The busy season for tax preparers has arrived. W-2s and 1099s have been sent out, the IRS is accepting returns and Americans are preparing to file their tax returns for 2013.
The IRS expects to receive 6.1 million individual 2013 tax returns from Illinois.
Local preparers said there aren’t any big changes this year, but advise taxpayers to be prepared for additional questions about health insurance when filing next season.
“Nothing really jumps out at me as being very different this year,” said Pat Anderson, a Genoa certified public accountant.
She said the software doesn’t ask anything about health care this year, and no penalties are assessed for those not covered by health insurance.
Dale Fluegel of Liberty Tax Service in DeKalb said for those who had a bad year medically, the deduction for medical expenses has increased from 7.5 percent to 10 percent.
As for big changes, Fluegel said next year will be a different story because of the Affordable Care Act.
“It’s a complicated law being enforced by the IRS,” Fluegel said.
He said taxpayers have a grace period to sign up for health care, as mandated by the ACA, until March 31. After that date, they will be charged a pro-rated penalty for every month they do not have health insurance coverage.
“It doesn’t affect those who have health care through their employer, those who have private insurance or are on Medicaid or Medicare,” Fluegel said. The W-2 form employees receive may change to indicate the employee has coverage, but Fluegel said he’s not sure how it will look.
He explained there are two ways of figuring the penalty for not having coverage.
A flat fee of $95 an adult and $47.50 a child, with a maximum of $285 a household, may be charged. The second way of figuring the penalty is 1 percent of adjusted gross income, and the fine will be whichever is greater, Fluegel explained.
“Exemptions do exist for hardship,” he added.
The following year, the penalties increase to $325 an adult, $162.50 a child with a household maximum of $975, or 2 percent of the filer’s adjusted gross income.
Penalties increase yet again the third year to $695 an adult, $347.50 a child with a household maximum of $2,085 or 2.5 percent of the filer’s adjusted gross income.
Those who qualify for and accept government subsidies for health insurance have to be careful not to underestimate their incomes, Fluegel said.
“Subsidies are available,” Fluegel said, “but if you get it wrong, you will pay for it at tax time. If you pay upfront and qualify for a subsidy, you will get a refund.”
Because the IRS is the enforcement agency, Fluegel said tax preparers will be the bad guys.
“Tax people are the ones giving the news about enforcement of the law,” Fluegel said.
In addition to tax preparation firms and CPAs, taxpayers have options for free assistance in DeKalb County.
• Goodwill Free Tax Help is offered, staring Feb. 19, at Founders Memorial Library on the Northern Illinois University campus. To schedule an appointment, call 815-987-6200.
• AARP Tax-Aide and DeKalb County Free Tax Preparation is available at locations in DeKalb, Sycamore, Kirkland and Genoa. For more information, Dave Leifheit at 815-895-2430 or 815-757-1800, or Mark Anderson at 815-765-5157.
• Do it yourself online at IRS.gov/freefile.