Accountants preparing tax returns ahead of the April 15 federal filing deadline are seeing more taxpayers seeking additional money to go back to school and cut energy costs.

Accountants preparing tax returns ahead of the April 15 federal filing deadline are seeing more taxpayers seeking additional money to go back to school and cut energy costs.

“Everybody’s looking for rebates,” said Al Kranc of Colchester, who runs an accounting practice in Norwich. Younger taxpayers have shown strong interest in the Hope tax credit, which provides up to $1,800 for college expenses. Credits for improved energy efficiency have drawn interest across the age spectrum, Kranc said.

Tax implications of the federal economic stimulus law, also called the American Recovery and Reinvestment Act of 2009, have piqued public interest.

“Everyone seems to be curious about it,” Kranc said.

Traffic in several local tax preparation centers is down 10 percent to 15 percent from last year. Lionel LaSalle II, owner of an accounting firm in Griswold, attributes the decline to more people doing returns themselves, as well as taxpayers who owe the government waiting until the last minute. High unemployment also plays a role, meaning some think they can’t afford professional preparation fees.

Do-it-yourself

A wide variety of do-it-yourself computer programs has prompted many cost-conscious tax filers to have a go. One result has been a greater number of amended returns this year, LaSalle said.

“Some think TurboTax is all you need, but some returns are too complicated,” said LaSalle, referring to Intuit Inc.’s hot-selling software program made famous by U.S. Treasury Secretary Timothy Geithner’s confirmation hearings and his disclosure of underpayments.

LaSalle agreed with Kranc’s observation that taxpayers are becoming more sophisticated and more demanding. Tight personal budgets are part of the equation, they say.

“People are much more aggressive in trying to get refunds this year,” LaSalle said.

The slower early foot traffic is setting up a possible tidal wave in the two weeks leading up to April 15, said Sharon Wadecki, a certified public accountant in Ledyard.

“The tax season seems to have started later this year,” said Wadecki, citing the activity of the new Obama administration that took office in January and later distribution of 1099 forms.

While some small accounting practices have seen an early season drop in business, some larger operations seem to be holding their own or better.

Kansas City, Mo.-based H&R Block Inc., the nation’s largest tax consulting firm, cited growth in the number of returns prepared in reporting increased profits for its fiscal third quarter ended Jan. 31. Revenue rose 11 percent to $993.4 million. Total retail tax returns were up 1.6 percent, Block said in a March 6 press release.

“While the fiscal fourth quarter is always the critical driver ... we are nonetheless pleased with our results, not withstanding the headwinds in the broader economy,” H&R Block Chairman Richard Breeden said in the release.

Block cited higher net average tax preparation fees as an element of its higher earnings. Some are willing to pay more for services like the Peace of Mind Extended Service Plan in which H&R
Block pledges to represent taxpayers before the Internal Revenue Service in the event of an audit. The company also promises to pay up to $5,000 of additional taxes caused by preparation errors.

Among the communities Block has local offices in are Colchester, Danielson, Gales Ferry, Jewett City, Norwich, Putnam and Uncasville.     

Keeping 401(k)s

Despite the tough economy, most people are not cashing out 401(k) retirement accounts early, local tax preparers say. Taxpayers take a penalty of at least 20 percent by cashing out early.

“I have had a couple of people borrowing against them to buy houses,” Wadecki said. “But that’s not unusual.”

Yet some see no alternative, said John Ferland, a CPA in Danielson.

“That distribution is at least something to live on,” he said.

Norwich Bulletin