Jan 9, 2009 4:50 pm US/Pacific
Bay Area Taxpayers Expect Filing Changes For 2008
Tax Season Brings Breaks for Foreclosure Victims and Confusion for Gay Newlyweds
SAN FRANCISCO (CBS 5) ―
With the sour stock market, foreclosure crisis, and rising unemployment, filing taxes won't be routine for a lot of people in the Bay Area. Here are a few things to consider.
There's some good news among the changes for taxpayers. Homeowners who had to walk away from overwhelming mortgages are getting a break from the IRS according to tax preparer Jan Zobel. Zobel is an Enrolled Agent, meaning she's IRS certified.
"You don't have to pay any tax on the mortgage that has been forgiven," Zobel said. "So that's a big thing that could have affected people pretty dramatically."
And for people taking advantage of the foreclosure market there's an interest-free first time home buyer credit of $7,500.
"The downside to it is that it has to be paid back. It's more like a loan. It gets paid back over the next 15 years on your tax return," Zobel said.
California has 18,000 same sex couples whose legal status is in question, so there is confusion as to whether they should file as married or single.
Same sex couples who file as married may have to file an amended return and face penalties if the courts determine those unions are not valid. So, Zobel said another option is to file an extension and wait for the legal ruling.
If you sold stocks or mutual funds outside of your 401k, your 1099 form may arrive later than usual. Brokerage houses got an extension from the IRS and don't need to provide a 1099 by January 31st. Instead they have until February 15th.
The IRS starts accepting tax returns January 16th and Zobel expects in this tough economy more people expecting refunds will file early. Paul Wever plans to file right when his W2 form arrives in the mail.
"It's just that I have expenses I need to take care of and I'm living paycheck to paycheck. So, every additional penny helps," said Wever.
Zobel advises against services that use your paystub instead of a W2 to offer what they call an early refund. She said it's essentially a payday loan with high fees associated. For a fee of around $45 the service will estimate what your return will be and will work with a lender go give you a credit card loaded with that amount. But, you are then responsible for getting your tax refund and applying it to the debt before a certain deadline or risk paying high interest rates.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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