It's tax season and shockingly, Americans left more than a billion dollars in unclaimed refunds on the table last year. And, to add to the confusion, you might be wondering how the Affordable Care Act will affect your tax return. As a mother, wife, and CFO of my household tax season can be stressful. I had the chance to pick Richard Garland's brain about taxes. He's a senior tax preparer at H&R Block has some advice to make it worry free.
Q: Richard, tell us about the most overlooked tax breaks and how we could be missing out on a lot of money.
A: You know, last year we found that people left $1 billion on the table when they did their own taxes. That's a billion with a "b." And the major area where they left that money was with credits not claimed or deductions not taken. Big area is credit, of course. Education credit, $2,500 for a student. $1,000 child tax credit, that's a $1,000 per child and the earned income credit for low and moderate income for families with children. That can be up to $6,000 and if you can believe it, 1 in 5 people who qualified for that credit last year, didn't claim it. That just shouldn't be happening.
Q: How will the Affordable Care Act affect our tax return?
A: The Affordable Care Act has been law now for several years. The part that's affecting 2014, this is the year that people need to get their own coverage. If they're not covered during 2014, they're going to pay penalties that will be collected on their next year's tax return, the one that they're going to file a year from now. So this is the time to get covered. We've got a website available for people, it's called Helpth.com, you can get written information, live chat, telephone help. You can actually enroll there.
Another aspect important to remember is that there are subsidies available to help those folks, to help many folks, pay for those premiums. In order to qualify for those, you need to get registered.
Q: What are the most common mistakes we make when we do our taxes on our own?
A: You know, doing taxes on our own, I think probably the most common mistake we see is the people who check that box that says "itemize standard deduction" and don't go to the extra effort to itemize. Itemizing takes a little more work, you gotta go through those receipts, you keep those receipts first of all and then you've got to go through 'em, organize 'em, know what's deductible and what isn't. Often times if you add all of that up, it's going to be a lot more savings than if you just checked that box that says standard.
Other areas are those credits I talked about earlier that people just aren't claiming when they're entitled to them.
Q: How can life changes affect our return?
A: You know, for every major milestone in life, I think there's an equivilant milestone in your tax situation. So these are things like, well, we talked a little about college and some credits there. The next one that comes along? Typically it's marriage. Having a baby, buying a home, maybe a divorce and then retirement. Each of these areas in your life has significant changes in the way you do your taxes and it's a good opportunity to get expert advice to help you understand what you're able to do and then get you that maximum refund.
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