The IRS has announced that the tax extenders legislation will not slow the start of tax season. The IRS will be open for business on January 19, as planned. On this day personal tax returns, 1040 forms, can be electronically filed. All 1040s will begin to be processed at that time so sending in a paper return before that date will not speed up the process. Paper returns will be held until January 19 and processed at that time.
Tax season will end on Monday, April 18, 2016, because Washington, D.C. will celebrate Emancipation Day and when D.C. closes and the IRS takes a break, it slows down the end of tax season.
The IRS urges tax payers to make certain all tax filing forms have been received before filing a tax return, this included W-2s, 1099s and the new form 1095-A from the Marketplace for tax payers who plan to take the premium tax credit. I will be writing a separate post on these forms which are new.
E-file and direct deposit are still the quickest and safest ways to file returns and claim refunds. You can do this yourself, sometimes for free if certain qualifications are met, or for a small fee. You can also use the services of a tax professional if you prefer. If you have any questions, please post a question and I'll do my best to supply an answer.
Showing posts with label taxes. Show all posts
Showing posts with label taxes. Show all posts
Friday, December 25, 2015
Sunday, January 18, 2015
The IRS is open for business and so am I
The IRS will be open for business on Tuesday, January 20, 2015, to begin processing 2014 tax returns. Below is some information copied directly from the IRS web site about filing and using electronic filing. If you don't file electronically, I urge you to do so. It's quick. It's easy. It's free (sometimes).
Contact me if you need me.
IR-2015-03, Jan. 15, 2015
WASHINGTON — The Internal Revenue Service announced the on-time opening of the nation’s 2015 filing season and highlighted a growing array of online services, including features that help taxpayers understand how the Affordable Care Act will affect them at tax time, along with the availability of the Free File program.
Taxpayers have until Wednesday, April 15, 2015 to file their 2014 tax returns and pay any tax due. The IRS expects to receive about 150 million individual income tax returns this year. Like each of the past three years, more than four out of five returns are expected to be filed electronically.
The IRS Free File program, available at IRS.gov, will open Friday for taxpayers, and the IRS will begin accepting and processing all tax returns on Tuesday, Jan. 20.
This year’s return will include new questions to incorporate provisions of the Affordable Care Act (or ACA). The majority of taxpayers - more than three out of four – will simply need to check a box to verify they have health insurance coverage. For the minority of taxpayers who will have to do more, IRS.gov/aca features useful information and tips regarding the premium tax credit, the individual shared responsibility requirement and other tax features of the ACA.
“Our employees will be working hard again this season to help the nation’s taxpayers,” IRS Commissioner John Koskinen said. “We encourage people to use the tools and information available on IRS.gov, particularly given the long wait times we anticipate on our phone lines. As always, taxpayers can benefit by filing electronically.”
Koskinen announced that taxpayers can begin preparing their returns using the Free File system on Friday, Jan. 16. Available only at IRS.gov, Free File offers two filing options:
- Brand-name software, offered by IRS’ commercial partners to about 100 million individuals and families with incomes of $60,000 or less; or
- Online fillable forms, the electronic version of IRS paper forms available to taxpayers at all income levels and especially useful to people comfortable with filling out their own returns.
E-file, when combined with direct deposit, is the fastest way to get a refund. More than three out of four refund recipients now choose direct deposit. People who e-file make fewer mistakes, and it costs nothing for those who choose Free File.
In all, 14 software companies will be participating in this year’s Free File program. Additional details about the specific Free File offerings will be available tomorrow on the front page of IRS.gov when Free File becomes available.
Taxpayers who purchase their own software can also choose e-file, and most paid tax preparers are now required to file their clients’ returns electronically. In addition to Free File, commercial software companies also are currently available for taxpayer use.
The IRS will begin accepting and processing all returns — whether e-file, Free File or paper tax returns — on Jan. 20.
Like last year, the IRS expects to issue more than nine out of 10 refunds within 21 days. Again, the fastest way to get a refund is to e-file and choose direct deposit. It takes longer to process paper returns and in light of IRS budget cuts resulting in a smaller staff, it will likely take an additional week or more to process paper returns meaning that those refunds are expected to be issued in seven weeks or more.
Koskinen said, “If you haven’t already, you should consider filing electronically. It’s fast, accurate and the best way to get your refund quickly.”
Koskinen also strongly encouraged taxpayers to visit IRS.gov as a first stop for information ranging from the status of their refunds to basic tax information. He cautioned taxpayers that recent budget reductions will mean long wait times on the phone, routinely topping 30 minutes.
Information on IRS.gov and using tax software and e-file are among the options that can help people with questions about the individual shared responsibility requirement included in the Affordable Care Act, which is new to the Form 1040 this filing season.
Saturday, August 17, 2013
New Information about Tennessee Unemployment
This information comes from an article I read in the Tennessee CPA Journal, the magazine published by the Tennessee Society of Certified Public Accountants. It was written by Stacie Caraway with Miller & Martin PLLC in Chattanooga.
Ms. Caraway brings Tennessee employers up to date about the definition of "disqualifying misconduct" which was included in amendments to the unemployment benefit law.
Every employer with payroll pays into the unemployment pool to provide benefits for those who lose employment. The fewer former employees who draw unemployment compensation on an employer's account, the lower the employer's percentage rate. To put it another way, if no employee ever draws unemployment on your account, then your rate is as low as it can be to pay unemployment taxes. If you have a lot of employees drawing unemployment on your account, then your rate will go as high as it can go. That way employers who have more employees drawing unemployment pay more and employers who have few or no employees drawing unemployment, pay less.
Obviously, as an employer, you want to keep those who draw unemployment on your account to a minimum. That means when you receive a letter informing you that a former employee wants to draw unemployment you have to fight the claim if you believe it is unreasonable. It seems this has been made a bit easier to do now.
To show "qualifying misconduct", that is the reason the employee is no longer employed and why that cause means the employee doesn't get to receive unemployment, the employer has some guidelines. These are as follows:
Good news. There are freelance employee handbook writers. That's right just as you can hire a CPA when you need one and ignore him the rest of the time, you can also hire a Human Resource or HR department when you need one. There are many small businesses that help other small businesses work better. I know who they are. If former employees who don't deserve to draw unemployment on your account are a problem, let me know by commenting on this blog entry and I will put you in touch with a small business HR department. They will be happy to work with you to create a written employee handbook that will outline what is correct and proper to your employees. And this will give you back up when trying to fight an unemployment claim.
If you want to read the entire article you can find the March/April edition of the Tennessee CPA Journal on the TSCPA web page.
Ms. Caraway brings Tennessee employers up to date about the definition of "disqualifying misconduct" which was included in amendments to the unemployment benefit law.
Every employer with payroll pays into the unemployment pool to provide benefits for those who lose employment. The fewer former employees who draw unemployment compensation on an employer's account, the lower the employer's percentage rate. To put it another way, if no employee ever draws unemployment on your account, then your rate is as low as it can be to pay unemployment taxes. If you have a lot of employees drawing unemployment on your account, then your rate will go as high as it can go. That way employers who have more employees drawing unemployment pay more and employers who have few or no employees drawing unemployment, pay less.
Obviously, as an employer, you want to keep those who draw unemployment on your account to a minimum. That means when you receive a letter informing you that a former employee wants to draw unemployment you have to fight the claim if you believe it is unreasonable. It seems this has been made a bit easier to do now.
To show "qualifying misconduct", that is the reason the employee is no longer employed and why that cause means the employee doesn't get to receive unemployment, the employer has some guidelines. These are as follows:
- Conscious disregard of the rights or interests of the employer (example: starting competing business on employer's time);
- Deliberate violations or disregard of reasonable standards of behavior that the employer expects of its employees ("deliberate" will require proof of notice via handbook);
- Carelessness or neglect of such a degree or recurrence as to show an intentional or substantial disregard of the employer's interests;
- Deliberate disregard of a written attendance policy and the discharge is in compliance with such policy;
- A knowing violation of a regulation of this state by an employee of an employer licensed by this state, which violation would cause the employer to be sanctioned or have the employer's license revoked or suspended by this state; or
- A violation of an employer's rule, unless the employee can demonstrate that he/she did not know, and couldn't not reasonably know, of the rule's requirements, or the rule is unlawful or not reasonably related to the job environment and performance.
Good news. There are freelance employee handbook writers. That's right just as you can hire a CPA when you need one and ignore him the rest of the time, you can also hire a Human Resource or HR department when you need one. There are many small businesses that help other small businesses work better. I know who they are. If former employees who don't deserve to draw unemployment on your account are a problem, let me know by commenting on this blog entry and I will put you in touch with a small business HR department. They will be happy to work with you to create a written employee handbook that will outline what is correct and proper to your employees. And this will give you back up when trying to fight an unemployment claim.
If you want to read the entire article you can find the March/April edition of the Tennessee CPA Journal on the TSCPA web page.
Friday, February 15, 2013
When can you file certain forms?
The IRS can only act a quickly as Congress. Since Congress worked literally until the 12th hour making changes to the tax structure, the IRS is still working on updating forms and instructions. If you want to know which forms will be ready and at which dates, click on the link to the right on this blog page that says IRS General Information Home Page. That link will take you directly to the IRS. Then click on the orange/red section that says Forms and Pubs. At the top of the next page is a link to all the forms still under programming. Most will be ready by the first of March and most people don't use them. So it's very possible you can file right now, if you haven't already done so.
As always, if there is something specific you want to know, leave a comment and let me know.
As always, if there is something specific you want to know, leave a comment and let me know.
Monday, January 28, 2013
W-2s, 1099s and Year End Payroll Reports
It's about time to get those tax statements out to employees and sub-contractors. These need to be mailed by the end of January but don't have to be filed with the IRS (for 1099s) or the Social Security Administration (for W-2s) until the end of February. The reason for this? If there are errors in name, address or ID number, in either the 1099 or W-2, the recipient of the form will let the sender know. A corrected form can be generated and the documents needed to be sent to to the taxing authority can be corrected before the forms are sent in. That's the easiest way to do it.
The other reports that need to be sent in by January 31, no extension on these forms, are the 941, the 940 and the state unemployment. These have to be sent in by the end of the month. The main thing to remember about these reports is that they all need to balance to each other. The four quarterly 941 reports need to match the the W-2s in gross payroll. The gross payroll total of the 941s need to equal both the quarterly state unemployment reports and the total payroll for the annual 940 or federal unemployment. If these reports don't match, you will find out about it years later and have to dig through your old files to figure out what the error is and how to correct it. Best to get it right the first time.
Now let's take a look at the W-2. New this year on the W-2 is the requirement to include the value of health insurance. Small employers are exempted from this requirement. Only large employers need to worry about this. In any event, this amount is not taxable to the employee but is included for information purposes only, to let the employee know the value of health insurance paid on his behalf. If the employer can't afford health insurance for the employee, then there is nothing to include.
That's a brief overview, except to let you know that there are a multitude of 1099s - miscellaneous, interest, dividends, mortgage interest (actually a 1098), and a host of others. So don't forget any of them. You still have time to get them out. Have fun.
The other reports that need to be sent in by January 31, no extension on these forms, are the 941, the 940 and the state unemployment. These have to be sent in by the end of the month. The main thing to remember about these reports is that they all need to balance to each other. The four quarterly 941 reports need to match the the W-2s in gross payroll. The gross payroll total of the 941s need to equal both the quarterly state unemployment reports and the total payroll for the annual 940 or federal unemployment. If these reports don't match, you will find out about it years later and have to dig through your old files to figure out what the error is and how to correct it. Best to get it right the first time.
Now let's take a look at the W-2. New this year on the W-2 is the requirement to include the value of health insurance. Small employers are exempted from this requirement. Only large employers need to worry about this. In any event, this amount is not taxable to the employee but is included for information purposes only, to let the employee know the value of health insurance paid on his behalf. If the employer can't afford health insurance for the employee, then there is nothing to include.
That's a brief overview, except to let you know that there are a multitude of 1099s - miscellaneous, interest, dividends, mortgage interest (actually a 1098), and a host of others. So don't forget any of them. You still have time to get them out. Have fun.
Wednesday, January 16, 2013
Should you amend a tax return?
In my last blog I ended by stating the I didn't always recommend that a client amend a tax return to apply for the full refund to which he or she might be entitled. Why would I do that? Why wouldn't I want my client to have every penny of their hard earned money refunded by the government? What kind of CPA am I?
I'm a cautious CPA. First let me say that I always do what the client wants, as long as it's legal. But here are some reasons why it might not be the best idea to amend a prior year's tax return.
Every tax return carries a statute of limitations based upon when it was filed. That time period for personal taxes or 1040s is three years. If you file, that is submit your tax return to the IRS, on April 15, 2013, for tax year 2012, the IRS has until April 15, 2016, to question the return. After that date, no more questions. Unless fraud, that is out right lying on the return, is suspected, then these rules don't apply. But for this discussion we're going to assume no fraud.
How do you know for certain when the statute begins? The IRS will have a record of when the tax return was received and you'll know that as well based upon the date on your copy of the return. You can go to the lengths of sending your tax return via return receipt if you wish but I've never had a client do that unless they were really worried or under the gun by the IRS for some reason. Of course, if you file electronically, which is becoming more and more popular, then you know exactly when the return was received and accepted by the IRS.
So what does all this have to with amending a tax return to get back more money? When a tax return is amended, the statute of limitations is extended. That's not usually a problem but it is a consideration. If the amount to be refunded with an amended return is $50, the tax payer might not want to extend the time the IRS could examine the return for that small amount.
Another consideration is cost to prepare the amended return. As far as I'm concerned, if I made the mistake, then I correct it for free. For example, if the client brought in the information and I failed to get it onto the tax return, then after I explain everything to the client - that is my mistake and the statute of limitations - if he or she wants to proceed, then I prepare the amended return for free. On the other hand, if the reason for the amended return is that the client forgot to bring me some information, then they have to pay for the preparation of the amended return. And that brings us to the second reason for not requesting the refund.
It takes a lot of time to prepare an amended return. It might cost $200 to prepare the amended return to receive a $50 refund. Not very cost effective, however, I did have a client with this situation and he insisted that I prepare the amended return even though he would be paying me more than he would be getting back from the IRS. His reasoning was that the government wasn't going to keep a penny of his money that it didn't deserve and he didn't care how much he had to pay me to get it all back. I didn't agree with this reasoning but if that's what he wanted to do, I was happy to collect the fee.
There you have it. My two main reasons why I don't always suggest preparing an amended return to get back a refund. Next blog: How much should I be paying to have my taxes prepared or do CPAs really read 900 pages of tax law or maybe I'll talk about year end payroll taxes and W-2s? If any of my readers want one topic more than the other, let me know in the comments sections. Until next time Happy Taxes!
I'm a cautious CPA. First let me say that I always do what the client wants, as long as it's legal. But here are some reasons why it might not be the best idea to amend a prior year's tax return.
Every tax return carries a statute of limitations based upon when it was filed. That time period for personal taxes or 1040s is three years. If you file, that is submit your tax return to the IRS, on April 15, 2013, for tax year 2012, the IRS has until April 15, 2016, to question the return. After that date, no more questions. Unless fraud, that is out right lying on the return, is suspected, then these rules don't apply. But for this discussion we're going to assume no fraud.
How do you know for certain when the statute begins? The IRS will have a record of when the tax return was received and you'll know that as well based upon the date on your copy of the return. You can go to the lengths of sending your tax return via return receipt if you wish but I've never had a client do that unless they were really worried or under the gun by the IRS for some reason. Of course, if you file electronically, which is becoming more and more popular, then you know exactly when the return was received and accepted by the IRS.
So what does all this have to with amending a tax return to get back more money? When a tax return is amended, the statute of limitations is extended. That's not usually a problem but it is a consideration. If the amount to be refunded with an amended return is $50, the tax payer might not want to extend the time the IRS could examine the return for that small amount.
Another consideration is cost to prepare the amended return. As far as I'm concerned, if I made the mistake, then I correct it for free. For example, if the client brought in the information and I failed to get it onto the tax return, then after I explain everything to the client - that is my mistake and the statute of limitations - if he or she wants to proceed, then I prepare the amended return for free. On the other hand, if the reason for the amended return is that the client forgot to bring me some information, then they have to pay for the preparation of the amended return. And that brings us to the second reason for not requesting the refund.
It takes a lot of time to prepare an amended return. It might cost $200 to prepare the amended return to receive a $50 refund. Not very cost effective, however, I did have a client with this situation and he insisted that I prepare the amended return even though he would be paying me more than he would be getting back from the IRS. His reasoning was that the government wasn't going to keep a penny of his money that it didn't deserve and he didn't care how much he had to pay me to get it all back. I didn't agree with this reasoning but if that's what he wanted to do, I was happy to collect the fee.
There you have it. My two main reasons why I don't always suggest preparing an amended return to get back a refund. Next blog: How much should I be paying to have my taxes prepared or do CPAs really read 900 pages of tax law or maybe I'll talk about year end payroll taxes and W-2s? If any of my readers want one topic more than the other, let me know in the comments sections. Until next time Happy Taxes!
Tuesday, January 8, 2013
New Year and a New Tax Season Begins
Happy New Year!!! For most people the change from December 31 of year 2012 to January 1 of 2013 is just an excuse to have a big party and drink champagne. But for many CPAs and accountants it's the signal that a fast paced few months of increased revenue is about to begin. Old accounting years end and new accounting years begin. Books of account are closed and reopened. Non accountants begin waiting for their tax documents to come in the mail so they can prepare and file their 2012 tax returns.
Are you looking for someone to prepare your taxes? Planning on using the same person or organization as last year? Doing your own taxes with a program either purchased or on line? Is this your first year to file your own taxes? What to do???
Any of these choices are fine. Recently I saw an ad on TV, which will be prevalent for the next few months and then die away until next year, from a rather large national tax preparation firm asking for clients to bring in the last three years of tax returns. The ad suggests that there may be an error on the prior years' returns that, once rectified, would yield large tax refunds missed by the previous preparer. And that might be true. It occurred to me that this request for prior tax returns might need some explaining.
Is this usual practice? Yes, it is. I always want a new tax client to bring in the previous three years tax returns for my review. Do I think the prior preparer has made a mistake or missed something? No, not really. There are a lot of things I'm looking for when I review a new client's tax returns. Read on to see what I hope to discover.
First of all I'm looking to see what the client reported for the last three years so I can continue in the same manner. No need to upset the IRS with changes that don't need to be made.
Second I'm looking for anything that might be missing. If interest was reported from a certain bank in prior years and there is no interest from that bank now, I want to ask about it. It could be the account was closed and therefore no interest income for the current year or it could be the tax payer forgot to bring in that 1099. I also want to check to see how certain items such as installment sales and depreciation were handled. The list is long and extensive and I won't try to list everything here.
So, if you are going to a new preparer or to a preparer you've used before, it's always a good idea to bring along the previous years tax returns. Some preparers might not need that since they will be keeping everything on file and can find it themselves. I'm that way. A continuing client doesn't need to bring in the previous years tax returns because I keep copies and look back on them if I need to answer a question.
Why only three years? Why not four or five or ten? There is a statute of limitations on taxes which means after three years the tax payer can't make any changes and neither can the IRS. After all, if no error has been found in three years, it probably won't be found.
Am I also looking for errors that might help my new client to receive more money from the government ? Yes, I am. Do I always tell a client about these? Yes, I do. Do I always suggest that the client act on receiving these refunds? No, I don't and in the next blog I'll tell you why.
Remember if you have an idea about a blog topic, let me know. I'm here to respond to what my public wants to read.
Are you looking for someone to prepare your taxes? Planning on using the same person or organization as last year? Doing your own taxes with a program either purchased or on line? Is this your first year to file your own taxes? What to do???
Any of these choices are fine. Recently I saw an ad on TV, which will be prevalent for the next few months and then die away until next year, from a rather large national tax preparation firm asking for clients to bring in the last three years of tax returns. The ad suggests that there may be an error on the prior years' returns that, once rectified, would yield large tax refunds missed by the previous preparer. And that might be true. It occurred to me that this request for prior tax returns might need some explaining.
Is this usual practice? Yes, it is. I always want a new tax client to bring in the previous three years tax returns for my review. Do I think the prior preparer has made a mistake or missed something? No, not really. There are a lot of things I'm looking for when I review a new client's tax returns. Read on to see what I hope to discover.
First of all I'm looking to see what the client reported for the last three years so I can continue in the same manner. No need to upset the IRS with changes that don't need to be made.
Second I'm looking for anything that might be missing. If interest was reported from a certain bank in prior years and there is no interest from that bank now, I want to ask about it. It could be the account was closed and therefore no interest income for the current year or it could be the tax payer forgot to bring in that 1099. I also want to check to see how certain items such as installment sales and depreciation were handled. The list is long and extensive and I won't try to list everything here.
So, if you are going to a new preparer or to a preparer you've used before, it's always a good idea to bring along the previous years tax returns. Some preparers might not need that since they will be keeping everything on file and can find it themselves. I'm that way. A continuing client doesn't need to bring in the previous years tax returns because I keep copies and look back on them if I need to answer a question.
Why only three years? Why not four or five or ten? There is a statute of limitations on taxes which means after three years the tax payer can't make any changes and neither can the IRS. After all, if no error has been found in three years, it probably won't be found.
Am I also looking for errors that might help my new client to receive more money from the government ? Yes, I am. Do I always tell a client about these? Yes, I do. Do I always suggest that the client act on receiving these refunds? No, I don't and in the next blog I'll tell you why.
Remember if you have an idea about a blog topic, let me know. I'm here to respond to what my public wants to read.
Thursday, September 27, 2012
Drain the Fat.
I'm no cook. I can boil water and operate a microwave, but cook a meal from scratch? The 20 minute meal takes me several hours and leaves me too tired to eat it. That is if my attempt is edible. The simplest instructions stump me. Take last night for example, one simple line, drain the fat.
All right. How? Into what? The pan is hot. The broken up hamburger is steaming and popping with its own hot oil. The fat itself is rather dangerous to my skin and, I think, maybe to my drain pipes. What am I to do with the stuff? And really, what if I make a mistake? What if I don't do it exactly right or as fast as an experienced cook? It's only cooking.
Many people can throw together a meal, drain the fat, and cook a casserole. They don't give it a second thought and if they mess it up a bit, no one cares. Taxes aren't that way. Do 'em wrong and people care. IRS Agents care a lot and they'll let you know about it, too. Don't worry. You'll have directions on what to do and how to do it. Directions that are obtuse, overly complicated and rarely on point.
But taxes to me are like cooking to an experienced cook. Just as a good cook scans a recipe and automatically begins mentally listing the first steps and size of pan he'll need, I do the same with tax information. Based on the informational forms the taxpayer presents, I begin to plan the tax forms I need. 1099 - better check it to see what income is being reported - rents (Schedule E), interest or dividends (Schedule B), K-1 partnership or S-corp (Schedule E page 2), 1098 (Schedule A). Since the Schedule A is already in play, how about real estate taxes, medical bills, state taxes, contributions? W-2, self-employed, retired? Depreciation, vehicle expenses, employee benefits? Each tax client is different just like a recipe.
I can't cook a meal but I can prepare a tax return with one had tied behind my back.
Well, not too tough with one hand and a computer.
How did I get this way? Was I always strange and slightly crazy? Well, maybe, but it could be years and years of experience. Yep, that and growing up with a CPA. My father ran a small one man shop. Just like a good cook brings the children into the kitchen as babes to begin learning through observation and prep work, so it was in my childhood home with taxes.
My father's cottage industry involved the whole family from January to April. My first job as a child was to read the appointment schedule to see who was coming in next. Then pull the taxpayer's file to find out which forms had been used the year before. After I had my stack of forms I wrote the taxpayer's name and ID on every one. I put these in a folder and placed the folder on my dad's desk.
After my father prepared the tax return, my grandmother proofed his addition. After he corrected any errors, my mother typed the tax return. After my sister proofed her typing, the client was contacted to pick up the tax return.
The process was repeated in our house 100 to 150 times a year, every year.
Then around 1979, my dad bought a personal computer with some basic tax software and life changed forever. Proofing and printing became a lot easier but knowing which forms to use and where to put the numbers required the same high level of knowledge.
Make a few mistakes in a recipe and you might have to eat a meal that's a little less tasty than you'd hoped, but probably not fatal. And while making a mistake preparing a tax return isn't fatal either, it sure feels like it when that letter from the IRS arrives - usually two years after the return was filed - asking for an explanation about an entry the taxpayer doesn't remember making.
Many people begin to prepare their own taxes, just like I try to make my own meals, and get stumped by the instructions. What does that mean? How do I do that? What form do I use? It can be scary and it can be difficult, but it's not impossible. Maybe you'll never prepare your own taxes, but by reading this blog you'll be more educated and organized when you sit down with your CPA and she starts asking questions. Maybe your tax prep fee will drop because you bring the correct documents and information to the interview the first time and the CPA doesn't have to call you repeatedly to get the information she needs to finish the tax. Maybe your anxiety level will drop and you'll gather your tax information without breaking into a sweat or screaming at your spouse and children.
Maybe you'll just read the blog because you can't believe anyone would write about something as boring as taxes.
I plan to write a new blog each week and discuss a topic that I find interesting or timely. If my readers have questions or problems or confusion or fear, they can ask questions or make comments and I may use those for future posts. Don't be shy. I'm a real CPA licensed to practice in Tennessee. Outside the state of Tennessee, my state specific information will be spotty, but if you're in the United States, my federal information will apply to all. Until next time, keep cooking.
All right. How? Into what? The pan is hot. The broken up hamburger is steaming and popping with its own hot oil. The fat itself is rather dangerous to my skin and, I think, maybe to my drain pipes. What am I to do with the stuff? And really, what if I make a mistake? What if I don't do it exactly right or as fast as an experienced cook? It's only cooking.
Many people can throw together a meal, drain the fat, and cook a casserole. They don't give it a second thought and if they mess it up a bit, no one cares. Taxes aren't that way. Do 'em wrong and people care. IRS Agents care a lot and they'll let you know about it, too. Don't worry. You'll have directions on what to do and how to do it. Directions that are obtuse, overly complicated and rarely on point.
But taxes to me are like cooking to an experienced cook. Just as a good cook scans a recipe and automatically begins mentally listing the first steps and size of pan he'll need, I do the same with tax information. Based on the informational forms the taxpayer presents, I begin to plan the tax forms I need. 1099 - better check it to see what income is being reported - rents (Schedule E), interest or dividends (Schedule B), K-1 partnership or S-corp (Schedule E page 2), 1098 (Schedule A). Since the Schedule A is already in play, how about real estate taxes, medical bills, state taxes, contributions? W-2, self-employed, retired? Depreciation, vehicle expenses, employee benefits? Each tax client is different just like a recipe.
I can't cook a meal but I can prepare a tax return with one had tied behind my back.
Well, not too tough with one hand and a computer.
How did I get this way? Was I always strange and slightly crazy? Well, maybe, but it could be years and years of experience. Yep, that and growing up with a CPA. My father ran a small one man shop. Just like a good cook brings the children into the kitchen as babes to begin learning through observation and prep work, so it was in my childhood home with taxes.
My father's cottage industry involved the whole family from January to April. My first job as a child was to read the appointment schedule to see who was coming in next. Then pull the taxpayer's file to find out which forms had been used the year before. After I had my stack of forms I wrote the taxpayer's name and ID on every one. I put these in a folder and placed the folder on my dad's desk.
After my father prepared the tax return, my grandmother proofed his addition. After he corrected any errors, my mother typed the tax return. After my sister proofed her typing, the client was contacted to pick up the tax return.
The process was repeated in our house 100 to 150 times a year, every year.
Then around 1979, my dad bought a personal computer with some basic tax software and life changed forever. Proofing and printing became a lot easier but knowing which forms to use and where to put the numbers required the same high level of knowledge.
Make a few mistakes in a recipe and you might have to eat a meal that's a little less tasty than you'd hoped, but probably not fatal. And while making a mistake preparing a tax return isn't fatal either, it sure feels like it when that letter from the IRS arrives - usually two years after the return was filed - asking for an explanation about an entry the taxpayer doesn't remember making.
Many people begin to prepare their own taxes, just like I try to make my own meals, and get stumped by the instructions. What does that mean? How do I do that? What form do I use? It can be scary and it can be difficult, but it's not impossible. Maybe you'll never prepare your own taxes, but by reading this blog you'll be more educated and organized when you sit down with your CPA and she starts asking questions. Maybe your tax prep fee will drop because you bring the correct documents and information to the interview the first time and the CPA doesn't have to call you repeatedly to get the information she needs to finish the tax. Maybe your anxiety level will drop and you'll gather your tax information without breaking into a sweat or screaming at your spouse and children.
Maybe you'll just read the blog because you can't believe anyone would write about something as boring as taxes.
I plan to write a new blog each week and discuss a topic that I find interesting or timely. If my readers have questions or problems or confusion or fear, they can ask questions or make comments and I may use those for future posts. Don't be shy. I'm a real CPA licensed to practice in Tennessee. Outside the state of Tennessee, my state specific information will be spotty, but if you're in the United States, my federal information will apply to all. Until next time, keep cooking.
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