Income tax changes could add to your filing confusion
By Michelle Singletary
Tax time is near and you know what that means, right?
It means changes, and lots of them. Why must we poor taxpayers have to put up with this constant tinkering of the code?
Oh well, as Richard Hooker, a British theologian said, "Change is not made without inconvenience, even from worse to better."
That about sums up the many tax code changes that will affect your 2006 return. For instance, educators are still allowed to deduct up to $250 a year for unreimbursed supplies they buy for their classroom. That deduction had been scheduled to end in 2005.
The problem is that some of the changes won't be reflected in the tax forms the IRS sent out. That's because Congress, known for moving at a glacial pace, passed the Tax Relief and Health Care Act of 2006 too late to make the IRS' publication deadline.
The tax forms and first round of instructions, in fact, were printed well before the president signed the bill into law in December, says David Bergstein, a CPA and analyst for CCH Complete Tax (www.completetax.com), an online tax program for the do-it-yourself tax filer.
Whether you plan on doing your own taxes or having them prepared by a professional, you need to read up on these changes by going to the IRS Web site, www.irs.gov. Click on the link for "individuals" and you will see announcements you should read before starting your tax return or having someone else do it.
"If you don't know what you don't know, you don't know what to ask," Bergstein said.
This tax year may be particularly problematic for people who prepare their own return, says Cindy Hockenberry, a tax information analyst for the National Association of Tax Professionals.
"People will look at the form that was mailed to them and not realize that some deductions have been extended," Hockenberry said. If you plan to use a tax-preparation program, you need to go to the software's Web site and download all updates, she said.
IRS commissioner Mark Everson warned Congress that this would be a confusing year. In a letter to Sen. Max Baucus, D-Mont., now chairman of the Senate Finance Committee, Everson wrote in December that all the late changes will challenge the agency and "add significant risk to an already high risk filing season."
To get you started on your research, here are some of the changes for 2006:
That may be welcome to many couples who file jointly. I've encountered quite a few spouses who learn that their husband or wife spent the joint tax refund without their knowledge. Spouses who keep separate accounts can now split the refund before the money comes into the household.
"This might reduce a lot of arguments," Bergstein said.
See, Hooker was right. Some change is for the better even if it's inconvenient.
