CPAs advise taxpayers to watch for credits, increased audits
BY DANNY GALLAGHER, McKinney Courier-Gazette - Sunday, April 15, 2007
Normally people scramble until the last possible second to file their tax return before the dreaded April 15 deadline, but this year was different. The deadline was moved back to April 17.
"I'll be working all weekend," Certified Public Accountant Peg Breeding, of McKinney, said Friday.
The deadline for taxpayers to file their returns for 2006 was moved back to Tuesday since the traditional April 15 deadline fell on a Sunday and Monday is Emancipation Day, which is a federal holiday, according to a statement released by the Internal Revenue Service.
CPA Keith Andre, of McKinney, said even though the deadline was pushed back two days, he's still loaded down with people who need their taxes done on time.
"We started telling people three weeks ago they need to do an extension form," Andre said. "We just have to do them the order that they came in."
There have been some other changes this year other than the new deadline such as credits for homeowners who make 'energy efficiency improvements' to their homes. Breeding said the credit can be worth up to $500.
Taxpayers can also take advantage of the new Telephone Excise Tax Refund, a one-time credit 'designed to refund previously collected long distance telephone taxes,' according to the IRS Web site.
Breeding said credits can sometimes do more for your pocketbook than deductions.
"Credits are better than deductions because they are real cash," she said. "A deduction is just a decrease based on your income but you still have to add in your taxes."
The bad news is audits could see an increase this year, Breeding said.
"The head of the IRS (IRS Commissioner Mark W. Everson) has been given approval to get more staff to do more audits," she said. "I think the IRS has kind of taken the soft approach the last few years and now is going to start being the hard guy."
But Waters said the threat of impending audits could just be an empty one.
"They said it, but who knows whether they're going to do it or not," Waters said. "The IRS has for many years lived on the threat and scared people, but half the time it wasn't anything."
Breeding said the best way to prepare for an audit is make sure all of your taxes are in order before you mail them.
"Make sure you're taxes are done right because audits are on the increase," she said. "[The IRS] does them randomly and has a lot of parameters for audits. They don't just use one or two things."
And if you do get audited this year, Waters said the most important thing you can do is "don't panic."
"Let [your accountant] deal with the IRS and you will be truly better off," Waters said. "Getting a letter from the IRS is not always a bad thing but don't try to handle it yourself."
- Danny Gallagher