10 things you need to know about your taxes

By Jon Moffett

YOUNGSTOWN — Before Valley residents can dream about the sunny picnics and sandy beaches of summer vacation, they must first make it through another season.

Tax season.

Income tax filing season is under way and taxpayers are encouraged to file quickly and carefully. Eric Erickson, IRS spokesman for Ohio, said those who start their tax preparation early are usually more diligent — plus they get their refunds more quickly.

Now that W-2 forms have been distributed, the focus shifts to the new rules and regulations for the 2009 filing season. Here are 10 things local tax professionals said taxpayers should know before they race toward the April 15 deadline:

1 The standard deduction has increased for many taxpayers. According to the Find Law Web site, public.findlaw.com, about two-thirds of taxpayers choose to file a standard deduction as opposed to itemizing things such as mortgage interest and charitable contributions. The standard deductions figures for 2008 are:

U$10,900 for married couples filing a joint return and qualifying widows and widowers, a $200 increase over 2007.

U$5,450 for singles and married individuals filing separate returns, a $100 increase over 2007.

U$8,000 for heads of household, a $150 increase over 2007.

2 Taxpayers have the opportunity to claim an additional standard deduction this year. The deduction is based on state or local real-estate taxes paid in 2008. The maximum deduction is $500, or $1,000 for joint filers.

3 Returns for claim- ing a personal or dependency exemption have also increased. The figure is $3,500, up $100 from last year. Dependents — whose eligibility is determined by several IRS qualifying tests — cannot claim their own personal exemption.

4 A taxpayer can also increase a standard deduction by claiming a federally declared disaster deduction. A form to claim net disaster suffered is available in the 1040 and 1040A packets.

5 New homeowners are also eligible for a new credit. Taxpayers who purchased a home on or after April 9, 2008, are eligible for a first-time home-buyer credit worth up to $7,500. The credit works like a 15-year interest-free loan. The credit can be claimed on the new Form 5405.

6 Another program many taxpayers are unfamiliar with, Erickson said, is the Earned Income Tax Credit. The EITC is available to low-income workers. He said approximately 25 percent of qualified filers fail to claim the credit, which could be as much as $4,800 this year.

The credit is available to low- and moderate-income workers and working families. It helps taxpayers whose incomes are below certain levels. The figures for 2008 are:

U$41,646 for those with two or more children.

U$36,995 for people with one child.

U$15,880 for those with no children.

7 Verda Scott, an agent of the IRS, said one of the most important things to note about this year’s tax season is not to include stimulus checks in returns.

“One important thing that people do need to know is how much their rebate [stimulus check] was from last year, because it is not taxable,” the 40-year tax professional said. “A lot of people had the misconception that it was taxable, but it does not go on their return this year. We’re getting a lot of calls on that.”

8 One tip that might seem obvious is that the more time spent on filing means less complication and chance of error.

“The mistakes that we see all the time are easy to avoid,” Erickson said.

He said simple mistakes, such as incorrect addresses or Social Security numbers, can create unnecessary problems. Common pitfalls include people thinking they know their spouse or child’s Social Security number by heart. Erickson said the easiest way to make sure is to check the card for accuracy.

Local tax professionals agree with Erickson, saying preparation is the easiest way to ensure a speedy and accurate filing.

“You need to have a government-issued photo ID, because without that you won’t be able to process anything,” said Ed Khatib, franchisee of two Jackson Hewitt Tax Service locations in Youngstown. “You have to have everything in order and it’s important to have and know what documents you need.”

Khatib said this time of year tends to be busy because companies are required to distribute W-2 forms by the end of the month. He said the last week of January and first of February bring the most attention to tax time.

“We are in the high peak of the [tax] season,” he said. “I [expect] to see an increase over this weekend and the beginning of next week for filing.”

9 Erickson said filing returns online is quicker and more effective than using mail. He said filing online can speed up the return process, bringing refunds in as little as 7-10 days, as opposed to 6-8 weeks for paper filing. He added that by filing online, there is less chance for error because the software can detect mathematical errors. He added the error rate for paper filing is about 20 percent. The rate for online filing is less than 1 percent, he said.

The online software, used by many area tax professionals, can also detect deduction eligibility the filer may not be familiar with.

“We know how to follow to roads the IRS wants this to go through,” Scott said. “People miss too many deductions ... As taxpayers, we want what’s coming to us. We don’t want to cheat, but we want what is coming to us.”

10 The best way to understand eligibility for all credits and deductions is to visit a tax preparer, or visit www.irs.gov. All forms are also available on the IRS Web site.