• FREE FILING: The IRS encourages online returns because it cuts down on paper costs and processing time. Taxpayers with less than $54,000 in adjusted gross income can file free at www.irs.gov
• STIMULUS COMING: As a way to give a shot in the arm to the national economy, the federal government approved an economic stimulus plan giving money to almost every American who files taxes. Most taxpayers will receive up to $600 while high wagers could get $1,200. Families will also receive $300 for every child under the age of 17.
• FASTER REFUNDS: Those getting tax refunds can get their money eight to 14 days after electronic filing if they ask for a fund transfer instead of a paper check. This year an electronic transfer will also speed along the economic stimulus payment, which can go into the same account as the tax refund, according to Mark Green, IRS spokesperson for Georgia.
• SCAM ALERT: Be careful of online rip-offs. Every year, scammers con people out of personal information by posing as IRS agents in emails.
“Unfortunately we are seeing a number of scams,” Green said. “We are seeing e-mails claiming to be with the IRS promising a large e-mail or a deduction for a group of people that don’t exist.”
Scammers then use the personal information to empty bank accounts and create fake credit accounts. Don’t be fooled by official looking e-mails because the IRS never sends unsolicited e-mails, Green said. All official IRS correspondence with taxpayers is done on paper.
“In the case that we do need to contact a tax payer it will be in a situation so that tax payer will know who they are talking with,” Green said. “We will never ask for personal information; we probably already have it.”
• ADOPTION HELP: There are adoption deductions available. The federal government allows couples making less than $170,820 to deduct $11,390 for adoptions, including legal and travel expenses.
“For example, you adopted a healthy child in 2007 from China. Your un-reimbursed adoption expenses are $8,000 and the travel cost to get to China and get the child home is an additional $3,000 — you would have a credit against your tax of $11,000,” certified public accountant Janice Merchant said.
The deadline to file your state and federal taxes is April 15, a little more than three weeks away. And while single gay filers don’t face any serious obstacles different than their straight counterparts, gay couples must navigate the maze of deductions and credits in the federal tax code because they don’t have the legal recognition that comes with marriage.
Most single gay men and lesbians have the same circumstances as straight singles: The vast majority can claim the standard deduction and be done with their taxes in fairly in short order, according to the IRS.
Census data indicates a lower rate of home ownership among gay couples, so many cohabitating couples can also finish their taxes quickly.
“Unless they own a house, most people are better taking the standard deduction,” said Jim Knoll, a certified public accountant in South Buckhead. Knoll has been in business for 30 years and his client list includes many gay and lesbian couples.
“There are a lot of specifics I could get into, but what I tell my gay couples, which is the same thing I tell my straight clients, [is] tell your advisor that you’re in a relationship, [because] if they don’t know they can’t advise you properly,” he said.
Tax issues for gay couples can get complicated when deciding which person takes what deductions, especially when there are children or a joint mortgage involved.
Having children costs families more money, but they are also offer significant tax deductions, said accountant Janice Merchant of Tucker.
“Assuming that all the money goes into one pot, so to speak, and that the child’s expenses are paid for equally by both parents, you can do some planning based on your income, and the needs of the children,” said Merchant, who is a lesbian.
Parents can get both a blanket deduction and deduct certain expenses, but not all the deductions need to stay together. Single child families might want to split the child’s expenses between both parents.
“For instance if your income is moderate, between $20,000 and $100,00, you might take the childcare [deduction] … and your partner, who’s income might be significantly lower, or significantly higher, or even the same, might take the child as their dependent. So you get the childcare and they take the tax credit,” Merchant explained.
When it comes to families with two wage earners and two children, it might be best for each parent to claim a child because the tax rules allow for two households under one roof, according to Knoll. And filing as head of household is preferable to filing single because heads of household are taxed at a lower rate than single people.
“You’re separate people, not a couple; you have two kids, so you can each take one and be head of household,” Knoll said.
Contrary to popular belief, a partner can work and still be considered a dependent for tax purposes in some cases.
“Let’s say for one reason or another your partner isn’t working this year, and you are providing more than 50 percent of their support, and let’s say your partner is a student, you have to count student loans in their support,” Merchant explained. “But let’s say that you are [supporting your partner], that your partner is ill, or a stay at home mom or dad, then you might be able to take them on your taxes, even though they are not a relative.”
Knowing when this is appropriate can be complicated, and Merchant suggested consulting a financial advisor before deciding to claim a partner.
While Congress constantly re-writes the tax code, there are no major changes for 2007, but there are a few new write-offs.
“This year we have a new law in place where if you purchased a home and you’re forced to purchase private mortgage insurance, that can be deducted,” said Mark Green, IRS spokesperson for Georgia. “Add in the interest, property and ad valorem taxes and it starts to add up fast.”
Green said he didn’t have any specific advice for gay taxpayers.
“I don’t have any unique situations, but every tax payer needs to take advantage of every deduction they’re allowed,” he said. “Any donation you make to a 501(c)3 can be tax deductible. I say that, because it needs to be a legitimate charity, but any donation, clothes, materials, money, can be deducted.”
What that means is that donations to the Atlanta Stonewall Democrats or Log Cabin Republicans, partisan gay political groups, would not be tax deductible, while donations made to Pets Are Loving Support are.
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