Banking

Changes to expect in filing taxes for 2012

Here are some changes in the tax code and IRS expectations that could affect your filing this year.

I am numbers impaired. That's why the thought of doing taxes every year nauseates me. Our taxes are a little complicated, but my husband insists on saving some money and using some tax preparation software, which I find as unintuitive and incomprehensible as the IRS itself. I'm putting my foot down this year though.

But for those of you who do prepare your own taxes, I thought I'd prepare you for a few changes. First, the IRS has implemented some new guidelines for paid tax return preparers. From the IRS website, the changes will:

  • Require all paid tax return preparers who must sign a federal tax return to register with the IRS and obtain a preparer tax identification number (PTIN). These preparers will be subject to a limited tax compliance check to ensure they have filed federal personal, employment and business tax returns and that the tax due on those returns has been paid.
  • Require competency tests for all paid tax return preparers except attorneys, certified public accountants (CPAs) and enrolled agents who are active and in good standing with their respective licensing agencies.
  • Require ongoing continuing professional education for all paid tax return preparers* except attorneys, CPAs, enrolled agents and others who are already subject to continuing education requirements.
  • Extend the ethical rules found in Treasury Department Circular 230 — which currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS — to all paid preparers. This expansion would allow the IRS to suspend or otherwise discipline tax return preparers who engage in unethical or disreputable conduct.
*The required continuing education could cost upwards of $1,000. So if you pay to get your taxes done by a smaller entity, I'd say you can expect price increases.

If you're doing your own taxes, and may the force be with you, keep in mind some changes in the tax code from last year. According to a piece from Yahoo,

  • Business mileage rates for 2011 were changed mid-year, so when calculating your mileage for 2011 use the rate of 51 cents per mile for miles driven up to June 30, 2011, and 55 ½ cents per mile from July 1 to Dec. 31. Mileage rates for 2012 are as follows: 55 ½ cents per mile for business, 23 cents per mile for moving and medical, and 14 cents per mile for charitable purposes.
  • If you pay estimated tax payments throughout the year, the due date for your next quarterly installment for prepayment of 2011 income taxes is Tuesday, Jan. 17. Estimated tax payments for 2012 will be due on April 17, June 15, Sept. 17, and Jan. 15, 2013.
  • The self-employment health insurance deduction no longer offsets the self-employment tax. In 2010 only, self-employed workers were able to reduce the amount subject to self-employment tax on Schedule SE by the amount paid for health insurance premiums. You can still take the deduction on Form 1040 as an adjustment to income.

About

Toni Bowers is Managing Editor of TechRepublic and is the award-winning blogger of the Career Management blog. She has edited newsletters, books, and web sites pertaining to software, IT career, and IT management issues.

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