortgages with a new company and paying for children attending college.
“The biggest pitfall that I see is [people] are not making available the deductions that Uncle Sam allows,” Hull said.
As for the most efficient way to file, the Internet seems the clear-cut choice of both firms and the every-ay person. They prefer sending in all their tax return data on an electronic form on the IRS Web site.
This sends the documents directly to the state and federal offices. Electronic filing not only gets refund checks faster than sending through the mail, it also has the documents verified sooner, taking merely hours to get confirmation of a correct application or pointing out a mistake.
“Electronic filing is so much better than even thinking about paper filing,” Hull said. “If there is an issue, we know within hours.”
