Consumers' Top Three Tax Issues -- ACA, Gig Economy and Fraud
"With about a month remaining in the tax season we are seeing a clear indication that both assisted and DIY tax filers are experiencing levels of confusion on several complex filing issues," said
Affordable Care Act, in second tax year, still confusing taxpayers
The impact of the Affordable Care Act on the tax return is still confusing taxpayers in its second year of implementation. In addition to the questions taxpayers are asking, evidence suggests that confusion has grown over the past year.
Confusion has also surfaced over new 1095-B and -C forms being delivered to taxpayers that report health insurance information to both the taxpayer and the
Like last year, taxpayers enrolled in marketplace insurance need to use information on the 1095-A to reconcile their advance premium tax credit and file a complete tax return. More than one million taxpayers put their tax credit at risk by either not filing or reconciling the credit appropriately last tax season.
"Even those who have received the Advance Premium Tax Credit for a second year are still asking questions about how it impacts their tax returns," Pickering said. "Add in additional forms for millions more taxpayers and we are hearing more questions than in the past regarding ACA."
Tax questions reveal growth of sharing economy
With more taxpayers turning to the sharing economy to earn money, their tax obligations and benefits have become more complex. Taxpayers who gig are generally subject to a 15.3 percent self-employment tax and must file quarterly estimated payments unless they have sufficient tax withheld from another job where they earn wages.
The increased tax complexity also means new tax benefits in the form of deductible expenses which could include health insurance premiums, retirement plan contributions, one-half of self employment taxes, the cost of advertising, licensing, insurance, repairs and supplies.
"Keeping a business-only bank account usually makes it easier to keep good records and file accurate tax returns. But in the sharing economy, it isn't always possible to keep separate business and personal accounts. For example, a driver will probably use the same car for both business and personal use. This makes good record-keeping all the more important, and, unfortunately, the tax-filing process all the more complicated for those participating in the sharing economy," said Pickering. "We have seen clients who rent out their home through a web site who now are accidental landlords and are seeing their tax situation change dramatically."
Questions about delayed refunds indicate taxpayers notice new anti-fraud measures
In an effort to reduce fraud risk, some states have increased their review processes to validate returns and taxpayers have noticed. Some states delayed distributing refunds until
"Tax identity theft can take victims several months or even years to resolve. Taxpayers understand the importance of reversing the growth of tax identity theft and a majority are willing to wait a little longer for their refund if it helps combat tax fraud," said Pickering.
Taxpayers with questions can get free, unlimited advice from a tax expert with
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