By Laura Mazur
Community Post
By the end of January, taxpayers should have started putting together all of their necessary paperwork so as to start filing for that dreaded April 15 deadline.

Many people seek the assistance of a certified public accountant or a professional tax firm to do their taxes.
“Tax laws are more complex than they think and people become intimidated by them,” said Jeff Wical, manager of H&R Block, in Sidney.
For instance, laws, such as child tax credit, are not as straight forward, said Wical, especially, if a couple is separated or divorced.
John Johnson, CPA and partner of Stroh, Johnson and Company LLP, in Wapakoneta, agreed that the complexity of putting together a return, as well as the time it takes to file are what make taxpayers seek help.
Many people seeking assistance in tax preparation look to get the entire process done by a CPA or tax preparer and to just have to sign their name and write out a check in the end. Others who choose to prepare them on their own may still have questions, however.
Wical said the majority of questions he has been asked lately have dealt with a supposed $600 to $800 federal tax rebate that is to come in May and June. Taxpayers can indeed keep asking questions about this, however, because, “We don't know any more than they do. They did not do a patch for it yet,” said Wical.
On the other hand, Johnson said many of his calls have been regarding a taxpayer receiving something unfamiliar and don't know what to do. For inheritances or money gifts, there is generally no tax on these, but people still question them because they are not accustomed to what taxes are associated with these special items.
Itemizing deductions, and watching out for things that bring on penalties are key for those choosing to do taxes on their own.
Penalties that people sometimes miss are those dealing with pensions and profit sharing plans, according to Wical. Taxpayers should remember that a 10 percent penalty may be invoked if funds are withdrawn too early from these accounts.
Johnson said there may be potential deductions that people overlook. Donations, real estate taxes and separate filings for married couples all have possibilities for deductions.
For taxpayers seeking the advice of CPAs or other tax preparers for filing, they should get together any documents or information received in the mail marked tax information. Bank information, as well as 1099 forms and information from transfer of properties, should also be along.
With so many firms to pick from, some may be at a loss for who to turn to.
Johnson said many people come to his company because of referrals.
“In small communities, people talk to their neighbor or friend and ask them who they use,” he said.
Many television commercials also advertise the use of at-home computer tax preparation. The question is whether or not these software programs indeed work for preparing taxes.
Johnson said that while the programs seem to work by asking users questions to go through the process, the software asks more “black and white” questions according to the law and not so many of those dealing with gray issues, such as those of the alternative minimum tax. The AMT system uses a different set of rules for determining taxable income and allowable deductions. About 95 percent of those using these programs are able to file without problems, however.
Only about 1 to 2 percent of taxpayers actually get audited each year. Higher income earners and those who are self-employed are at a higher risk for audit, though.
“They look to see what's outside the norm,” said Johnson.
Most of the time federal auditors look at the income range and apply related things to see what is outside of normal deductions and other itemizations for this range. Audit notices usually do not come until a year to two years after filing if a taxpayer is to be audited. If audited, Johnson suggests taking the CPA or tax preparer along to the appointment and to simply answer the questions asked by the auditor.