Upcoming Tax Trends from E-How Money

They say there are only two things certain in life: death and taxes. But even with taxes, your must-dos in a given year are far from certain, thanks to annual tax code changes and other trends. Some of the biggest changes for 2013, though, are in tax technology.

Consumers and professional tax-preparers have access to more advanced software that makes for faster tax preparation, a more accurate return and — if you’re lucky enough to be owed one — a speedier refund. We talked to tax experts about five changes taxpayers should keep an eye on.

Rising Tax Rates

If President Obama and Congress don’t take action, a number of tax breaks — including the 2 percent payroll tax cut for workers — will expire Dec. 31, 2012. Lawmakers are working toward a compromise, but it’s likely that taxpayers will see at least some tax increases as a result, either through higher rates or fewer deductions, says Brian Greenberg, a certified public accountant and owner of Brian C. Greenberg & Associates in Marlton, New Jersey.

In previous years, tax experts have suggested that homeowners make their January mortgage payment in late December to get the extra mortgage interest deduction. This year, however, taxpayers should push any deductible expenses to January — and to the next tax year — if possible. “Any deduction next year is going to be worth more,” he says.

Preparing Via Smartphone

(photo: Photo courtesy Turbo Tax)

Yes, really! Tax preparation firms and the Internal Revenue Service have been introducing more apps that let taxpayers do some tax tasks from their phone — even file a return. In 2011, the IRS released an app called IRS2Go, which lets users track the status of their returns and their refunds.

Now there are apps like TurboTax SnapTax, which let taxpayers who use Form 1040EZ file by snapping a picture of their Forms W-2. More than 500,000 Android device owners have downloaded the app, according to the Google Play app store. There’s no word yet on how many consumers are hopping on the smartphone-filing trend. The IRS doesn’t include that statistic in its records.

Filing Electronically

More taxpayers are filing their returns electronically. According to the IRS’s latest statistics on returns filed in 2012, self-prepared e-filed returns are up 9.7 percent. Those from tax preparers are up 4.3 percent.

“That’s a good thing,” says Greenberg.

Online systems catch a number of common errors, such as entering the wrong Social Security number or incorrectly transferring income from a Form W-2. Normally, those problems would take a few weeks to spot and require you to do more paperwork, he says. The IRS also promises that e-filing will get your refund to you twice as fast.

Some state tax authorities now penalize those who file paper returns, or are considering doing so. In 2012, the state of New York considered — but did not put in place — penalties of $25 to $50 for people who used tax software to prepare their return but chose to submit it by mail instead of electronically.

Encountering Tax Identity Theft

Tax identity theft is a big problem. According to the IRS, 938,664 fraudulent tax returns representing $6.5 billion were filed for tax year 2011. The Treasury Department’s inspector general for tax administration identified another 1.5 million potentially fraudulent returns involving $5.2 billion.

One person may find that someone else has filed a return under his name and Social Security number, or that his refund has been intercepted, says Adam Levin, chairman and founder of Identity Theft 911. Worse, it’s often the tip of the iceberg.

“If there’s a problem with your taxes, there’s usually a problem in other areas,” he says, like medical bills or a criminal record under your name.

Using the Web To Meet With Tax Preparers

(photo: Medioimages/Photodisc/Photodisc/Getty Images)

If you’re using a professional preparer, you might not even need a lengthy in-person meeting these days.

“Everyone is forwarding us their digital information to prepare returns,” says James Bourke, a certified public accountant and partner at WithumSmith+Brown in Red Bank, New Jersey. Some preparers are using online portals that allow clients to upload scanned Forms W-2 and other documents securely, he says, eliminating the danger of email-related fraud. That digital submission, along with advanced software that automatically pushes the details into a Form 1040, speeds the process.

 

Source:http://www.ehow.com/feature_12251463_big-tax-trends-2013-consumers-should.html