CPA has tips for procrastinators as tax deadline nears

ChristineDugas for USA Today writes: As the April 15 tax deadline approaches there are still some tax-filer slowpokes. But the procrastinators shouldn’t wait too long. USA TODAY personal finance reporter Christine Dugas asked Lisa Lewis, CPA at the American Tax & Financial Center at TurboTax, for a few last-minute tips to help them get going.

Q: Does the Affordable Care Act affect taxes?

A: The requirement to purchase insurance under the Affordable Care Act does not affect your 2012 individual income tax return. However, your 2012 return will help determine your eligibility for a tax credit or subsidy from the government to help you pay for your health insurance.

Q: Are there tax changes for Social Security and Medicare?

A: Not for the 2012 tax return. But for Medicare, an additional tax goes into effect in 2013. Individuals making over $200,000 and $250,000 married filing jointly will see an increase of 0.9% Medicare tax imposed. And for Social Security, an employee’s personal portion of the Social Security tax went back up 2 percentage points to 6.2% with the expiration of the Payroll Tax Holiday.

Q: Who benefits from the Earned Income Tax Credit?

A: The Earned Income Tax Credit (EITC) is for people who work, but have low wages. More than 27 million taxpayers received nearly $62 billion in Earned Income Tax Credits for the 2011 tax year. The credit, which could be worth up to $5,800 for a family of four, is among the most commonly overlooked tax credits. Anyone with earnings under $50,000 should see if they qualify.

Q: Who is considered Head of Household, and do they receive a tax benefit?

A: This is a filing status available for people who are single (unmarried as of Dec. 31, 2012) and financially support a child or dependent who lives in their home. Qualifying for the Head of Household filing status means you’ll get a larger Standard Deduction, which saves you more money on your taxes. There are a series of rules to determine if you are eligible.

Q: If you had a mortgage debt forgiven, is this debt still non-taxable?

A: Yes, as a part of the American Relief Act of 2012 (helping Americans avoid the fiscal cliff) Mortgage Debt Relief legislation was extended, which excludes up to $2 million of forgiven debt from income in 2013.

Q: What is a transit subsidy, and who can benefit from it?

A: As a part of the fiscal cliff legislation, Congress passed tax breaks for individuals who take mass transit to work or have to pay to park. If your employer offers a plan, you can set aside up to $245 a month pretax to help cover expenses. Someone in the highest federal tax bracket -- 30% to 39.6% -- could save about $570 a year. Someone in the 15% tax bracket could save about $260 a year.

Q: Does e-filing make consumers more vulnerable to tax ID theft?

A: E-filing is a safe, secure and fast way to file your tax return.

People should be aware of identity theft, though, and can take simple steps to help protect themselves. Identity theft occurs when someone gains access to your personal information through a stolen wallet, credit card or old bill. Once identity thieves gain access to personal information, they can purchase items on your credit card, open new credit cards, or even file a fraudulent tax return in your name. People should protect their computers, use strong passwords, shred documents with personal information and monitor their credit.

Q: What is the the gift- and estate-tax rate, and whom does it affect?

A: The federal gift tax exists to prevent people from avoiding the federal estate tax by giving away their money before they die. Gift givers -- not gift recipients -- have to pay it. You can give up to the annual exclusion amount ($13,000 in 2012) to any number of people every year, without facing any gift taxes.