Business

Filing taxes early may result in closer scrutiny of returns

LYNN ? Whoa!If you’re chomping at the bit to file your tax return, mostly likely because you anticipate a return, it might behoove you to wait a few weeks.Most tax preparation experts agree that returns filed closer to the April 15 final deadline stand a far better chance of being given a cursory review rather than a fine-tooth analysis.”At the beginning of the tax season, the IRS hires a big staff to handle all the incoming filings. That means there is more time for them to study your return and maybe find something you didn’t put down correctly,” said David Peralta, owner of a tax preparation service and insurance company at 56 Andrew St. in Lynn.According to Peralta, most taxpayers are forthcoming about their finances, but returns can get complicated when they involve tax shelters, and illegitimate shelters are likely to be flagged by auditors.The federal Internal Revenue Service handles most filings from Greater Lynn at its Andover facility. According to IRS spokesman Peggy Riley, additional temporary staff is hired during the holiday season to beef up the ranks of tax analysts.Although the government’s 1040EZ form is the easiest to file, electronically or otherwise, and hence its EZ designation, it does not allow for more detailed deductions. As a result, some taxpayers could benefit from taking additional time to gather the receipts necessary to complete the standard 1040 form, with its related schedules.Typically, taxpayers fill out one or all of schedules A through E n respectively itemized deductions, dividends and interest, self-employment data, capital gains and losses, and rental property income.”If you have the receipts, it’s certainly worth saving them, but it takes some organizing,” Peralta said. “I’ve had people come in here with a shopping bag full of receipts. I don’t do that. It would cost them too much. I tell them, go home and sort them out, put everything down on paper, and then come back.”There are other reasons for not filing early during the 2008 tax season, including recent changes in the tax law, some of which were not authorized until Feb. 11.Legislation related to the alternative minimum tax (AMT) was signed into law on Dec. 27, and some federal tax forms designed to accommodate the change are still awaiting approval.”Every day I check the IRS Web site for updates,” Peralta said. “A lot of people were ready to take energy credits this year, but until Feb. 11 it was impossible to file for them.”In other words, if you filed early, you could have missed out on some credits or deductions, including those related to education and childcare.According to the IRS, more than 13 million taxpayers with tax returns affected by late enactment of the Alternative Minimum Tax “patch” in December will face delays with filing and refunds. The only people affected are those using any of five specific forms, including form 8863 for Education Credits, for 5695 for Residential Energy Credits, Schedule 2 on form 1040A for Child and Dependent Care Expenses , and form 8396 for Mortgage Interest Credit.”It’s human nature to want to file early if you think you’re getting a return,” Peralta said. “Only it might not be the best thing to do.”

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