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Smart Talk is a daily, live, interactive program featuring conversations with newsmakers and experts in a variety of fields and exploring a wide range of issues and ideas, including the economy, politics, health care, education, culture, and the environment.  Smart Talk airs live every week day at 9 a.m. on WITF’s 89.5 and 93.3.

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Host: Scott LaMar

Smart Talk: Questions about filing your tax return?

Written by Scott LaMar, Smart Talk Host/Executive Producer | Feb 11, 2015 2:22 PM
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What to look for on Smart Talk Thursday, February 12, 2015:

Preparing a tax return is usually an annual chore that most people don't look forward to.  The process has been made somewhat easier in recent years though as more taxpayers abandon the paperwork and file electronically or have tax preparers or accountants do all the dirty work.  It all may seem worth it if it's determined a refund is on the way.

Every year seems to bring changes to filing a tax return.

What's noteworthy about 2014 tax returns is health insurance questions take a major role.

For the first time taxpayers must show they have meet three health insurance requirement -- have minimum health insurance coverage, qualify for a health coverage exemption, or make a shared responsibility payment with their tax return.

The answers to those questions can determine if and how much of a refund the taxpayer receives.

On Thursday's Smart Talk, Certified Public Accountants John Steffee and Eric MacCollum join us to answer your tax questions.

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Eric MacCollum and John Steffee

Do you have a tax question?  Put it in the comments section below.

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  • Deb img 2015-02-12 09:10

    Question: Are there still Federal tax breaks for energy saving home improvements? Thanks!

    • Eric MacCollum img 2015-02-14 15:06

      Deb- slight update to the answer given on air – as part of the extenders bill that passed in late December, you can still claim the Residential Energy Efficient Property Credit (solar panels, geothermal, small wind turbines, etc.) as well as the Nonbusiness Energy Property Credit (energy efficient products including windows, doors, insulation, etc.) for 2014. However, the Nonbusiness Energy Property Credit has a lifetime cap of $500 ($200 for windows), so you have to account for any credits taken in the past.

  • Chris Altman img 2015-02-12 09:14

    Moved here last year from Ohio. In ohio we have to file State, City, and School District taxes all separately. Beyond federal and state, what filing needs done in PA?

    • Eric MacCollum img 2015-02-14 13:26

      Chris- In PA, there is also a local earned income tax to go along with the Federal and State. To find information on your locality, go here: http://munstatspa.dced.state.pa.us/findlocaltax.aspx and plug in your address information. If your employer is not withholding at the correct rate, you should ask them to do so. If they won’t, you may want to make quarterly estimated payments throughout the year.

  • Radio Smart Talk img 2015-02-12 09:30

    Debra emails: Are there still Federal tax breaks for energy saving home improvements?

  • Radio Smart Talk img 2015-02-12 09:31

    Ben emails:

    Could you help me understand Pennsylvania residency. My daughter, age 26, has lived in two different states, not Pennsylvania, earned money in both, and is a full time student. She is more than 50% dependent upon me. In which state does she file state taxes?

    • Eric MacCollum img 2015-02-14 14:19

      Ben- It really depends on what other states we are talking about and where state taxes were withheld. She may need to file in the other states depending on filing limits, if she needs to claim a refund, and if PA does not have a reciprocal agreement with that state. As a PA resident, she would file here to claim her income and pay her taxes. She will receive a credit for taxes paid to other states, so she will not be taxed twice. If she was working in a state with a reciprocal agreement, the employer should have withheld PA taxes and remitted them to PA and there would be no need to file in that state.

  • Radio Smart Talk img 2015-02-12 09:34

    Kara emails:
    If a car is totaled and insurance pays more than the balance on the loan, is that excess money income?

    • Eric MacCollum img 2015-02-12 17:15

      Kara – in this case, the balance of the loan has nothing to do with the proceeds. The insurance company, more than likely, paid you out on the value of the vehicle before the accident. If this is the case, there is no financial gain and the proceeds are not taxable. If the insurance company happened to pay out above the value of the vehicle, for example lost wages, you experienced a financial gain and this would more than likely be taxable.

  • Radio Smart Talk img 2015-02-12 09:35

    Jo emails:
    When I retired from State employment in January 2012, I rolled over some of my retirement money into an IRA of $190,000 to avoid immediate tax consequences. I took distributions in 2013 and 2014 totaling $50,000 (approx. $25,000 a year, including the withholding for taxes). My IRA manager (USAA investment services) has sent me generic letters telling me that I must take a distribution this year, as I will reach 70 1/2 (on Nov. 14). I thought you had to take distributions by the time you reach 70 1/2, and that those distributions in 2013 and 2014 exempted me from having to take one this year. What is the rule?

    May I take a distribution from another IRA (one that I haven't touched yet and MUST withdraw from this year) to pay the taxes on converting the $140,000 IRA into a Roth?

    • Eric MacCollum img 2015-02-14 11:17

      Jo- This question has a lot of parts to it and I recommend you run through your particular case with an investment advisor and/or a knowledgeable tax professional. However, here is some general guidance. The Required Minimum Distributions (RMDs) are required to start in the year in which you turn 70 ½, so that is why you got the letter for the first time this year. It is an annual RMD from this point forward, therefore your prior year distributions do not count towards this requirement. Now that you are hitting this age, a calculation will have to be run on each account to determine the required amount per account. Once you have these amounts, you can take them from any account that you choose.

  • Radio Smart Talk img 2015-02-12 09:36

    Jon emails:
    In South Central PA, what is the reasonable price range for tax preparation for 1040, schedule A, one or two other federal forms and PA state income taxes?

    • Eric MacCollum img 2015-02-14 15:21

      Jon- we hit this one pretty good on the air, as there can be a wide range of prices for tax returns and there may be levels of complexity that don’t show up until preparation. For a “basic” return I would put you somewhere in the $400-500 range for a professionally prepared return. It can be lower if it is straight forward and the information is organized well, but it can also go higher if additional work or analysis is required. On air, we talked about some of the costs that go into tax preparation as it is more than meets the eye and that is what determines the price. Now, on the flip side, you want to make sure you are dealing with a reputable preparer and that you are getting value for your return fee. A reputable preparer should have no problem looking over your tax situation and giving you an estimated fee (may be a range) up front. If they go above their estimate, there needs to be a valid reason – something that was truly unforeseen or they are creating additional value that improves your situation. Like any transaction, don’t be afraid to ask questions, hold people accountable, or shop around. It tends to be a very personal relationship so make sure it is a good fit!

  • Radio Smart Talk img 2015-02-12 09:36

    Rand emails:
    I have a question about the "Standard Deduction" interactive tax assistant interview on the IRS.gov website. After going through the steps our Standard Deduction is $14,800. Does that amount include the deductions for medical, real estate, etc. taxes?

    • Eric MacCollum img 2015-02-12 18:03

      Rand – you are allowed to take either the standard deduction OR the total of your itemized deductions. Of course, most people would take the higher of the two. If you went through the standard deduction calculation on the ITA at irs.gov, it does not include your itemized deductions. You will want to add those up on your own to see if it is greater than your standard amount.

  • Radio Smart Talk img 2015-02-12 09:37

    Nancy emails:
    I am a retired public school educator. Health insurance is with the group plan of my former public school employer but I pay all insurance costs. PSER's contributes $100 toward insurance. Can I claim my insurance payments (minus $1200 from PSERs) on schedule A?

    • Eric MacCollum img 2015-02-12 16:58

      Nancy – health insurance premiums are a deductible medical expense on Schedule A.

  • Dave img 2015-02-12 09:42

    I had a thought to help with diversity in my retirement plan. I decreased my company sponsored 401k to maximize the match (me 6%, company 3%). I had previously been putting in 10% with nothing left for my ROTH. The additional 4% will be going into my ROTH every onth. I understand this is pre tax vs post tax, but do you forsee any issue with diversifying my savings this way?

    • Eric MacCollum img 2015-02-14 11:07

      Dave- I cannot speak to the diversity in your retirement savings, but there is no tax issue with what you are doing. As long as you meet all the income limitations, you can contribute to both your company 401(k) and your ROTH IRA.

  • Radio Smart Talk img 2015-02-12 09:46

    Joe writes:
    My wife and I purchased a second home for our future use. At this time, her father, (90+ years old) moved in to occupy full-time. We pay all expenses (mortgage, utilities, taxes, etc) except phone and cable. Can he be included as a dependent on tax returns?

    • Eric MacCollum img 2015-02-14 13:51

      Joe- Your father in law may qualify as a dependent as a Qualifying Relative. Basic criteria is if you and your wife provided over half of his support, he earned less than $3,950 (Social Security would not count), he is a US Citizen, cannot be claimed elsewhere, and he is not filing jointly. These questions can get a little complicated and the IRS’s Interactive Tax Assistant (ITA) is pretty helpful: http://www.irs.gov/uac/Interactive-Tax-Assistant-%28ITA%29-1

  • caz img 2015-02-12 09:47

    Is there a new standard deduction for home offices, and, if so, what are the pros/cons of using it as opposed to itemizing?

    • Eric MacCollum img 2015-02-12 16:57

      There is a simplified option for claiming home office deduction which started in 2013. The simplified option is to deduct $5 per square foot for up to 300 square feet. So it has a cap of $1,500. The pro is that you do not have to add up expenses and file Form 8829. The con is that the typical deduction is greater than the cap, so you are losing deduction. Under the simplified option, you would claim the entire amounts of mortgage interest, real estate taxes, and casualty losses on Schedule A.

  • Radio Smart Talk img 2015-02-12 10:00

    Blaine emails:
    THANK YOU so much for pointing out that the fees include the knowledge base. I am a preparer with one of the national firms and a lot of our clients have trouble understanding that.

    • Eric MacCollum img 2015-02-14 15:26

      Blaine- No problem as I am sure this is an issue we all deal with. Every year returns get more complex with more disclosures required and we are expected (rightfully so) to be up to speed on everything. There is a cost to that which shows up in the price. Thanks for listening and your feedback!

  • Jim Foster img 2015-02-14 15:40

    Hi. Just thought I'd mention that free help by trained volunteers is available through the AARP IRS Tax-Aide program. I volunteer with the program on the Harrisburg West Shore, but there are several other locations within the WITF listening area. Follow this link to find a location near you:
    http://www.aarp.org/applications/VMISLocator/searchTaxAideLocations.action