With the economy still recovering, tax time could be even more stressful for many Iowans. Tax advisor Kathy Pickering says taxpayers need to watch for every eligible deduction.
She says many people don’t realize there’s an energy improvement credit still on the books, though it’s been downsized.
“That had been up to $1500 but now it’s been reduced to $500 and it’s for home improvements to improve the energy efficiency in your house,” Pickering says. “That would be things like storm doors, windows, a new furnace, all those kinds of things and again, that’s up to $500.”
Pickering, executive director of the Tax Institute at H-and-R Block, says Iowans who are unemployed may think preparing taxes this year will be a piece of cake but they need to realize unemployment benefits are taxed.
“You are required to file a tax return even if you were unemployed and all of your unemployment income is taxable,” she says. “Last year, the first $2400 was tax-free but that was not extended, so this year, all of your unemployment income is taxable.”
Pickering adds, some people don’t realize taxes are not withheld from their unemployment income, as that’s something you have to request be done.
While it’s a chore for many taxpayers and tax preparers to keep up with the annual changes in tax laws, Pickering says even the Internal Revenue Service isn’t immune to problems.
“There are three forms the IRS needed more time to program into their system,” she says. “That would be the itemized deductions, so your Schedule A for itemized deductions. There’s the $250 educator expense and that’s for teachers who use their own money to purchase classroom supplies, and then there’s a tuition and fees deduction.”
All three of those forms are delayed but the IRS is expected to be able to start processing them next week — on February 14th.
Pickering says there are many other tax credits still available, so check to see if you qualify before filing.