He’s the taxman

Tom Ma­niaci is the own­er of C. Thomas Ma­niaci Ac­count­ing in May­fair. JENNY SWI­GODA / TIMES PHOTO


Time for a New Years Quiz: What do all of the fol­low­ing per­son­al ex­penses have in com­mon?

• Doc­tor and dent­ist fees

• Pre­scrip­tion med­ic­a­tion costs

• Health in­sur­ance premi­ums

• Char­it­able con­tri­bu­tions

• Prop­erty taxes

• Un­reim­bursed em­ploy­ee ex­penses

• Gambling losses

• School loan in­terest pay­ments

• Job skills train­ing fees

• Job hunt­ing ex­penses

Still stumped?

Ac­cord­ing to vet­er­an North­east Phil­adelphia tax ac­count­ant C. Thomas Ma­niaci, all of the above ex­penses and many oth­ers may qual­i­fy as item­ized de­duc­tions on per­son­al in­come tax re­turns.

With the dead­line for fil­ing less than three months away (it’s on April 17 this year, two days later than usu­al, due to a couple of cal­en­dar quirks), and with em­ploy­ers start­ing to send out W-2 forms, folks already should be think­ing about how to max­im­ize their re­funds or min­im­ize their taxes owed for 2011.

Each year, Ma­niaci said, many tax­pay­ers need re­mind­ers on many of the cred­its and de­duc­tions avail­able to them, even if they choose not to item­ize and opt in­stead for the stand­ard de­duc­tion.

“Un­for­tu­nately, a lot of people don’t know about or for­get about the Earned In­come Tax Cred­it or the Child Cred­it,” he said. “The IRS wants us [tax pro­fes­sion­als] to let people know to take ad­vant­age of the things they should take ad­vant­age of.”

The Child Tax Cred­it is $1,000 per de­pend­ant age 16 or un­der, re­gard­less if the tax­pay­er item­izes or claims the stand­ard de­duc­tion. The same holds true for the Earned In­come Tax Cred­it, which is ap­plied on a slid­ing scale to fam­il­ies that earned less than $49,078 in 2011.

Stand­ard­ized de­duc­tions re­mained sta­tion­ary for tax year 2010, but in­creased for 2011. Single filers now de­duct $5,800, a $100 in­crease over 2010, while mar­ried couples fil­ing jointly get an $11,600 de­duc­tion, a $200 in­crease.

Single filers who qual­i­fy as a Head of House­hold are now eli­gible for an $8,500 stand­ard de­duc­tion, $100 more than in 2010.

Ma­niaci, who opened his May­fair of­fice at 6722 Frank­ford Ave. in 1968, will be em­phas­ize sev­er­al oth­er tax law changes for his cli­ents.

For the first time, the IRS is re­quir­ing that tax filers re­port any in­terest earned on sav­ings bonds that have reached ma­tur­ity, even if the bonds were not re­deemed.

Fur­ther, tax filers must now re­port for­eign bank ac­counts and for­eign fin­an­cial as­sets they hold if the total value ex­ceeds $50,000. In pri­or years, the IRS re­quired only that for­eign in­come must be re­por­ted.

“If [the as­sets] are un­der fifty thou­sand dol­lars, you just re­port the in­come like you did be­fore,” Ma­niaci said.

Also for the first time, the Pennsylvania De­part­ment of Rev­en­ue has in­cluded space on its form PA-40 for tax filers to re­port any pur­chases in which sales taxes were not paid, al­though the mer­chand­ise qual­i­fies as a sales-tax item. Typ­ic­ally, this pro­vi­sion ap­plies to pur­chases made out-of-state or via mail or­der.

“Say you went on the In­ter­net and bought some fur­niture and had it de­livered from South Car­o­lina. Tech­nic­ally speak­ing, you’re sup­posed to pay sev­en per­cent (state sales tax) on that,” Ma­niaci said.

Pre­vi­ously, Pennsylvania res­id­ents were ex­pec­ted to file a sep­ar­ate form to re­port and pay out­stand­ing sales taxes.

Tax­pay­ers should keep in mind sev­er­al oth­er com­mon cred­its, de­duc­tions and be­ne­fits when pre­par­ing per­son­al tax re­turns, ac­cord­ing to Ma­niaci.

Those who fall in­to the 10 per­cent to 15 per­cent brack­et — singles who made up to $34,500 or mar­ried couples who made up to $69,000 — are ex­empt from cap­it­al gains tax. And those wish­ing to re­port net cap­it­al losses can claim up to $3,000 in a single year. Any ad­di­tion­al losses may be car­ried over to an en­su­ing tax year, however.

Un­for­tu­nately, Ma­niaci noted, people who lost value on their re­tire­ment plans may only claim the losses after cash­ing out the in­vest­ments.

Folks who made green im­prove­ments to their homes in 2011 may be eli­gible for the Non-Busi­ness En­ergy Prop­erty Cred­it or the Res­id­en­tial En­ergy Ef­fi­cient Prop­erty Cred­it. The non-busi­ness cred­it has a cap of $500, along with ad­di­tion­al caps on each in­di­vidu­al im­prove­ment. The res­id­en­tial en­ergy cred­it amounts to 30 per­cent of the cost of qual­i­fy­ing im­prove­ments.

The en­ergy cred­its cov­er im­prove­ments such as doors, win­dows, sol­ar elec­tric sys­tems, sol­ar wa­ter heat­ers, geo­therm­al heat pumps, wind tur­bines and fuel cell prop­er­ties. As cred­its (and not de­duc­tions), these im­prove­ments re­duce the amount of tax owed dol­lar for dol­lar.

Ma­niaci noted that many homeown­ers are choos­ing to in­vest in im­prove­ments to their ex­ist­ing homes due to the slow real es­tate sales mar­ket. Those in­vest­ments could pay im­me­di­ate di­vidends at tax time.

Col­lege stu­dents may be eli­gible for up to $2,500 through the Amer­ic­an Op­por­tun­ity Cred­it, as well as up to $2,000 through the Life­time Learn­ing Cred­it. Also, stu­dents may de­duct con­tri­bu­tions to Pennsylvania’s 529 Col­lege Plan on their state re­turns. The max­im­um stu­dent loan in­terest de­duc­tion is $2,500 per year.

Work­ing-age adults who con­trib­ute in­to an IRA or 401k re­tire­ment plan may be eli­gible for a cred­it ran­ging from $200 to $2,000 de­pend­ing on their in­come.

Prop­erty own­ers could be eli­gible for a re­bate of $250 or more on a por­tion of their real es­tate taxes de­pend­ing on their in­come.

Elec­tron­ic fil­ing has re­vo­lu­tion­ized the tax fil­ing pro­cess in re­cent years, but des­pite the pre­val­ence of easy-to-use and in­ex­pens­ive tax fil­ing soft­ware, Ma­niaci con­tends that work­ing with a live tax con­sult­ant is still the way to go for a bet­ter out­come.

“[E-file] is much faster and much, much more ac­cur­ate, but with the e-file pro­grams, all they have you do is in­put in­form­a­tion on the forms,” he said. “[The pro­grams] ask ques­tions, but they’re not fully com­plete. It would be im­possible for them to give you all of the ques­tions and an­swers, stuff that’s im­port­ant that may be over­looked.” ••

You can reach at wkenny@bsmphilly.com.

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