Archive for Thursday, April 12, 2001

Some tax filers paying off debts, preparers say

April 12, 2001

On Monday, the deadline will be up for Americans to file their income tax with the Internal Revenue Service. Some local accountants say some clients who receive money back from the government are planning on spending their returns on more than frivolous things.

Leahann Snow, owner of Eudora's Spruce Corporation, said a growing number of her customers have expressed interest in putting their returns toward paying off old debts.

"I would say most people who get returns are paying down debt," Snow said. "That seems to be the big thing is to pay off credit cards."

Certified Public Accountant Jim O'Berg said some of his customers are searching for ways to fix debt problems due to gambling. Federal law permits a filer to claim some amount of gambling debt, but only if the individual can verify the amount lost was equal to the amount won, O'Berg said. For example, a gambling debt could be verified by using a credit card to withdraw money, thereby gaining a receipt. If a gambling institution, such as a casino, gave a receipt to show winnings, then the two receipts could verify winnings to losses.

O'Berg said in many cases, the filer can't justify the losses for one simple reason the house almost always wins.

"Three years ago, I started seeing people having more financial problems due to gambling," O'Berg said. "Last year it was more. This year it was even more. It saddens me to see what they do to themselves and the people around them."

But filers worrying about paying off debts aren't the only ones with stress at tax time. Snow said this year has been busier than usual due to a high number of people who have tried their hand in the stock market.

"It has taken me longer to do some returns this year because of stock sales," she said. "Some people have tried some buying and selling."

Parents living separately but claiming a child as an exemption has also given O'Berg some headaches. O'Berg gave a common example of a parent who is paying child support and has the right to claim the child as an exemption. Sometimes the recipient of the child support will rush down to a tax preparer to claim the child instead.

"There's a great deal of confusion on who gets to claim exemption for a child," he said. "It's a wild race for whoever claims (the child) first. The IRS, the first one that claims that child they'll pay."

O'Berg said this type of problem between two parents not married has become "quite common."

"These divorce battles just go on and on," he said.

Since tax day, April 15, falls on a Sunday this year, the deadline for filing has been extended to Monday, April 16. Eudora Postmaster Marty Flanagan said the post office will keep regular hours, from 8:30 a.m. to 4:30 p.m., weekdays and 8:30 a.m. to 11 a.m. on Saturday. Those who drop filings inside the post office before 4:30 p.m. on Monday will be postmarked that day.

For those last-minute filers, the main Lawrence Post Offices at 6th and Vermont will close at midnight.

Commenting has been disabled for this item.