By Wade Coggeshall
For some, the new year means a chance for renewal and self-improvement.
But for most, it means filing taxes.
Jason Gibson, a certified public accountant in Brownsburg, says the annual process can be relatively pain-free, if certain steps are taken.
For one, you can still have a trained professional calculate your tax returns for you. Gibson notes the recent news story of the Internal Revenue Service commissioner saying he pays someone else to file his tax returns.
“It shows the tax code is complex and you should seek professional advice if you need some help,” Gibson said.
He doesn’t see that changing any time soon either. Despite efforts to simplify the tax code, such as the push to legislate the Fair Tax, Gibson thinks some 80 percent of our current tax law is required. It exists not just to extract revenue from citizens to fund government operations, but to give incentive to residents to do certain things (i.e. social engineering). Gibson believes a chaste system like the Fair Tax would eventually get muddied too.
“I’m not one of those people who thinks we can totally do away with our current tax code and go to a simple system,” he said. “That would never exist. We have a complex world. Somewhere along the line there would be inequities, and I don’t think that’s what we want.”
While Gibson believes many people are capable of preparing their own tax returns, the rate at which our tax code is being amended has recently increased exponentially.
“It’s just changing so rapidly today it’s hard to keep up,” he said. “If you’re not a tax professional, you’re not going to be able to keep up.”
Many residents who qualify may miss out on new credits such as one for home buyers or another for energy-efficient remodeling of homes. A person who bought a brand-new automobile in 2009 can deduct the sales tax on that purchase, in addition to the standard tax deduction.
Gibson says it’s a full-time job in itself just trying to stay current on tax law. It’s why he’s cautiously optimistic of the federal government’s proposal requiring a minimum level of education for tax preparers.
“I’d rather someone do their own return than use someone who doesn’t do this on a day-to-day basis,” Gibson said. “You know your situation better than that person. And someone doing tax work on the side isn’t going to be able to keep up with all the changes.”
Regardless of whether you figure your own taxes or have someone else do it, Gibson recommends everyone have a system in place where they collect their tax information.
“I have a folder I throw stuff in all year round,” he said.
That includes documents like prior tax returns, W2 forms, 1099s, expense receipts — any record that supports a number on your tax return.
“If you’re ever audited, you are required to substantiate anything on your tax return,” said Gibson, who recommends you keep such information for at least seven years.
People also should keep data on major life changes, like having a baby, divorcing, or buying a home. Chances are there’s a tax credit for it.
“Everything you do in life affects your tax return,” Gibson said.
And finally, don’t wait until April 14 to start preparing your tax returns.
“Procrastination is bad,” Gibson said. “It usually leads to you preparing a hurried tax return, and that’s the last thing you want to do on a document as detailed as a tax return.”
Gibson’s office is at 701 N. Green St. For more information, call 679-8558 or visit the website at www.jtgcpa.com.
wade.coggeshall@flyergroup.com
