Viewer - Live chat with Brent Hunsberger: Talk tax prep at noon Thursday

Live chat with Brent Hunsberger: Talk tax prep at noon Thursday

Thursday January 24, 2013

11:44

The Oregonian:

Welcome to our tax prep live chat with It's Only Money reporter Brent Hunsberger. Brent will join us at noon. Until then, please feel free to submit your questions and comments. Expect a short delay between the time you hit send and the time you see your comment in the chat.

Thursday January 24, 2013 11:44 The Oregonian

12:04

itsonlymoney:

HI folks, sorry for the delay. Welcome to the chat.

Thursday January 24, 2013 12:04 itsonlymoney

12:05

itsonlymoney:

I'll try to take any tax-related question, but I really wanted to focus on helping you choose the right way to do your taxes.
We might have a couple experts join us too.

Thursday January 24, 2013 12:05 itsonlymoney

12:05

The Oregonian:

So let's the start with the basics. Who are the best candidates to file their taxes themselves?

Thursday January 24, 2013 12:05 The Oregonian

12:06

The Oregonian:

And speaking of experts in the room, welcome to April Gutierrez.

Thursday January 24, 2013 12:06 The Oregonian

12:06

[Comment From April GutierrezApril Gutierrez: ]

Short Bio - I am co-owner of Pacific Northwest Tax Service which is a Portland-based independent tax service. We have east and west side locations with full-time staff of 10-15 LTCs, LTPs, EAs and a CPA.

Thursday January 24, 2013 12:06 April Gutierrez

12:06

[Comment From April GutierrezApril Gutierrez: ]

I am also founder and owner of Pacific Northwest Tax School. Our school is licensed by the Oregon Board of Education. We are also an approved IRS provider of CPE for Enrolled Agents and Registered Tax Preparers. The school is also approved by NASBA as provider of CPE for CPAs. More than 3,200 CPAs, EAs and other tax professionals completed more than 20,000 hours of CPE with our school in 2012.

Thursday January 24, 2013 12:06 April Gutierrez

12:06

itsonlymoney:

Well, anyone who's single or married without kids who qualify for the 1040EZ and bring in a paycheck from an employer should have a fairly easy time.

Thursday January 24, 2013 12:06 itsonlymoney

12:07

The Oregonian:

And when do you know it's time to seek professional help filing taxes?

Thursday January 24, 2013 12:07 The Oregonian

12:07

itsonlymoney:

Even married couples with kids can do their own relatively easily. Things start to get tricky when you're self-employed, a small business owner and have special needs children.

Thursday January 24, 2013 12:07 itsonlymoney

12:08

itsonlymoney:

And, if you just find you don't enjoy it, then get help. Software programs might do the trick, but professionals can, too.

Thursday January 24, 2013 12:08 itsonlymoney

12:08

The Oregonian:

Thanks, Brent. And now for reader questions.

Thursday January 24, 2013 12:08 The Oregonian

12:08

[Comment From GuestGuest: ]

Any word on when the withholding calculator will come back online? http://www.irs.gov/Individuals/IRS-Withholding-Calculator

Thursday January 24, 2013 12:08 Guest

12:09

itsonlymoney:

Great question. I just asked IRS spokesman Richard Panick about this last week about the withholding calculator. He didn't have an answer. Tools on the IRS web site are taken down annually for "updating," he said. I presume they're reprogramming it because of all the changes in the fiscal cliff legislation.

Thursday January 24, 2013 12:09 itsonlymoney

12:10

itsonlymoney:

I think you'll just have to keep checking back. I'll alert readers when I see it up. It's something folks will want to use to adjust their withholding at the start of the year. Here's the link: http://www.irs.gov/Individuals/IRS-Withholding-Calculator

Thursday January 24, 2013 12:10 itsonlymoney

12:10

[Comment From AnneAnne: ]

Hi, I bought my first house in 2012 and had to pre-pay property taxes so the full annual tax bill could be paid later that year in my name by the escrow company. But I am hearing that I can't deduct all the property taxes I paid in 2012. Apparently, I can only deduct the portion that is pro rated for the time I owned the house. Is that right? I thought individual taxpayers are cash based, which means, you report it in the year you earn it or pay it.

Thursday January 24, 2013 12:10 Anne

12:11

itsonlymoney:

Thanks, Anne. Boy, that's beyond my immediate expertise. April Gutierrez, do you know?

Thursday January 24, 2013 12:11 itsonlymoney

12:11

[Comment From MikeMike: ]

I'll start w/ a L-T question: Do you expect the mortgage deduction to be capped?

Thursday January 24, 2013 12:11 Mike

12:12

itsonlymoney:

Mike, that calls for speculating on what Congress will do, which is always dangerous.

Thursday January 24, 2013 12:12 itsonlymoney

12:12

itsonlymoney:

Already, there is a new cap on itemized deductions for high earners; their ability to benefit from that deduction has been limited somewhat.
For the average taxpayer who itemizes? I don't know. It's certainly possible, but I wouldn't worry about it now.

Thursday January 24, 2013 12:12 itsonlymoney

12:13

[Comment From JerryJerry: ]

What will be the standard deduction for 2013,,,filing jointly?

Thursday January 24, 2013 12:13 Jerry

12:13

itsonlymoney:

Jerry,

one moment

Thursday January 24, 2013 12:13 itsonlymoney

12:14

[Comment From April GutierrezApril Gutierrez: ]

Reply to Anne: You are allowed a deduction only for taxes assessed against you or property you own that were paid by you. Taxes paid for a period of time that you did not own the home should have been prorated and credited to you by the seller of the home when you purchased. This credit would appear on the settlement statement from closing.

Thursday January 24, 2013 12:14 April Gutierrez

12:14

The Oregonian:

Thanks, April. Anne, hope that helps.

Thursday January 24, 2013 12:14 The Oregonian

12:15

itsonlymoney:

Jerry, it should be $12,200 for married taxpayers filing jointly. That's an estimate by the CCH Group, which provides tax software to CPAs, etc. The official numbers won't be release for a while.

Thursday January 24, 2013 12:15 itsonlymoney

12:15

[Comment From Bob WattBob Watt: ]

We have executed a 10-31 exchange on a rental house. can most cpa's deal with this

Thursday January 24, 2013 12:15 Bob Watt

12:16

[Comment From April GutierrezApril Gutierrez: ]

Standard deduction for MFJ for 2012 is $11,900.

Thursday January 24, 2013 12:16 April Gutierrez

12:16

itsonlymoney:

Bob Watt,

Yes, they can. Even Licensed Tax Consultants can handle those.

Thursday January 24, 2013 12:16 itsonlymoney

12:17

itsonlymoney:

And thanks, April, for the 2012 standard deduction number. It's official and any 2013 estimate is just that.

Thursday January 24, 2013 12:17 itsonlymoney

12:18

[Comment From AnneAnne: ]

So I can deduct the taxes for 2012-2013 year (I will own the house the whole tax year, not the whole 2012 calendar year) even if portion of the taxes is for 2013, as long as I paid it in full in November 2012?

Thursday January 24, 2013 12:18 Anne

12:18

[Comment From DeanDean: ]

I live in Oregon 10 months out of the year. Can I deduct (itemize) property tax and mortgage interest on a second home located in California?

Thursday January 24, 2013 12:18 Dean

12:19

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Thursday January 24, 2013 12:19

12:19

[Comment From April GutierrezApril Gutierrez: ]

Bob Watt: 1031 Exhanges require completion of IRS Form 8824. Specific tax tests are applied to calculate what portion of gain is realized from the sale and what part will be taxed now vs. the amount of gain that will be deferred. Most CPAs do not specialize in taxes, therefore a comment should not be made that any CPA should be able to complete for 8824 accurately.

Thursday January 24, 2013 12:19 April Gutierrez

12:20

The Oregonian:

Dean, Brent's searching for some info for you on that question.

Thursday January 24, 2013 12:20 The Oregonian

12:20

itsonlymoney:

Dean, real estate taxes on a second home are generally deductible.

Thursday January 24, 2013 12:20 itsonlymoney

12:21

The Oregonian:

Readers, I'm curious. Are you filing your taxes on your own this year? Or with professional help? What determined that choice?

Thursday January 24, 2013 12:21 The Oregonian

12:21

itsonlymoney:

Dean, the combined deduction limit for mortgage interest on your primary and secondary residence is $1,000,000 for acquisition indebtedness and $100,000 for home equity indebtedness

Thursday January 24, 2013 12:21 itsonlymoney

12:22

[Comment From April GutierrezApril Gutierrez: ]

Oregon property tax statements are fiscal. This means that taxes due and paid in November are for the fiscal period that runs July 1, 2012 through June 30, 2013. If you closed on the sale on or before July 1, 2012, you will be able to claim all taxes paid in November. If you closed before July 1, you will also be able to claim for a prorated amount of tax you paid for the first half of the year. You would have paid this prorated amount when you closed on the purchase. By contrast, if you closed after July 1, then your deduction must be prorated for the portion of time you owned the home for the fiscal period.

Thursday January 24, 2013 12:22 April Gutierrez

12:23

[Comment From AnneAnne: ]

Thanks, that helps.

Thursday January 24, 2013 12:23 Anne

12:23

itsonlymoney:

And while April is correct that not all CPAs specialize in taxes, the ones that do should be able to handle a 1031 exchange. Just make sure you seek one out who regularly does income tax returns.

Thursday January 24, 2013 12:23 itsonlymoney

12:24

[Comment From MeMe: ]

I tried to pay some medical bills by the end of 2012, but my provider's billing department wasn't open for a few days in a row so I wasn't able to pay until Jan. 2. Any luck in applying that to 2012?

Thursday January 24, 2013 12:24 Me

12:24

[Comment From spiff88spiff88: ]

I file my own taxes. Mine are relatively simple, though I do file 1040 with a few schedules. It takes a few hours on a Saturday, and I usually use my previous year's form to make sure I don't miss something. Also, I try and make sure I know what has changed each year.

Thursday January 24, 2013 12:24 spiff88

12:24

itsonlymoney:

Me -- I don't know for sure, but I doubt it. I certainly wouldn't advise backdating it. However, perhaps April knows.

Thursday January 24, 2013 12:24 itsonlymoney

12:24

[Comment From JerryJerry: ]

Professional help here....small business seems a bit too complex to handle on our return. Once the small business goes away (June this year), we will do it on our own

Thursday January 24, 2013 12:24 Jerry

12:25

[Comment From AmyAmy: ]

I recently completed my taxes with TurboTax's software and selected to have my TurboTax fees deducted from my federal return. Is there a risk of delay in getting my refund? Or should it come the day the feds say it will?

Thursday January 24, 2013 12:25 Amy

12:26

The Oregonian:

Interesting. Thanks all for weighing in on the DIY vs. going to a pro.

Thursday January 24, 2013 12:26 The Oregonian

12:27

itsonlymoney:

Amy, I doubt it, especially if yours was a fairly straightforward 1040 return.

Thursday January 24, 2013 12:27 itsonlymoney

12:27

[Comment From April GutierrezApril Gutierrez: ]

You can deduct medical expenses paid during the year. Did you send payment in January of 2013? If so, you will deduct on your 2013 return. This of course assumes that your medical expenses will exceed 10% of your adjusted gross income (AGI) for 2013. For 2012, your medical expenses must exceed 7.5% of your AGI. Taxpayers who are age 62 or older can claim a full medical deduction on their Oregon return without regard to the AGI limit.

Thursday January 24, 2013 12:27 April Gutierrez

12:27

itsonlymoney:

Amy, Taxpayers who attach certain additional forms, however, will not be able to file until February or March because of the changes Congress made. I'll get a link to those forms in a moment.

Thursday January 24, 2013 12:27 itsonlymoney

12:27

The Oregonian:

Thanks, April, for weighing in on Me's question.

Thursday January 24, 2013 12:27 The Oregonian

12:28

[Comment From AmyAmy: ]

Thanks - mine was a 1040-EZ. So it looks good, then!

Thursday January 24, 2013 12:28 Amy

12:30

The Oregonian:

Anne, I bet you can help with this question about closing costs.

Thursday January 24, 2013 12:30 The Oregonian

12:30

[Comment From CarlCarl: ]

I recently re-financed my mortgage. What portions of the closing costs qualify as deductions?

Thursday January 24, 2013 12:30 Carl

12:30

itsonlymoney:

Here's a link to a list of forms that the IRS won't accept for processing until late February at the earliest: http://www.irs.gov/uac/Newsroom/List-of-IRS-forms-that-1040-filers-can-begin-filing-in-late-February-or-into-March-2013 Anyone depreciating business assets or claiming passive activity losses will be impacted.

Thursday January 24, 2013 12:30 itsonlymoney

12:30

[Comment From April GutierrezApril Gutierrez: ]

Amy: Having Turbo Tax withhold your fees should not directly cause a delay in issuance of your refund. The cause of any delay is attributable to the length of time it will take for a transfer to occur between Turbo Tax's financial institution and your bank after IRS releases your refund.

Thursday January 24, 2013 12:30 April Gutierrez

12:30

[Comment From pdxfirepdxfire: ]

What can you tell me about a recent refinance I just completed...is there any way of knowing whether parts of it are tax deductible? I am paying Mortgage Insurance each month, but my understanding is I cannot write a portion of that off...any help

Thursday January 24, 2013 12:30 pdxfire

12:30

[Comment From April GutierrezApril Gutierrez: ]

You can track the status of your refund on IRS' website once the system becomes operational at the end of this month. Here is the link to check the status of your refund: http://www.irs.gov/Refunds

Thursday January 24, 2013 12:30 April Gutierrez

12:31

[Comment From JerryJerry: ]

We started a HSA on October 1 of 2012. We contributed $5,000 to the account. Can we deduct the entire amount or only three months (pro-rated) of it?

Thursday January 24, 2013 12:31 Jerry

12:32

[Comment From April GutierrezApril Gutierrez: ]

The only cost associated with a re-fi that is deductible is points paid. Point will be identified on the settlement papers as either a loan origination fee or a loan discount fee.

Thursday January 24, 2013 12:32 April Gutierrez

12:33

The Oregonian:

Interesting question about the HSA, Jerry. Brent is finding the info for you now.

Thursday January 24, 2013 12:33 The Oregonian

12:33

[Comment From April GutierrezApril Gutierrez: ]

Some homeowners also pay mortgage insurance premiums on re-fi. Mortgage insurance premiums are deductible. If the premiums are prepayments for later years, they must be amortized over 7 years.

Thursday January 24, 2013 12:33 April Gutierrez

12:33

itsonlymoney:

Jerry, You shouldn't have to pro-rate it. It should be fully deductible. April can correct me if I'm wrong.

Thursday January 24, 2013 12:33 itsonlymoney

12:34

The Oregonian:

We appear to be caught up with your questions! We have about 10 more minutes. What else do you want to ask about DIY vs. professional help on tax prep?

Thursday January 24, 2013 12:34 The Oregonian

12:34

[Comment From April GutierrezApril Gutierrez: ]

Yesterday we had a visit from a client whom I will refer to as Jane. Our preparer asked Jane how many children she had. The answer was 1. Later that day her boyfriend whom I will refer to as John came to our office. We learned that Jane and John lived together and that they actually had 2 kids. His income is $6,000 and Jane's income was $15,000 for the year. This is a fairly complex situation because both individuals qualify to claim both kids. Who ultimately benefits most and can the parents agree on how they will share the children demands the expertise of someone familiar with all aspects of tax law relating to filing status, dependency and the Earned Income Credit.

Thursday January 24, 2013 12:34 April Gutierrez

12:34

itsonlymoney:

Jerry, also, I presume you have family insurance coverage, because $5,000 is above the limit that a single can contribute to an HSA.

Thursday January 24, 2013 12:34 itsonlymoney

12:35

[Comment From JerryJerry: ]

thank you all for your help today :):)

Thursday January 24, 2013 12:35 Jerry

12:35

[Comment From April GutierrezApril Gutierrez: ]

The question of pre-paid mortgage insurance premiums is a common one. Settlement statements that I see do not state whether the premium paid at close is a prepayment, however IRS says that if you make a lump payment of mortgage insurance premiums that apply to later years, then the proration must be made.

Thursday January 24, 2013 12:35 April Gutierrez

12:35

[Comment From JerryJerry: ]

correct - family coverage

Thursday January 24, 2013 12:35 Jerry

12:35

itsonlymoney:

I'm sure glad April was here to answer some of these questions.

Thursday January 24, 2013 12:35 itsonlymoney

12:37

The Oregonian:

Folks, we'd also like to know, what other personal finance topics would you like to cover in a live chat? Throw us your ideas, please.

Thursday January 24, 2013 12:37 The Oregonian

12:37

[Comment From April GutierrezApril Gutierrez: ]

Regarding HSA's: Assuming you meet all of the tests to participate in an HSA, the maximum amount you can contribute for the year does not need to be prorated.

Thursday January 24, 2013 12:37 April Gutierrez

12:37

itsonlymoney:

If you're looking for online tax prep help, I reviewed several services two years ago. In reality, there's not a huge difference between the providers. A link to that review is in the window below this chat.

Thursday January 24, 2013 12:37 itsonlymoney

12:38

The Oregonian:

And here it is again, the post on free software.

http://blog.oregonlive.com/finance/2011/02/free_tax_software_just_as_good.html

Thursday January 24, 2013 12:38 The Oregonian

12:38

[Comment From katekate: ]

just joining so I apologize if this has been covered (I'd guess not though). I'm trying to figure out if I should file my taxes this year. I'm a 23-y.o. very low wage earner who didn't work the whole year. I'd guess I made around $9000, have a savings account, and am still claimed as a dependent by my parents. My parents say maybe I shouldn't file, but I say won't I get money back? What are you thoughts?

Thursday January 24, 2013 12:38 kate

12:40

The Oregonian:

Kate, have you filed taxes in previous years?

Thursday January 24, 2013 12:40 The Oregonian

12:40

[Comment From April GutierrezApril Gutierrez: ]

Kate: because you are a dependent of your parents you income is more than the minimum IRS sets as a filing requirement. You are required to file a tax return.

Thursday January 24, 2013 12:40 April Gutierrez

12:40

[Comment From April GutierrezApril Gutierrez: ]

Wait Kate, are you full-time student?

Thursday January 24, 2013 12:40 April Gutierrez

12:42

[Comment From April GutierrezApril Gutierrez: ]

You must be a full-time student to qualify as a dependent of your parents. This is because your income exceeds $3800 for the year.

Thursday January 24, 2013 12:42 April Gutierrez

12:42

[Comment From katekate: ]

Nope, not a student anymore :/ good to know that I have to file! Thanks, April! Will I risk paying extra taxes on money I have in a savings account (accruing a tiny amount of interest)?

Thursday January 24, 2013 12:42 kate

12:42

[Comment From katekate: ]

Ohh so they can't claim me as a dependent any longer? Every though I am utterly dependent? Haha

Thursday January 24, 2013 12:42 kate

12:42

[Comment From katekate: ]

Even* sorry about the typo

Thursday January 24, 2013 12:42 kate

12:42

itsonlymoney:

Kate, yes, interest is taxable income, but you'll hardly see an impact on what you owe.

Thursday January 24, 2013 12:42 itsonlymoney

12:42

[Comment From April GutierrezApril Gutierrez: ]

Were you a student for at least 5 months of 2012? If you were not, then you are not a dependent of your parents.

Thursday January 24, 2013 12:42 April Gutierrez

12:43

[Comment From April GutierrezApril Gutierrez: ]

Dependency questions are some of the most complicated areas of tax law to understand. This is why I am always saying that simple situations are usually not as simple as they appear.

Thursday January 24, 2013 12:43 April Gutierrez

12:43

[Comment From pdxguypdxguy: ]

What is the status on the Portland Arts Tax? How will it be collected?

Thursday January 24, 2013 12:43 pdxguy

12:44

itsonlymoney:

pdxguy, I've not followed that closely so I don't know, I'm sorry.

Thursday January 24, 2013 12:44 itsonlymoney

12:44

The Oregonian:

Last call for questions. Brent has just a few more minutes.

Thursday January 24, 2013 12:44 The Oregonian

12:44

[Comment From April GutierrezApril Gutierrez: ]

Is the Portland Arts Tax what we voted on in November's ballot? If so, I believe it is added to the property tax bill of homeowners.

Thursday January 24, 2013 12:44 April Gutierrez

12:44

The Oregonian:

Brent, if I hire a professional, do I need to hire a CPA?

Thursday January 24, 2013 12:44 The Oregonian

12:45

[Comment From April GutierrezApril Gutierrez: ]

This question of should I hire a CPA to do my taxes is indicative of how most people confuse accounting with tax.

Thursday January 24, 2013 12:45 April Gutierrez

12:46

itsonlymoney:

No. In Oregon, a Licensed Tax Consultant or one of the Licensed Tax Preparers they supervise are extremely well qualified, regulated and likely less expensive.

Thursday January 24, 2013 12:46 itsonlymoney

12:46

[Comment From April GutierrezApril Gutierrez: ]

A CPA is a Certified Public Accountant. Tax education completed by CPAs in college is minimal and most CPAs do not specialize in tax. Your best bet for a competent tax professional is an Enrolled Agent. The EA can be a CPA or a Licensed Tax Consultant.

Thursday January 24, 2013 12:46 April Gutierrez

12:47

The Oregonian:

What can I expect to pay a professional tax preparer?

Thursday January 24, 2013 12:47 The Oregonian

12:47

itsonlymoney:

The National Society of Accountants estimated today that a 1040 with a Schedule A will cost $246. That's a survey of CPA rates.

Thursday January 24, 2013 12:47 itsonlymoney

12:48

itsonlymoney:

LTCs might charge less. You'll also pay less for less complicated returns and more if you have to file other Schedules, such as for rental income, investment gains & losses and business income.

Thursday January 24, 2013 12:48 itsonlymoney

12:48

[Comment From April GutierrezApril Gutierrez: ]

If you boil the comparison down to the difference between a CPA and a Licensed Tax Consultant, the LTC is required to complete education in tax law and pass a very difficult test after obtaining several hundred hours of work experience.

Thursday January 24, 2013 12:48 April Gutierrez

12:49

[Comment From April GutierrezApril Gutierrez: ]

A CPA may know as much or far less than an LTC. The CPA credential does not mean the CPA is experienced or knowledgeable in tax.

Thursday January 24, 2013 12:49 April Gutierrez

12:49

itsonlymoney:

The association estimates that a non-itemized federal and state return will, on average, cost $143.

Thursday January 24, 2013 12:49 itsonlymoney

12:49

[Comment From April GutierrezApril Gutierrez: ]

On the other hand, there are many CPAs who do focus on tax and are very good at it. I am merely cautioning that CPA does not mean tax expert.

Thursday January 24, 2013 12:49 April Gutierrez

12:49

The Oregonian:

Thanks everyone. Still looking for your suggestions for future chats on personal finance. What would you like to chat about in our next It's Only Money live chat?

Thursday January 24, 2013 12:49 The Oregonian

12:50

The Oregonian:

Feel free to email Brent with your ideas for chats and stories: bhunsberger@oregonian.com

Thursday January 24, 2013 12:50 The Oregonian

12:51

itsonlymoney:

Thanks everyone! And thanks, April, for weighing in.
You can feed other tax questions as they come up throughout the season to Oregonlive's Tax Q-and-A blog at http://blog.oregonlive.com/taxes/index.html

Thursday January 24, 2013 12:51 itsonlymoney

12:51

The Oregonian:

Thanks, Brent. And thank you April, for your answers and advice today. And thanks to all for participating.

Thursday January 24, 2013 12:51 The Oregonian

12:51