Tax preparation time is here
It’s that time of year for one of two sure things in life — the other one is death.
Taxpayers started lining up in accountants’ offices to have 2002 returns prepared Monday.
“Today is the day because we have to wait until people get their W2 forms, and companies tend to wait until the last minute,” South Lake Tahoe certified public accountant Dave Olivo said. “My 13-year-old son kisses me goodbye after Feb. 1.”
His Swiss Village office handled 27 appointments Monday from 9 a.m. to 10 p.m.
The most significant changes filers will find this year involve access.
On the South Shore, forms are no longer available at the post office. They’re on hand at the El Dorado County Library’s South Lake Tahoe branch on Rufus Allen Boulevard.
Internet users may revel in the first year the Internal Revenue Service will allow free electronic filing on its Web site at http://www.irs.gov.
But filers beware, CPAs warn.
The IRS tends to evaluate self-filed returns more than those prepared with help, and the auditing rate has doubled in recent years in the South Lake Tahoe area from 1.25 percent to 2.5 percent.
Then, there’s the sheer nature of human error with dealing with the unfamiliar.
“We’ve had teletax around for quite some time, and I still have people who can screw it up,” said Jack Marcarelli, a Zephyr Cove accountant.
Marcarelli acknowledged that through the years tax rates have gone down and the incentive to save has increased.
“They’re very concerned about Americans saving. I have a lot of people who make over $100,000 and don’t have interest income,” Marcarelli said.
The 2002 tax code offers income earners increased credit on their IRA contributions from a maximum contribution of $2,000 for 2001 to $3,000.
Low-income individuals may notice a raise in the credit of up to 50 percent on contributions made to retirement accounts, South Shore accountant Weldon Wulstein pointed out.
For those socking away money for their families, the income levels available to taxpayers increased for 2002. For example, low-income couples with two children making up to $34,178 qualify for an earned-income tax credit.
Educators may end up with the short end of the stick though.
The $1,500 annual teacher retention credit granted in 2001 was eliminated and replaced by a $250 deduction for classroom supplies.
This is a drop in the bucket compared to what teachers like Holly Greenough of South Tahoe Middle School shells out. She estimated she spends on the average $100 a month.
“In all honesty, teachers spend a fair portion of their salaries on classroom supplies. But you have these kids without clothing and supplies,” she said, explaining her investment.
Small businesses may want to seize an increased deduction on new assets to $59,000 — up from $24,000 in 2001.
The highest tax bracket was reduced from 39.1 percent to 38.6 percent, while the lowest dropped to 10 percent for the lowest income earners in 2001.
Those who have an extracurricular activity in the “Women helping women” gifting circle may want to take note.
The California Society of Enrolled Agents warned the IRS is cracking down on the gifts, which have ranged from $625 to $5,000 per person to join. The federal agency has “a nasty surprise for anyone who thinks the payouts are tax-free,” the taxpayers advocacy group writes.
Although participants claim they sign a form authorizing “this gift is freely given,” the California Attorney General’s Office — along with those from other states — does not recognize the exchange of cash in the pyramid as a gift.
District attorneys across the state, including El Dorado County’s, considers the activity illegal.
The circles generated much interest in South Lake Tahoe about a year ago.
Susan Wood can be reached at (530) 542-8009 or via e-mail at firstname.lastname@example.org.
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