Alleviating tax-prep pain

Gayle B. Ronan

This year giving Uncle Sam his due may be even more complicated thanks to mid-year and late-year tax code changes.

Here is a rundown of where the potential for confusion — and ingestion of extra aspirin — lies:

Hidden deductions
Many taxpayers are stumped about where to enter their state sales tax, higher education and educator expense deductions based on the questions being submitted to the online companion site to J.K. Lasser’s Your Income Tax 2007.

It is understandable. Those lines are missing from the tax forms because Congress failed to extend these deductions until after the returns were printed.  Worse, how to take them is far from obvious as Donna LeValley, a contributing editor to Lasser’s explains. 

Free tax help The IRS offers no-cost tax help: Its Web site, has information on any tax topic, publication, instructions or form. You can research tax questions, order forms and publications, view IRS bulletins and use interactive tools for making certain calculations. Phone assistance. The IRS has several toll-free numbers to call for tax help. For individuals, call 1-800-829-1040; for businesses, 1-800-829-4933. People with hearing impairments should call 1-800-829-4059. IRS Taxpayer Assistance Centers provide help in person at walk-in sites. Go to the IRS Web site and click on your state to view the centers there. To find the site nearest you, you can also enter your five-digit ZIP code in the “Walk-in Site” search box. The independent Taxpayer Advocate office within the IRS doesn’t help you file your tax return, but it does help with unresolved tax issues or problems with the IRS. Call the Taxpayer Advocate toll-free at 1-877-777-4778. Source: Associated Press

The State and Local General Sales Tax Deduction now goes on line 5 of Schedule A (Form 1040). But taxpayers need to enter an "ST" notation to the left of line 5 to indicate they are claiming the sales tax deduction instead of the deduction for state and local income taxes, which is what the line is intended for.

The Higher Education Tuition and Fees Deduction may be claimed on Form 1040, Line 35, which is for the Domestic Production Activities Deduction.  A "T" needs to be entered to the left of the line if only the tuition and fees deduction is claimed.  If both the tuition credit and the domestic production deductions are being claimed, a "B" is required instead.

Educators claiming a deduction for out-of-pocket classroom expenses are referred to line 23 of Form 1040, which is used for the Archer MSA Deduction.  Here a side notation of  "E" for educator expenses or a "B" to claim both the MSA and classroom expense amounts is required.

A day later if you’re a tax form short
Another printed point of confusion in the IRS’ materials has to do with the filing date itself.

“Much of the IRS material went out showing April 16 as the filing date this year, but it is actually April 17,” says LeValley.   Filers have two extra days because April 15 falls on a Sunday and Monday, April 16 is a legal holiday in Washington D.C.

Overly energetic credit claims
JustAnswer.com’s tax experts are also reporting confusion over this year’s energy tax credits.

“Many taxpayers are confusing the ‘energy-efficient’ stickers that come on their appliances with qualification for the credit. It doesn’t work that way,” explains Andy Kurtzig, CEO of the fee-based tax question and answer Web site.

The energy improvements the IRS is giving credit for involve new purchases of items like solar panels and air conditioning units or some windows — not refrigerators or washing machines.  “Taxpayers need to read the instructions carefully to see what qualifies,” he adds.

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