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6 Taxing Questions for Accounting Prof

Janie Casello Bouges Shares Some Expert Advice on Tax Season

Janie Casello Bouges
Assoc. Prof. Janie Casello Bouges says there are a few easy steps you can take to help thwart identity theft and tax fraud.

02/11/2016
By Ed Brennen

Good news if you’re a procrastinator living in Massachusetts: You have until Tuesday, April 19 to file your taxes this year.

With Washington D.C. observing Emancipation Day on Friday, April 15, taxpayers across the nation have until Monday, April 18 to file their returns. And since that’s Patriots Day in Massachusetts and Maine, residents of those states get even one more day to file.

But if you’re tempted to take advantage of the four-day reprieve, Janie Casello Bouges, an associate professor of accounting in the Manning School of Business, has one word of advice: Don’t.

Casello Bouges, a certified public accountant who’s taught taxation and finance in the Manning School since 2005, says there are several reasons why it’s always better to file your return earlier rather than later. It’s just one of the pieces of valuable advice she offered when asked to share her thoughts on tax season.

Q. What should people be aware of as they prepare to do their taxes this year?

A. One of the big things in the tax world right now is identity theft and tax fraud, where people file a tax return in your name, with stolen information, and get your refund. I believe the IRS in 2013 ended up paying billions ($5.8 billion, to be precise) in false refunds, so it’s a huge problem. The IRS has steps you can go through to get your refund back, but that’s like closing the barn door after the horse is gone.

Some of the things that people can do to prevent it are really easy, like filing early. I want to say 30 percent of people wait until April, and then in April you file your tax return and the IRS says, “You already got your refund,” and you say, “What are you talking about?” So if you file early, you protect yourself.

Another thing you can do is take your mail in. If you have a W-2 or 1099 sitting in your mailbox, that has your Social Security number on it, how much you make and more. It’s feasible that somebody could take your W-2, file for all kinds of credit cards and be gone before you even know it. And the third thing is to use a secure network if you file your taxes online. If it’s not a secure network, anyone who’s looking to steal your identity, your Social Security number, they can do that.

Q. What’s a common mistake people can avoid on their taxes?

A. Most people who have W-2 wages and a small bank account tend to overpay their taxes. So most people are going to get a refund. And if you think about it, the government’s not paying you interest on that — you’re basically giving the government a tax-free loan. That’s why I tell people to file early and if you find that you’re getting a refund, do yourself a favor and re-do your W-4 with your employer so that they withhold less.

Q. It seems like there are more and more ways to file online. Is that a good thing?

A. If you file electronically you get your refund faster. I’m still a paper girl, though; I still like the paper in my hand. But I think people are becoming more comfortable with filing electronically. The IRS loves it because it involves fewer people, and there’s less chance for error because they’re not inputting information. I think it’s a getting-used-to thing. Millennials are quite used to computers and don’t mind doing it. I think as people get more comfortable, more people will file online.

Q. If you have someone do your taxes, what should you look for in a preparer?

A. You can go down the street and see “Joe Schmo’s Tax Preparation Services,” and you don’t know Joe Schmo from anybody. So look for professional certifications, either enrolled agents or CPAs, because there have been reports of theft. People set up shop, you bring them all your stuff and they disappear. So look for people that have been around. And make sure they sign the return, because paid preparers have to sign returns with their (IRS-authorized) PIN numbers.

If you’re a student, you can probably do your own tax return. But if you have anything more complicated, or you don’t want to be bothered, you can get them done — I don’t want to say inexpensively — but make sure it’s by a CPA.

Q. With this being an election year, what do you make of all the campaign rhetoric about taxes?

A. As a tax person, it does make me chuckle. One of the candidates, a flat tax proponent, said they were going to make a three-page tax code. The humorous thing about that is, I can’t think of a flat tax scheme that I’ve ever seen that doesn’t give some sort of break for exemptions, for dependents. And if you look at the current tax code, just the definition of a dependent is almost three pages. So I laugh because, what are you going to leave out?

Then I see that Ted Cruz says he’s going to eliminate the IRS. So who does he think is going to collect the money? Studies show that one of the things that make people comply is the threat of audit. If you’ve got no threat of audit, what does he think that’s going to do to compliance statistics? 

Do people like to hear that kind of stuff? Sure, because everyone loves to hate the IRS. But is it practical? Absolutely not.

Q. What about a candidate like Bernie Sanders who wants to close corporate loopholes and raise taxes on the top 1 percent?

A. I actually object to the word “loophole” because, in my mind, it implies that corporations are doing terrible, horrible things. And really, they’re just taking advantage of the law as written. Don’t hate the player, hate the game. Those are people that have read the tax law and are doing things that are lawful — or at least they interpret as lawful. It’s not like they’re being nefarious, because no CPA worth their salt is going to take that kind of risk. 

That said, I want to say 11 percent of taxes are paid by corporations. So even if you doubled it, what are we talking about? Between Social Security and regular taxes, I believe 80 percent of taxes are paid by individuals. So if you want to change tax law, to raise revenue, then that’s where you have to go. But individuals vote; corporations don’t vote.

I love political season and all the silly things you hear.