Katherine Ingalls, CPA was born and raised in Routt County. She works for the family business in Steamboat Springs, Ingalls and Company P.C. In preparation of the looming tax season, we sat down with Katherine to ask for advice.

Colorado Group Realty: What are the options for how to file a tax return? 

Katherine Ingalls: There are many options to choose from including online programs, software like Turbo Tax, or hiring a professional. If your taxes are complicated, consider talking to a professional for advice.

CGR: What will a professional need to prepare your taxes?

KI: Firstly, if you don’t have already have a professional working on your taxes, make sure you find someone before the year ends and ideally, get everything they need to them before mid-February. They will need all your income information with paperwork such as W2s, 1099s, 1098s, receipts for deductions and year end statements. One of the most common things people forget are closing statements, if you bought or sold a property in the year.

CGR: What should you know about personalized deductions and how much you are allowed to deduct?

KI: The miscellaneous personal deductions that we used to be able to do are gone, unless you are in the military. Your deduction of state and local income, sales, and property taxes is limited to a combined total deduction of $10,000 ($5,000 if married filing separately).

CGR: Is there a difference between a Roth IRA and a traditional IRA?

KI: Yes, the traditional IRA is deducted before income when you put it in but will be taxed at the time you take the money out. The Roth IRA is not deducted, but it is reportable income when you put the money in, and not taxed when you take it out. I would suggest speaking to your tax professional about which one makes sense, as it really depends on personal circumstance.

CGR: Can you make charitable donations or add to a retirement fund for the tax year, even after December 31?

KI: You can make some types of retirement contributions depending on specific rules, after the year ends, but not charitable donations.

CGR: Is there a way to protect beneficiaries from inheritance taxes? 

KI: Unless your estate is over $11 million individually (married couples each allowed $11million), then we say don’t worry about it. However, the rules are set to change in the future, so I would advise speaking to a tax professional if your estate is worth $5 million and over.

CGR: If you have multiple homes in different states, do you have to file individual tax returns in each location?

KI: It depends on how much time you spend in each and whether you rent them out at all. Rules vary from state to state.

CGR: Can you make deductions on a second home if you use it for rental income?

KI: Yes, but it depends how many days you spend in it. The rules differ once you rent it out for 15 of more days.

CGR: Does it make sense to track medical expenses as a deduction?

KI: If you didn’t have anything beyond normal checkups then no, but if you did have major surgery or large unforeseen costs, then yes, keep track of everything you spent.

CGR: What are the penalties if you fail to submit a tax return?

KI: If you paid your taxes but did not file a tax return, the IRS will still come looking for you, but you won’t have penalties. It’s a different story if you owe taxes and didn’t file. You will be charged penalties and interest for every month you owe.