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  • Gregory Burke

  • Daniel Tahara

Ask the Experts: Last-minute tax answers

Published: Wednesday, Apr. 10, 2013 - 12:16 am | Page 7B

Spoiler alert: The April 15 tax-filing deadline is less than a week away.

Here with some last-minute "Ask the Experts" advice on state and federal taxes are Daniel Tahara of the state Franchise Tax Board and Gregory Burke, a Sacramento CPA and IRS expert.

My college-age kid just filed a federal tax return to get a $100 refund. He has no state tax or refund due. Should he file a state tax return anyway?

For tax year 2012, single individuals do not have a filing requirement if their gross income is $15,440 or less. If your son's gross income is above this amount, he would need to file a California tax return.

Although you mention there is no tax or refund due, it's important to note that a tax return would need to be filed in order to receive a refund, even if gross income was below the $15,440 threshold.

For more information on filing requirements, please visit www.ftb.ca.gov and search for "2012 California Tax Table." You'll also find information on the FTB's two free e-filing programs: ReadyReturn and CalFile.

With ReadyReturn, your return is already completed, based on your previous year's return and wages/income reported to the FTB. All you do is review the return and make any changes.

For more complex returns, CalFile is a step-by-step process that takes about 20 to 30 minutes to complete. Both options are fast, easy and, best of all, free.

What are the advantages or disadvantages to doing your own taxes electronically, rather than going to a professional tax preparer?

First, a disclaimer: I'm biased. For more than 25 years, I've made my living providing tax planning and tax preparation services. Before that I spent six years auditing income tax returns for the IRS.

That being said, let's start with the advantages of preparing and filing your own tax returns electronically. The main advantage: It's free. Secondly, there is less chance of making an arithmetic error because the software does the basic computations for you.

Now let's talk about the disadvantages:

• Unless your taxes are very simple, you run the risk of making costly mistakes without knowing it.

• You are liable to miss tax-saving deductions and credits.

• If you have questions, you have to find the answers yourself or call the IRS and FTB tax help lines, which could mean spending lots of time on hold.

• If you receive a tax notice from the IRS or FTB, you have to figure out what the notice means and how to respond.

Income tax has its own language. Words that have one meaning in general usage may mean something entirely different in the world of income taxation. What you think you know, you may not know.

Among the advantages of using a well-trained professional tax preparer: You get the benefit of his/her training and experience. You lessen the chance of errors. You reduce the possibility of missing valuable tax deductions or credits.

And if you receive an IRS or FTB notice regarding your tax return, you have someone knowledgeable to handle it on your behalf.

The potential disadvantages of using a professional?

You have to pay fees. You have to decide who to use, which can be daunting, since professional tax preparers range from unlicensed individuals to multi-national accounting firms. There's a possibility of using a bad preparer – or a good preparer who makes an error on your return.

Almost 60 percent of Americans filing federal income tax returns use a tax preparer, according to the IRS.

Increasingly, there is no such thing as a simple income tax return, given the growing complexity of this country's tax laws. Throw in California's 200-plus differences from the IRS rules and you face a tax-filing landscape full of traps for the unwary.

– Compiled by Claudia Buck

Need advice on money matters? Ask our panel of experts on the Personal Finance blog and see all their answers:

www.sacbee.com/ personalfinanceblog

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