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March 10. 2013 6:22PM

Leader Q&A: Richard Hendl, tax consultant at H&R Block


Richard Hendl, a tax preparer at H&R Block, prides himself on being able to find the most scarcely considered deductions. Though he earned a Ph.D. while in the Air Force, he became a tax consultant upon retiring 15 years ago. (SIMON RIOS PHOTO)
Richard Hendl is a tax consultant at H&R Block, working out of offices in Hudson and Nashua. During a long career in the Air Force that started in the days of Sputnik, he received a Ph.D. in meteorology, though he'd always wanted to be a CPA.
After retiring from the military, he decided to go back to doing something he'd wanted to do in high school: work as a tax preparer. Fifteen years ago he came on with H&R Block, one of the world's largest tax services providers.

Q: How is an independent contractor's tax liability and filing process different from that of a salaried worker?

A: A self-employed individual is both the employee and the business owner, so they are responsible for keeping track of their income, they're responsible for keeping track of all of their expenses and they're also responsible for paying the Self Employment Tax, which is both halves of the Social Security and Medicare tax. That's in normal years 15.3 percent of their net profit.

Q: What are the impacts of the fiscal cliff resolution on federal taxes this year?

A: Every working individual was affected by the fact that the tax holiday on Social Security ended. In the past two years, the Social Security tax was 4.2 percent. It went back to 6.2 percent on the first of the year, so everybody saw a reduction in their take home pay. That was something that wasn't well known by a lot of people, until they got their first paycheck. That whole tax holiday was supposed to be extended for a year, and then it just was not extended beyond 2012.

Q: How do you recommend people manage their withholdings?

A: Tax withholding is a funny thing. Some people like to get a refund because they want to view it as a savings account. Other people don't want to let Uncle Sam have any money; they'd rather owe them at the end. Do you feel that you got too big of a refund last year? Not big enough? If the answer to any of those is yes, you go to your employer, you file a new W4, which is telling the employer how much tax to withhold based on your income level, your marital status and the number of dependents that you're going to claim. And you can do almost anything you want within reason, and get a large refund, or owe the government money. But if you owe them more than $1,000, you may be hit with another withholding penalty.

Q: What are the most commonly missed deductions for contractors?

A: Everybody thinks they know about deductions. What we find here, at least in New Hampshire, the most commonly missed deduction is the Personal Property Tax and the Automobile Tax. If you itemize on Schedule A you can claim the excise tax that you pay to the city or town, every time you register your vehicle. Others have to do with medical and dental expenses. Everybody realizes that medical premiums and out-of-pocket generally are deductible, but a lot of people don't realize that long-term care premiums are deductible, as is mileage that you incur by driving back and forth to the doctor, the dentist and the hospital.

Q: What about gambling losses?

A: A lot of people don't realize that you can only deduct gambling losses up to the extent that you report gambling winnings. So if you don't win anything you can't deduct anything. Let's say you have a scratch ticket, you win a thousand bucks. You can deduct up to $1,000 of gambling losses - that catch is you have to be able to prove it, so you'd have to have a stack of losing scratch tickets, or the printout from Foxwoods or Mohegan Sun to be able to demonstrate that to the IRS. It gets a little bit sticky whether you can claim you're a professional gambler or not.

Q: What can filers do to reduce the odds of being audited?

A: The simpler the return that you file, the less chance of being audited. But you don't want to leave things unclaimed just because you're afraid of getting audited. What you shouldn't do is buy into a lot of complicated investment schemes, like publically-traded partnerships in oil and gas. Those increase your odds of getting audited. Every year the IRS has a series of filters that they send everybody's taxes through, and they compare your income with the types of deductions you're claiming. For example, if you're claiming charitable deductions outside of the limit, then they might pull a desk audit.

Q: Why come to a place like Block rather than use do-it-yourself software?

A: The real advantage of coming into the office is you and I sitting down here, and we're going to discuss your situation. I'm going to ask you a lot more questions than you've ever thought of in terms of your particular situation, and how it affects your taxes. I will uncover more deductions than you will because I have to take courses every year, and I'm a rigorously tested enrolled agent.