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Residents fear IOUs from state, file taxes early

Financial consultants keep busy by helping confused locals with complicated tax returns

Posted: February 23, 2009 1:11 a.m.
Updated: February 23, 2009 4:55 a.m.

Certified Financial Planner, Michael Green, left, works with client Meghan Walla-Murphy as she get her taxes prepared early in the season Thursday.

Tax filers fearing IOUs instead of returns from the state brought earlier business this year for one Valencia-based financial consulting company.

"We were having people (file) the second week of January," said Michael Green, an IRS-certified tax preparer and the owner of Michael L. Green Tax and Financial. "In the past with returns, we have had people file near the end of January, so it has been two weeks earlier."

One of Green's early filers was Romy Kuklin, a human resources manager who lives in Santa Clarita.

Kuklin said she normally files early because she likes to use her returns as vacation money. After hearing that the state would likely be sending IOUs to taxpayers in place of income tax returns, she wanted to see what would happen if she filed even earlier.

"I got curious as to when I'd get paid, if I got paid, "Kuklin said. "I haven't gotten it yet, and haven't even gotten an IOU."

Kuklin said she is not too affected by the delay since she already received her federal tax returns, a larger amount than her state returns would be. But she still sees how it could have a major impact on others.

"A lot of people are worried about their jobs and how secure they are," Kuklin said. "I think that's why so many people are concerned (about whether) the state will pay them."

The state has not done well to communicate updates of the IOU situation, Green said. He noted that the Web site for the state's Franchise Tax Board projected IOUs to begin early February, yet customers like Kuklin are still in tax limbo, not receiving payments or IOU notices.

With business "busier than normal," Green said customers are also weighed down with a slew of other economic concerns that make tax filing more complicated.

"People were more desperate this year and they had questions about the loan issues, the real estate issues," Green said. "There's a lot of people concerned about (Free Application for Federal Student Aid), student loans ... Colleges are starting to cut back on their educational funding, and that has an effect on people filing early."

Green added that many customers also need help filing because of hardships such as foreclosures and perks such as the first-time home buyer tax credit.

"They might want to be aware that there's been a lot of changes and they should consult with a professional before they file," Green said.

Retired people should especially seek help for tax credits and incentives they could be overlooking, he added.

Another tax professional, certified public accountant Sheralyn O'Connor who works for Santa Clarita-based Professional Tax Services, said a major mistake she sees is when people try to self-file when they are dealing with foreclosures.

Filings for cancellations of debt can be complicated by certain details, such a whether a property is considered abandoned. This requires a specific knowledge of which forms to use, O'Connor said.

"This whole area is very technical," she said. "Anyone trying to do that should definitely come in."


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