MARSHALL - In the countdown to the deadline in April, southwest Minnesota residents are continuing to work on filing their state and federal income tax returns. And if the filing process is sometimes confusing, it shouldn't come as a surprise. There are always new tax changes to consider, area accountants say - even professionals need to study up every year.
While several area accountants there haven't been many major tax changes this year, there have been smaller ones that still affect 2011 returns. The changes range from the expiration of certain tax credits to a slightly later deadline for taxes to be filed - April 17, instead of the traditional date of April 15. The 15th falls on a Sunday this year, and the following Monday, April 16, is the Emancipation Day holiday in Washington, D.C.
"There hasn't been a great deal of change, other than in credits," said Bob Kaufman, a certified public accountant with Dana F. Cole & Co. in Marshall.
Some tax changes that take effect this spring include the end of a tax credit that was part of the American Recovery and Reinvestment Act. The Making Work Pay credit gave workers a refundable tax credit of up to $400 for single people or $800 for married people filing a joint return. However, it was only in effect for a year.
Also expiring this year, Kaufman said, is bonus depreciation that allowed businesses to write off 100 percent of the cost of business equipment.
Other factors that can affect taxpayers include differences between federal and Minnesota state income taxes, area accountants said. Both Kaufman and Teresa Hoff, a CPA in Cottonwood, pointed out that Minnesota allows a much smaller tax deduction for depreciation of business equipment than the federal government does.
Some area taxpayers have already felt the effects of other tax changes, said Suzanne Moe, a CPA with the Brian Hildebrant office, which has locations in Ivanhoe and Hendricks. A temporary tax holiday has reduced the amount of Social Security taxes withheld from employee paychecks by 2 percent.
"People may have noticed that in 2011, because their paycheck was a little bit bigger," Moe said.
Some national changes this year aren't directly related to taxes, but can still affect a person's finances, said Carla Goedtke, a registered financial consultant in Slayton. For example, the maximum amount of money that can be contributed to a 401(k) plan for retirement has been raised to $17,000 for 2012, she said. People may want to consider increasing the contributions deferred from their pay.
Trying to navigate and understand tax changes isn't easy. "It seems like they keep making (income tax) more complicated," Kaufman said. However, there are resources that can help taxpayers. Computerized services like TurboTax can help people find tax credits that apply to them, although they take time to use, Kaufman said.
The Internal Revenue Service and the Minnesota Department of Revenue both have taxpayer resources on their websites. Working with an accountant can also help.
If a taxpayer is using the services of both an accountant and a financial advisor, Goedtke said, it's also important to make sure the lines of communication are open between them.
It's also possible for area residents to get help with taxes, even if they don't have an accountant. Western Community Action is offering tax clinics this spring for residents who meet income guidelines.