Talkin' Taxes

End-of-year tax planning Tip No. 1: Have you been putting off going to the doctor or dentist, or having surgery? This is the year to get the most out of those unwanted procedures.

In 2012, the baseline for medical expenses deduction is 7.5 percent of the adjusted gross income. This means that, before you can deduct medical expenses, the total must exceed 7.5 percent of the adjusted gross income. For example, if the adjusted gross income on the tax return is $20,000, the amount of medical expenses must be more than $1,500 to get any deduction for these expenses. Any expenses more than $1,500 can be deducted on Schedule A of the tax return.

If you wait until 2013 and beyond, the deduction limit increases to 10 percent of the adjusted gross income.

If you filed for an extension to file your taxes, the due date for individuals is Oct. 15.

However, if a corporation, S-corporation or partnership filed an extension, the due date to file this return is Sept. 17. Preparing financial statements for these types of businesses will help in completing the return, as the return is very similar to these statements.

An extension must have been filed for corporations and S-corporations by March 15. Failing to file an extension will result in a penalty that is assessed at $195 per month or part month, up to 12 months, multiplied by the number of shareholders. This penalty is steep because it extends to the number of shareholders involved.

The Internal Revenue Service has implemented new regulations that impose significant restrictions on tax preparers and tax preparation businesses.

The purpose of the new regulations is to improve the accuracy of return filings by ensuring preparers are competent and ethical in providing paid services.

There will be many tax changes occurring this year, unless Congress extends some provisions. Among the tax provisions that expired at the end of 2011 are the following:

If you owed taxes this year, it may be wise to review the W4 you filled out when you were hired. This form is confusing to many and is usually incorrectly completed. The purpose of the form is so your employer can withhold the correct federal income tax from your pay.

You should complete a new W4 each year if there have been changes in your household. These changes could include a dependent who will turn 17 during the year, making them ineligible for the child tax credit, a divorce or a child no longer lives in the home.

The information on the form is used to calculate how much tax is withheld from your paycheck. It is important to read the form thoroughly, as adjustments need to be made if you have more than one job or your spouse works.

The IRS isn’t always heartless when it comes to collecting taxes. In an earlier column, I talked about the failure-to-pay penalty that is assessed if taxes are not paid by this year’s April 17 deadline.

However, on March 16, the Internal Revenue Service released the Fresh Start Penalty Relief Initiative.

Two things in life are inevitable: death and taxes. We can’t say for certain when death will come. Tax day, however, is usually April 15, unless it falls on a weekend or holiday. This year, the deadline is April 17.

Have you ever wondered what happens if you file your tax return late? Or, even worse, if you don’t file your tax return at all?