Tax filing season is up and running and local certified public accountants and nonprofits are offering free help, including the Star-Telegram's tax hotline from noon to 4 p.m. Sunday.This week, the Internal Revenue Service announced a major initiative to curb the increasing problem of identity theft of tax refunds, which resulted in arrests and indictments last month.In addition to a guilty plea and grand jury indictment in Dallas in January, the IRS and the Justice Department took several undisclosed enforcement actions in Arlington and Grand Prairie in a national sweep. The enforcement actions included 109 arrests, 189 indictments and 47 search warrants."It's one of the biggest challenges facing the IRS today," acting IRS Commissioner Steve T. Miller said in a conference call with reporters. "We're doing a much better job on all fronts, but we still have a lot of work to do."Miller said he didn't know how much taxpayer money has been lost to identity thieves who use stolen Social Security numbers and other personal information to file false returns and illicitly grab refunds. But the agency prevented $20 billion from 5 million returns from being improperly released in 2012, up from $14 billion in 2011.Also, the number of taxpayer ID victims needing a personal identification number to file has grown from 250,000 in 2012 to 770,000 in 2013, Miller said. Other victims include those who don't file, such as children or dead people.Typically, it takes about four months from the time a fraud is discovered for the IRS to resolve the case and pay any refund owed to the victim, said Clay Sanford, a Dallas IRS spokesman. The agency is working to reduce that time, he said."The IRS continues to put more and more employees on resolution of victim cases," he said. "These are extremely complex cases to resolve, frequently touching on multiple issues and multiple tax years."The average jail time for such ID theft is about four years, but sentences can reach 20 years, Miller said. For example, in July in Fort Worth, Youlanda Rochelle Wright was sentenced to 78 months in prison and was ordered to pay $166,384 restitution after pleading guilty to filing tax returns in customer's names from a call center where she worked to claim refunds, according to the IRS.Tax tipsTax season is moving quickly, but filers still have a couple of ways to lower their tax bills for 2012, local CPAs say.Filers can put money into an individual retirement account or health savings account until April 15. The contributions can then be deducted from your gross earnings, lowering your tax bill.The limit on a traditional IRA contribution for 2012 tax filing is $5,000 ($6,000 if you are 50 or older.) For a health savings account, available only to people with high-deductible health plans, you can contribute up to $3,100 for an individual or up to $6,250 for a family for 2012.Other tips from local CPAs:Don't forget to deduct PMI. Private mortgage insurance, used when a home buyer does not have the required down payment, can be deducted from your federal taxes, according to Kevin Gilbreath of Dixon Hughes Goodman. PMI is generally not reported on your 1098 mortgage tax form, so you must find out from your mortgage company how much of your monthly escrowed payment is PMI.Remember the 15 percent depreciation deduction for oil and gas royalties. There may be other deductions you can take as well, said Lacey Riley, a Flower Mound CPA. Look for them on the 1099 form that will come from the gas company. Be sure to check the back of that form for possible expenses that can be deducted.Check online for 1099s. If you've gone paperless, you may have to check your online brokerage account to get the information, said Sheila Owens of Thomson Reuters. Otherwise, the forms will be mailed by Feb. 15.Some forms are still not available. New forms from the IRS still aren't out for higher education credits and business depreciation schedules because of tax law changes enacted in January by Congress, said Barbara Stukey of Weaver. Filers wanting the education credit will have to wait until mid-February. New depreciation schedules are not expected until March.Teresa McUsic's column appears Saturdays. TMcUsic@SavvyConsumer.net
TurboTax: The largest tax software provider has free help available via online chat on its website, www.TurboTax.com, under the tab "Help along the way." Answers are provided by CPAs, enrolled agents and tax attorneys.
Tax preparation: Most returns can be prepared by AARP's tax aide program, a free tax preparing and electronic filing service open to all taxpayers regardless of age or income. The program operates at 40 sites in Tarrant County, including most Fort Worth libraries, all the libraries in Arlington and senior centers countywide. To find the AARP tax aide location nearest you, call 211.
Catholic Charities: The charity's Volunteer Income Tax Assistance community tax service is one of the largest free tax preparation services for those making $50,000 or less. Filers can set up an appointment by calling 211, though walk-ins at any of their 12 locations are welcome, program manager Bill Gunn said. The program has 200 volunteers and expects to prepare more than 5,000 returns.
Free tax software: TaxAct offers free online tax software to all incomes for most tax forms at www.TaxAct.com. The Cedar Rapids, Iowa, software provider also provides free e-filing and tax help via email.
IRS: Provides free tax software through its Free File program for those with household incomes of $57,000 and lower. Free File includes software from 15 commercial tax software preparers, including TurboTax and H&R Block. Each sets its own eligibility requirements, usually based on income, state residency, age or military status. The program includes free e-filing, and some vendors offer their products in Spanish. To look at the Free File offerings, go to www.irs.gov/freefile.