Parsippany, N.J.-based Jackson Hewitt Tax Service has unveiled a mid-year list of top areas taxpayers should be considering or have pointed out to then by preparers to help put them in a better position when filing their tax returns next April.
Taxpayers would benefit from spending some time this summer reviewing their tax profiles and girding for possible shifts in the tax landscape, according to the tax prep chain. Nearly every taxpayer will be impacted by higher taxes and significant changes when they file their 2012 and 2013 returns, said Mark A. Steber, chief tax officer of Jackson Hewitt Tax Service Inc.
"Not only were the Bush tax credits set to expire and the new Affordable Care Act tax provisions set to begin, but the upcoming presidential election will set the stage for what the Tax Code will look like in the coming years," Steber noted.
Jackson Hewitt's tips:
1. "Taxmageddon." Problems for 2013 are expected to occur if certain provisions are not made by Dec. 31, 2012. The upcoming tax situation could include loss of deductions such as the educator's expense deduction, the tuition and fees deduction and the sales tax deduction. In addition, the Alternative Minimum Tax is currently expected to increase taxes on more than 20 million taxpayers. Other considerations include the reinstatement of the marriage penalty and possible increases in capital gains. The Affordable Care Act tax changes are also currently scheduled to begin in 2014.
2. Major life changes. Marriage, having or adopting children, buying a home, moving for a new job or returning to school: All should be considered in a client's life, not only now, but later in 2012.
3. Withholdings. Sometimes it's beneficial to consider changing a withholding status during the course of the year -- for instance, if a child is born or if a taxpayer works multiple jobs during the year.
4. Clients' savings. Saving in an IRA account or participating in a company-sponsored 401(k) plan should be considered. For 2012, clients can contribute up to $17,000 for a 401(k) plan if younger than 50 ($22,500 if 50 or older) and up to $5,000 for an IRA if under age 50 ($6,000 if 50 or older).
