How do I pay the IRS?

It's becoming easier than ever to pay any taxes owed to the IRS.

Just head over to the IRS Payments page. Not only can you make a payment via your bank account, debit card, or credit card, it's also free to pay this way. The IRS also gives the option to pay in payments if you can't afford the entire amount due in one payment. All the links for payment options are on this page.

All payments made online or over the phone are confirmed immediately, so it's quick and easy to make sure the payment is taken care of timely.

If you aren't sure if or what amount you owe, you should receive a statement from IRS about any taxes owed. If not, give me a call and we'll figure it out together!

Tax Deductions You Might Not Know You Can Take

Found this cool infographic over on Turbo Tax's blog about the top 10 tax deductions you aren't taking! Check it out and if you have any questions about whether these deductions might be ones you can take, give me a call! 818-368-5374.


by TurboTax Income Tax Software

2014 Tax Return Prep - What You Can Do NOW To Prepare!

Many of my clients ask me around this time what they can be doing to prepare for next year's tax season to make sure they are on track and can avoid last minute problems or delays. 

 

Below are some events that can affect your tax return for this year, so make sure to notify your tax preparer if any apply to you. In some cases, knowing ahead of time and getting the right documentation or information needed, can reduce your tax owed, or at the very least allow you to avoid any unexpected surprises before it's too late! 

 

In 2014 did you...

• Get married, divorced or become a widow?
• Change jobs?
• Has your spouse started working? Stopped working?
• Did you have an increase or decrease in your income?
• Did you have a significant gain from the sale of stocks and bonds?
• Did you buy or sell property?
• Did you start a business? Acquire a business? Sell a business?
• Did you buy or sell a home? 
• Did you retire?
• Did you begin withdrawing from a retirement account or pension?
• Did you turn 70.5?
• Did you refinance your home? Take out a second mortgage?
• Did you inherit anything? 
• Did you have a child? (If so, congrats!)
• Did you purchase anything significant for your business?
• Are you planning on buying and/or selling a vehicle for your business?
• Did you document your charitable contributions properly?
• Do you need to adjust your estimated tax payments?
• Did you purchase health insurance through the healthcare exchange this year? Do you qualify for an insurance subsidy? 
• Did you have income from investments or gains from their sale? 
• Are you aware of any new tax laws for this year?

 

If you answered yes to any of these questions or aren't quite sure, it's best to be in touch with your tax preparer as soon as possible so you can begin to address any potential issues before April 2015. It makes it a lot easier on you AND your accountant if you are aware of any issues or differences from last year so you can handle any issues and tax advantage of any tax benefits this year! 

 

*The checklist above was modified from a version that appeared in my quarterly newsletter whcih I send to all clients. Tax Tips & News, Fall 2014 Volume XXXIII, Number 2.*

Itemizing vs. Standard Deduction: Six Facts to Help You Choose

From IRS Tax Tip Newsletter 2013-37 

Itemizing vs. Standard Deduction: Six Facts to Help You Choose

When you file a tax return, you usually have a choice to make: whether to itemize deductions or take the standard deduction. You should compare both methods and use the one that gives you the greater tax benefit.

The IRS offers these six facts to help you choose.

1. Figure your itemized deductions.  Add up the cost of items you paid for during the year that you might be able to deduct. Expenses could include home mortgage interest, state income taxes or sales taxes (but not both), real estate and personal property taxes, and gifts to charities. They may also include large casualty or theft losses or large medical and dental expenses that insurance did not cover. Unreimbursed employee business expenses may also be deductible.

2. Know your standard deduction.  If you do not itemize, your basic standard deduction amount depends on your filing status. For 2012, the basic amounts are:

• Single = $5,950
• Married Filing Jointly  = $11,900
• Head of Household = $8,700
• Married Filing Separately = $5,950
• Qualifying Widow(er) = $11,900

3. Apply other rules in some cases. Your standard deduction is higher if you are 65 or older or blind. Other rules apply if someone else can claim you as a dependent on his or her tax return. To figure your standard deduction in these cases, use the worksheet in the instructions for Form 1040, U.S. Individual Income Tax Return.

4. Check for the exceptions.  Some people do not qualify for the standard deduction and should itemize. This includes married people who file a separate return and their spouse itemizes deductions. See the Form 1040 instructions for the rules about who may not claim a standard deduction.

5. Choose the best method.  Compare your itemized and standard deduction amounts. You should file using the method with the larger amount.

6. File the right forms.  To itemize your deductions, use Form 1040, and Schedule A, Itemized Deductions. You can take the standard deduction on  Forms 1040, 1040A or 1040EZ.

For more information about allowable deductions, see Publication 17, Your Federal Income Tax, and the instructions for Schedule A. Tax forms and publications are available on the IRS website at IRS.gov  You may also call 800-TAX-FORM (800-829-3676) to order them by mail.

Take Credit for Your Retirement

IRS Tax Tip Issue # 2013-27

Saving for your retirement can make you eligible for a tax credit worth up to $2,000. If you contribute to an employer-sponsored retirement plan, such as a 401(k) or to an IRA, you may be eligible for the Saver’s Credit.

Here are seven points the IRS would like you to know about the Saver’s Credit:

1. The Saver’s Credit is formally known as the Retirement Savings Contribution Credit. The credit can be worth up to $2,000 for married couples filing a joint return or $1,000 for single taxpayers.

2. Your filing status and the amount of your income affect whether you are eligible for the credit. You may be eligible for the credit on your 2012 tax return if your filing status and income are:

• Single, married filing separately or qualifying widow or widower, with income up to $28,750
• Head of Household with income up to $43,125
• Married Filing Jointly, with income up to $57,500

3. You must be at least 18 years of age to be eligible. You also cannot have been a full-time student in 2012 nor claimed as a dependent on someone else’s tax return.

4. You must contribute to a qualified retirement plan by the due date of your tax return in order to claim the credit. The due date for most people is April 15.

5. The Saver’s Credit reduces the tax you owe.

6. Use IRS Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the credit. Be sure to attach the form to your federal tax return. If you use IRS e-file the software will do this for you.

7. Depending on your income, you may be eligible for other tax benefits if you contribute to a retirement plan. For example, you may be able to deduct all or part of your contributions to a traditional IRA.

For more information on the Saver’s Credit, see IRS Publication 590, Individual Retirement Arrangements. Also see Publication 4703, Retirement Savings Contributions Credit, and Form 8880. They are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Form 8880, Credit for Qualified Retirement Savings Contributions
• Publication 590, Individual Retirement Arrangements
• Publication 4703, Retirement Savings Contributions Credit

The Affordable Care Act

I am always getting questions about the tax provisions provided by the Affordable Care Act.

Below is a great article from the IRS explaining the Affordable Care Act and the tax provisions implemented through it. It's a bit lengthy and as always with government, a bit confusing. So if you have any questions, feel free to call me to chat or to set up an appointment at my Granada Hills office to see how it can apply to you!

You can reach me at (818) 368-5374 or via my website: http://www.astonesthrowsite.com/contact.php

The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that are in effect and more that will be implemented during the next several years. The following is a list of provisions for which the IRS has issued proposed and/or final guidance; additional information will be added to this page as it becomes available.

Minimum Value

On April 26, 2012, the Department of the Treasury and IRS issued Notice 2012-31, which provides information and requested public comment on an approach to determining whether an eligible employer-sponsored health plan provides minimum value. Starting in 2014, whether such a plan provides minimum value will be relevant to eligibility for the premium tax credit and application of the employer shared responsibility payment. 

Information Reporting on Health Insurance Coverage

On April 26, 2012, the Department of the Treasury and IRS issued Notices 2012-32 and 2012-33, which invited comments to help inform the development of guidance on annual information reporting related to health insurance coverage. The information reporting is to be provided by health insurance issuers, certain employers that sponsor self-insured plans, government agencies and certain other parties that provide health insurance coverage.

Disclosure of Return Information

On April 27, 2012, the Department of the Treasury and the IRS issued proposed regulations with rules for disclosure of return information to be used to carry out eligibility determinations for advance payments of the premium tax credit, Medicaid and other health insurance affordability programs. The proposed regulations solicit public comments.

Small Business Health Care Tax Credit

This new credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. Learn more by browsing our page on the Small Business Health Care Tax Credit for Small Employers and our news release.

Health Flexible Spending Arrangements

Effective Jan. 1, 2011, the cost of an over-the-counter medicine or drug cannot be reimbursed from Flexible Spending Arrangements (FSAs) or health reimbursement arrangements unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. This standard applies only to purchases made on or after Jan. 1, 2011. A similar rule went into effect on Jan. 1, 2011, for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs). Employers and employees should take these changes into account as they make health benefit decisions. For more information, see news release IR-2010-95, Notice 2010-59, Revenue Ruling 2010-23 and our questions and answers. FSA and HRA participants can continue using debit cards to buy prescribed over-the-counter medicines, if requirements are met. For more information, see news release IR-2010-128 and Notice 2011-5.

In addition, starting in 2013, there are new rules about the amount that can be contributed to an FSA. Notice 2012-40 provides information about these rules and flexibility for employers applying the new rules and requests comments about other possible administrative changes to the rules on FSA contributions. The Notice provides instructions on how to submit comments.

Proposed Regulations Issued on Medical Device Excise Tax

On Feb. 3, 2012, the IRS and the Treasury Department issued proposed regulations on the new 2.3-percent medical device excise tax (IRC §4191) that manufacturers and importers will pay on their sales of taxable medical devices starting in 2013. Additional information is available in the Medical Device Excise Tax FAQs.

Health Insurance Premium Tax Credit

Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. Exchanges will operate in every state and the District of Columbia. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums. On May 18, 2012, the IRS issued final regulations which provide guidance for individuals who enroll in qualified health plans through Exchanges and claim the premium tax credit, and for Exchanges that make qualified health plans available to individuals and employers.

The portion of the law that will allow eligible individuals to use tax credits to purchase health coverage through an Exchange is not effective until 2014.

Exchanges will offer individuals a choice of health plans that meet certain benefit and cost standards. The Department of Health and Human Services (HHS) administers the requirements for the Exchanges and the health plans they offer. Additional information about the Exchange can be found at www.healthcare.gov and in IRS REG-131491-10 issued on Aug. 12, 2011.

Health Coverage for Older Children

Health coverage for an employee's children under 27 years of age is now generally tax-free to the employee. This expanded health care tax benefit applies to various work place and retiree health plans. These changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit. This also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return. Learn more by reading our news release or this notice.

Excise Tax on Indoor Tanning Services

A 10-percent excise tax on indoor UV tanning services went into effect on July 1, 2010. Payments are made along with Form 720, Quarterly Federal Excise Tax Return. The tax doesn't apply to phototherapy services performed by a licensed medical professional on his or her premises. There's also an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee. For more information on the tax and how it is administered, see the Indoor Tanning Services Tax Center.

Reporting Employer Provided Health Coverage in Form W-2

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2, Wage and Tax Statement, in Box 12, using Code DD. Many employers are eligible for transition relief for tax-year 2012 and beyond, until the IRS issues final guidance for this reporting requirement.

The amount reported does not affect tax liability, as the value of the employer excludible contribution to health coverage continues to be excludible from an employee's income, and it is not taxable. This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers.

More information about the reporting can be found on Form W-2 Reporting of Employer-Sponsored Health Coverage.

Adoption Credit

The Affordable Care Act raises the maximum adoption credit to $13,360 per child, up from $13,170 in 2010 and $12,150 in 2009. The adoption tax credit is refundable for tax year 2011, meaning that eligible taxpayers can get it even if they owe no tax for that year. In general, the credit is based on the reasonable and necessary expenses related to a legal adoption, including adoption fees, court costs, attorney’s fees and travel expenses. Income limits and other special rules apply. In addition to attaching Form 8839, Qualified Adoption Expenses (see instructions), eligible taxpayers must include with their 2011 paper tax return one or more adoption-related documents to avoid delaying their refund. Taxpayers may also be asked, after filing their returns, to substantiate any qualified adoption expenses they paid.

For other information, see our news release, tax tip, questions and answers, flyer, Notice 2010-66,Revenue Procedure 2010-31, Revenue Procedure 2010-35 and Revenue Procedure 2011-52.

Medicare Shared Savings Program

The Affordable Care Act establishes a Medicare shared savings program (MSSP) which encourages Accountable Care Organizations (ACOs) to facilitate cooperation among providers to improve the quality of care provided to Medicare beneficiaries and reduce unnecessary costs. More information can be found in Notice 2011-20, which solicited written comments regarding what additional guidance, if any, is needed for tax-exempt organizations participating in the MSSP through an ACO. This guidance also addresses the participation of tax-exempt organizations in non-MSSP activities through ACOs. Additional information on the MSSP is available on the Department of Health and Human Services website.

The Centers for Medicare and Medicaid Services has released final regulations describing the rules for the Shared Savings Program and accountable care organizations. Fact Sheet 2011-11 confirms that Notice 2011-20 continues to reflect IRS expectations regarding the Shared Savings Program and ACOs, and provides additional information for charitable organizations that may wish to participate.

Qualified Therapeutic Discovery Project Program

This program was designed to provide tax credits and grants to small firms that show significant potential to produce new and cost-saving therapies, support U.S. jobs and increase U.S. competitiveness. Applicants were required to have their research projects certified as eligible for the credit or grant. IRS guidance describes the application process.

Submission of certification applications began June 21, 2010, and applications had to be postmarked no later than July 21, 2010, to be considered for the program. Applications that were postmarked by July 21, 2010, were reviewed by both the Department of Health and Human Services (HHS) and the IRS. All applicants were notified by letter dated October 29, 2010, advising whether or not the application for certification was approved. For those applications that were approved, the letter also provided the amount of the grant to be awarded or the tax credit the applicant was eligible to take.

The IRS published the names of the applicants whose projects were approved as required by law. Listings of results are available by state.

Learn more by reading the IRS news release, the news release issued by the U.S. Department of the Treasury, the page on the HHS website and our questions and answers.

Group Health Plan Requirements

The Affordable Care Act establishes a number of new requirements for group health plans. Interim guidance on changes to the nondiscrimination requirements for group health plans can be found inNotice 2011-1, which provides that employers will not be subject to penalties until after additional guidance is issued. Additionally, TD 9575 and REG-4003810, issued by DOL, HHS and IRS, provide information on the summary of benefits and coverage and the uniform glossary. Notice 2012-59provides guidance to group health plans on the waiting periods they may apply before coverage starts. Other information on group health plan requirements is available on the websites of the Departments of Health and Human Services and Labor and in additional guidance.

Tax-Exempt 501(c)(29) Qualified Nonprofit Health Insurance Issuers

The Affordable Care Act requires the Department of Health and Human Services (HHS) to establish the Consumer Operated and Oriented Plan program (CO-OP program). It also provides for tax exemption for recipients of CO-OP program grants and loans that meet additional requirements under section 501(c)(29). IRS Notice 2011-23 outlined the requirements for tax exemption under section 501(c)(29) and solicited written comments regarding these requirements as well as the application process. Revenue Procedure 2012-11, issued in conjunction with temporary regulationsand a notice of proposed rulemaking, sets out the procedures for issuing determination letters and rulings on the exempt status of organizations applying for recognition of exemption under 501(c)(29).

An overview of the CO-OP program is available on the Department of Health and Human Services website.

Medicare Part D Coverage Gap “donut hole” Rebate

The Affordable Care Act provides a one-time $250 rebate in 2010 to assist Medicare Part D recipients who have reached their Medicare drug plan’s coverage gap. This payment is not taxable. This payment is not made by the IRS. More information can be found at www.medicare.gov.

Additional Requirements for Tax-Exempt Hospitals

The Affordable Care Act added new requirements for charitable hospitals. (See Notice 2010-39 andNotice 2011-52.) On June 22, 2012, the IRS issued proposed regulations which provide information on the requirements for charitable hospitals relating to financial assistance and emergency medical care policies, charges for emergency or medically necessary care provided to individuals eligible for financial assistance, and billing and collections. Comments on the proposed regulations are requested by Sept. 24, 2012.

Form 990, Schedule H, for tax year 2010 was revised to include a new Part V, Section B, to gather information on hospitals' compliance with the new requirements and on related policies and practices. To give the hospital community time to familiarize itself with the types of information the IRS is requesting, Part V, Section B of Schedule H was made optional for the 2010 tax year (seeAnnouncement 2011-37).

The IRS considered public input and made revisions to Part V, Section B for tax year 2011 (see theForm 990, Schedule H and instructions). Hospitals are required to complete all parts and sections of Schedule H for tax year 2011, with the exception of lines 1-7 of Part V, Section B, which relate to community health needs assessments (see Notice 2012-4). These lines are optional for 2011. The IRS continues to welcome public input on the new requirements for charitable hospitals under the Affordable Care Act.

Annual Fee on Branded Prescription Pharmaceutical Manufacturers and Importers

The Affordable Care Act created an annual fee payable beginning in 2011 by certain manufacturers and importers of brand name pharmaceuticals. On Aug. 15, 2011, the IRS issued temporary regulations and a notice of proposed rulemaking on the branded prescription drug fee. The temporary regulations describe the rules related to the fee, including how it is computed and how it is paid.

On Nov. 4, 2011, the IRS issued Notice 2011-92 which provides additional guidance on the branded prescription drug fee for the 2012 fee year. 

Modification of Section 833 Treatment of Certain Health Organizations

The Affordable Care Act amended section 833 of the Code, which provides special rules for the taxation of Blue Cross and Blue Shield organizations and certain other organizations that provide health insurance. IRS Notice 2010-79 provides transitional relief and interim guidance on the computation of an organization’s taxpayer’s Medical Loss Ratio for purposes of section 833, the consequences of nonapplication and changes in accounting method. Notice 2011-04 provides additional information and the procedures for qualifying organizations to obtain automatic consent to change its method of accounting for unearned premiums. Notice 2011-51 extends the transitional relief and interim guidance provided in Notice 2010-79 for another year to any taxable year beginning in 2010 and the first taxable year beginning after Dec. 31, 2010. Notice 2012-37 extends the transitional relief and interim guidance provided in Notice 2010-79 for another year to any taxable year beginning in 2012 and the first taxable year beginning after Dec. 31, 2012.

Medical Loss Ratio (MLR)

Beginning in 2011, insurance companies are required to spend a specified percentage of premium dollars on medical care and quality improvement activities, meeting a medical loss ratio (MLR) standard. Insurance companies that are not meeting the MLR standard will be required to provide rebates to their consumers beginning in 2012. For information on the federal tax consequences to an insurance company that pays a MLR rebate and an individual policyholder who receives a MLR rebate, as well as information on the federal tax consequences to employees if a MLR rebate stems from a group health insurance policy, see our frequently asked questions.

Limitation on Deduction for Compensation Paid by Certain Health Insurance Providers

The Affordable Care Act amended section 162(m) of the Code to limit the compensation deduction available to certain health insurance providers. The amendment goes into effect for taxable years beginning after Dec. 31, 2012, but may affect deferred compensation attributable to services performed in a taxable year beginning after Dec. 31, 2009. Initial guidance on the application of this provision can be found in Notice 2011-2, which also solicited comments on the application of the amended provision.

Employer Shared Responsibility Payment

Starting in 2014, certain employers must offer health coverage to their full-time employees or a shared responsibility payment may apply. Information may be found in news releases IR-2011-92and IR-2011-50 and Notices 2011-73, 2011-36 and 2012-17. Additionally, Notice 2012-58 expands upon and modifies previous guidance and describes safe harbors that employers may use to determine whether certain workers are full-time employees and to establish that coverage is affordable at least through the end of 2014. Notice 2012-59 provides related guidance for group health plans on the waiting periods they may apply before starting coverage.

Patient-Centered Outcomes Research Institute

The Affordable Care Act establishes the Patient-Centered Outcomes Research Institute. Funded by the Patient-Centered Outcomes Research Trust Fund, the institute will assist patients, clinicians, purchasers and policy-makers in making informed health decisions by advancing clinical effectiveness research. The trust fund will be funded in part by fees paid by issuers of health insurance policies and sponsors of self-insured health plans.

On April 12, 2012, the IRS and the Treasury Department issued proposed regulations on this fee. The IRS and Treasury request comment on the proposed regulations by July 16, 2012. Comments may be submitted electronically, by mail or hand delivered to the IRS. Additionally, a public hearing is scheduled for August 8, 2012. The preamble to the proposed regulations provides instructions on how to submit comments and participate in the public hearing.

For More Information

For tips, fact sheets, questions and answers, videos and more, see our Affordable Care Act of 2010: News Releases, Multimedia and Legal Guidance page.

Enrolled Agent vs. Accountant

I am asked all the time why I'm an EA (Enrolled Agent) and not an accountant or CPA (Certified Public Accountant), and what's the difference.

It's a common and understandable mistake to think that anyone who can prepare taxes or provides financial services is also an accountant. While the difference isn't huge, it should be noted that accountants, and not enrolled agents, can essentially perform audits. An enrolled agent does not have this ability. This means that while I can be audited and I can manage your finances to prevent audits (by doing work correctly and legally!) I cannot, on behalf of the government, audit an individual or business.

Aside from this auditing ability, I am capable and legally allowed to perform the functions most people of the public understand accountants and CPA's to be able to do. I can prepare tax returns, set up and manage billing and payroll for businesses and help individuals with financial and estate planning and give business advice. According to the NAEA (National Association of Enrolled Agents), of which I am a member, an Enrolled Agent is,

"An enrolled agent (EA) is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals."


The word enrolled is important. I am licensed by the NAEA and must maintain my license in order to continue practicing with the privileges granted to an EA. I am legally allowed by the Federal Government to prepare taxes and speak with the IRS on behalf of my clients.  I earned my license by passing a comprehensive exam and maintain my license by attending yearly continuing education courses. All candidates have a background check performed before they are licensed, so you should always work with a tax professional who is either a CPA or EA in order to ensure you are working with an experienced and licensed professional.

Why do I recommend Enrolled Agents who are members of the NAEA, like myself? Because the NAEA is both a respected and reputable organization representing my profession but the standards in order to maintain membership are important. Continuing education requirements and all EA's in the organization must abide by a strict code of ethics. These ethics and continuing education requirements exceed the standard the IRS sets for EA's and tax professionals in order to continue practicing their profession legally.

If you have more questions about the difference between a CPA and EA or want to learn more about my background, education and experience, give me a call or send me an email!

And don't forget tax season is in full swing! Be in touch with me if you haven't yet begun preparing your 2011 Tax Return.

What to look for in a Tax Professional

The IRS recently published a list of things you should look for in a tax professional. They are a great reminder to anyone looking for a professional to prepare their tax return.

*All quotes below are taken from the article referenced above.

1. Check the preparers qualifications. “New regulations require all paid tax return preparers to have a Preparer Tax Identification Number. In addition to making sure they have a PTIN, ask if the preparer is affiliated with a professional organization and attends continuing education classes. “

I have a PTIN, a preparer tax identification number, a requirement of all paid tax return preparers. I am also a member of both the NAEA (National Association of Enrolled Agents) and the CSEA (California Society of Enrolled Agents). I also have a Professional Financial Planning Designation award by UCLA. I take continuing ed classes yearly to maintain my license.

2. Check the preparers history for any questionable activities. “Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Enrollment for enrolled agents.”

Check with the Better Business Bureau or IRS, ask me for referrals or check out my reviews on yelp.

3. Ask about service fees. “Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers.”

In general you should avoid preparers whose fees are based on the percentage of the refund you receive. My fees are based on services provided, the amount of work involved in your return and hourly, depending on your situation, NEVER on the refund you receive.

4. Ask if they offer electronic filing. “Any paid preparer who prepares and files more than 10 returns for clients must file the returns electronically, unless the client opts to file a paper return.”

I prepare all my returns electronically using my PTIN number unless the client requests a paper return or the situation warrants it.

5. Make sure the tax preparer is accessible. “Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise.”

The core of my business if providing quality service to my clients, just ask them! I am always available by phone or appointment to answer your questions or explain parts of your return you don’t understand until you are satisfied.

6. Provide all records and receipts needed in order to prepare your return. “Reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items. Do not use a preparer who is willing to electronically file your return before you receive your Form W-2 using your last pay stub. This is against IRS e-file rules.”

I never complete a tax return without all the required documentation. I like my job and intend to keep it. Therefore I do not use illegal means or cut corners when preparing a return for a client. If I don’t have something I need, I’ll ask for it and will not file until I receive what is necessary to complete your return appropriately.

7. Never sign a blank return. “Avoid tax preparers that ask you to sign a blank tax form.”

Frankly any tax preparer who would ask a client to do this is insane. I always prepare a completed and professional prepared return before asking the client to sign. All my clients have the opportunity to review this return both on their own and with me, to ask any questions and clarify any points in the return. You sign when you are confident to do so.

8. Review the entire return before signing it. “Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.”

See question 7 above!

9. Ensure the preparer signs the return with his/her PTIN number. “ A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.”

I sign every one of my returns, including my daughters return, with my name and PTIN number. You receive a copy of your return, both to review it before signing as well as to keep for your own records.

10. Report abusive preparers to the IRS. “You can report abusive tax preparers and suspected tax fraud to the IRS on Form 14157, Complaint: Tax Return Preparer. Download Form 14157 from www.irs.gov or order by mail at 800-TAX-FORM (800-829-3676).”

I often have clients who have come to me from previous tax preparers who have done a bad job or caused problems for them with the IRS. There is nothing I enjoy more than helping these clients get out of any mess they are in and giving them the reassurance that with me, there will be no problems or issues. I haven’t been in business for 28 years for nothing. I care about my clients and strive to give them the best service and the best work. If you have been a victim of an unprofessional tax preparer I encourage you to take the advice of the IRS and report them.

Accounting Questions, Granada Hills Tax Professional

I am constantly asked by clients whether or not tips and earned cash are taxable and need to be reported by law. Services include restaurant employees, baggage handlers at an airport, hairdressers, etc who receive gratuity for their services. Another big question is whether or not bonuses and commissions are taxable.

The answer to all of the above situation is yes. Even if you earn tips or even the full amount of your services that you provide in cash, this income must be reported on a W-2 as well as an individuals income tax return.

In general an employer will report withhold federal income tax, social security and Medicare tax from your W-2. This is then used for the employee to fill out their individual tax return. Often times however, tips or bonuses are not reported on the W-2 but still must be reported on your individual return.

Not sure if your tip or bonus is taxable. Take this tricky example. An employee is awarded a free service (say, a gift certificate to a restaurant or a massage at a local spa) as a reward for good performance (highest sales for the month, meeting a goal, etc). Is this gift taxable? Yes.

Note that your employer is required by law to provide you with your W-2 for the previous year no later than January 31!

If you have more questions about taxable and non-taxable sources of income – check our IRS’s page (link: http://www.irs.gov/businesses/small/article/0,,id=117613,00.html) or give me a call. Every situation is different and with over 27 years of experience I can guarantee that you will pay the least amount of taxes legally!

Give me a call today – 818 368 5374 or send me an email by clicking Granada Hills Tax Professional