THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, January 28, 1996 TAG: 9601260204
SECTION: SUFFOLK SUN PAGE: 20 EDITION: FINAL
TYPE: Business
SOURCE: BY FRANK ROBERTS AND JENNIFER C. O'DONNELL, STAFF WRITERS
LENGTH: Medium: 68 lines
Tax season is officially under way, and by now most employers and financial institutions have mailed their W-2 and 1099 statements to their employees and investors.
Although taxpayers have until April 15 to file their 1040 forms, some tax preparers say that waiting until the last minute to file isn't to their benefit.
``There's an advantage to filing sooner,'' said Phyllis Mason, owner of Superior Bookkeeping & Tax Service on Jackson Road in Suffolk. ``You have less chance of your refund being lost by IRS.
``They'll go ahead and process your refund rather than wait and have it going in with everybody else's at the last minute,'' she said.
``If you organize and prepare your tax planning situation throughout the year,'' Mason said, ``you could possibly wind up with more itemized deductions than you would have had normally.''
Those deductions include such things as medical expenses and charity contributions.
``Keep up during the year or see a tax preparer to see about the current changes taking place,'' Mason said.
``If you do owe IRS, file your return and find out how much you owe so you'll know how much money you need before April 15,'' she said.
Most people who file early are expecting refunds and want the money as soon as possible.
Contrary to popular belief, tax preparers say their busiest time of the tax season is not the week before that deadline.
``Our peak period,'' Mason said, ``is around the end of February and the first part of March.''
Even if you are not expecting a refund, experts advise getting started early on the paperwork.
An early filing may not lower your tax bill this year, but it could help you plan for next.
``Itemizing is great,'' Mason said. ``Any time you reduce your adjusted growth income, you reduce your tax liability.''
For 1995, the standard deduction ranges from $3,900 for a single person to $6,550 for a married couple.
To get started on the right foot this season, tax preparers offer the following advice:
Find your W-2 statements. Employers are required by law to mail W-2 statements to their employees by the end of January. If you don't have yours by then, contact your employer.
Get a social security number for newborns. Children born before Nov. 1, 1995 must have a social security number if they are to be declared as a dependent.
Consider contributing to an Individual Retirement Account (IRA) or Self-Employment Pension (SEP). Either account can do much more than lower your taxable income. Robert Tull, a Chesapeake financial planner, calculates that a $2,000 contribution to an IRA or SEP will grow to more than $56,000 in 35 years, assuming a 10 percent annual return.
``Contribute $2,000 annually and your investment could be worth a whopping $596,253,'' he said. ``That's the miracle of compounding.'' ILLUSTRATION: Staff photo by MICHAEL KESTNER
Phyllis Mason has been preparing taxes for more than 20 years.
by CNB