Here are the answers to some of the most Frequently Asked Questions our firm receives.
REMEMBER:
The information found on this website is general in nature and may not apply to the reader's situation. Therefore, the reader should not rely on the information on this website alone. For specific advise, please call us at 972-264-0277
Q. What are your hours and are you a seasonal company?
Q. Do I need to visit your office to have my taxes prepared? | |||||||||
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Q. What size clients do you serve? | |||||||||
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Q. What size clients do you accept? | |||||||||
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Q. Can I deduct student loan interest? | |||||||||
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Q. Can I ever save tax by filing a separate return instead of jointly with my spouse? | |||||||||
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Q. How do you charge for your services and how does your cost compare to other tax preparation firms? | |||||||||
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Q. How are Limited Liability Companies (LLC) taxed? | |||||||||
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Q. Is there any non-tax record that I should keep? | |||||||||
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Q. Should I keep my old tax returns? If so, for how long? | |||||||||
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Q. What pieces of paper do I need to keep in order to do my taxes? | |||||||||
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Q. How do I know when certain taxes are due?
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Q. When should I give you my tax information? | |||||||||
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Q. What do I need to do to start a new business? | |||||||||
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Q. Should I use a lawyer or an accountant to incorporate my business? | |||||||||
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Q. Are QuickBooks or Peachtree good products? | |||||||||
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Q. By using QuickBooks Pro, can I reduce my fees? | |||||||||
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Q. Do I need a Certified Public Accountant or is an accountant okay? | |||||||||
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Q. How can I pay my taxes by credit card and which credit cards are accepted? | |||||||||
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Q. Is the IRS storing credit card information? | |||||||||
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Q. Is there a fee charged for using by credit card to pay my taxes? | |||||||||
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Q. Where can I get additional information about IRS e-file? | |||||||||
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Q. If I owe, how do I pay my taxes electronically? | |||||||||
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Q. What do I gain by using IRS e-file? | |||||||||
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Q. What is an Authorized IRS e-file Provider? | |||||||||
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Q. What is the Personal Identification Number (PIN)? | |||||||||
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Q. Can I pay my balance due by phone or Internet with a credit card if I'm a 'married filing joint' filer? | |||||||||
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Q. Do I really get my refund faster? | |||||||||
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Q. Should I wait until April 15 to file electronically if I owe taxes? | |||||||||
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Q. What is a Form 9465, Installment Agreement Request? | |||||||||
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Q. Do I have a greater chance of getting audited by the IRS if I use IRS e-file? | |||||||||
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Q. How do I know that the IRS really has my return? | |||||||||
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Q. Can my state tax return be e-filed with my Federal return at the same time? | |||||||||
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Q. If my return is electronic, how do I sign it? | |||||||||
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Q. What if I owe and cannot pay the full balance due on my taxes? | |||||||||
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Q. What happens if my return is filed electronically, I am receiving a refund, and I owe taxes from previous years? |
Q. Do you work with Start-up (new companies)? |
Q. Do you offer free business consultations? |
Q. I prepare my own tax return, why use your services |
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Q. What is the Economic Growth and Tax Relief Reconciliation Act of 2001 all about? A. The Act is the most significant tax cut since 1981, at a 10-year budget cost of $1.35 trillion. The entire act sunsets (reverts back to former law) in year 2011. The act focuses on individuals, not businesses. The key benefits include: -Individual rate reduction -Marriage penalty relief -Expanded credits -Expanded retirement benefits -Repeal of estate taxes |
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Q. How long should I keep my tax records? A. We at ***** FIRM NAME ***** recommend keeping your tax records for ten years. This is longer than recommended by the IRS, but we feel this is the safest length of time. However, documents in support of the purchase of a depreciable asset should be kept until the asset is disposed of and documents in support of loans and mortgages should be kept until the loan or mortgage is liquidated |
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Q. Can I save taxes by filing a separate return? A. It depends. For example, if both parties' income is approximately the same, but one has extraordinarily large itemized deductions subject to income limitations (medical expenses, casualty losses, miscellaneous deductions, etc.) it is possible to save taxes by filing separately. We at ***** FIRM NAME ***** always compute the tax result both ways, as jointly and married filing separately, to ascertain which filing status is more beneficial to our client |
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Q. How can I contact the IRS about my tax return? A. You can call the IRS at its toll-free line at 800-829-1040. To be ready to respond, you should have your Social Security number, your filing status and your refund or payment due amounts. Allow between 4 to 6 weeks before you contact the IRS |
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Q. How can I obtain a copy of my tax return? A. Of course, we at ***** FIRM NAME ***** supply you with a copy and if you lose it, we will furnish you with another copy. If we did not prepare the return, and for some reason you do not have a copy in your possession, you need to file form 4506, Request for Copy or Transcript of Tax Forms, with the IRS service center where you filed your missing return |
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Q. What records do I need for a CPA to file my tax return? A. We at ***** FIRM NAME ***** will provide a data collection form for your convenience, that contains most of the items which you will need. However, a detailed record of your income and expense items will be required to support our entries and in addition, a record of any other items reported on your tax return. Since totals of each category of income and expense will help us save time and cost, it is the preferred method of information submission |
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Q. Can I deduct child support payments? A. No. Child support payments are not deductible, because they represent a pre-existing legal obligation to support your children |
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Q. In a divorce who is entitled to the child dependency exemption? A. The parent who had custody of the child for the greater part of the year is generally treated as the parent who provided over one-half of the child's support and will claim the exemption if other tests are met. Custody is usually determined by the divorce, separate maintenance or custody decree or agreement. If no decree or agreement establishes custody, then the parent who had physical custody for the greater part of the year is entitled to the exemption |
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Q. What is the most tax efficient way to save for my children's education? A. The educational savings area is very complicated. We at ***** FIRM NAME ***** recommend that taxpayers seek professional assistance. Although a Section 529 plan, under the 2001 Tax Act, is an extremely flexible and tax effective plan, there are other plans to be considered. Also when considering any educational savings plan, consideration should be given to the impact on financial aid qualification requirements |
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Q. Do you provide prospective clients with estimates of your fee? A. When appropriate, we prefer to provide a fee estimate. We always provide a fee range estimate for the preparation of tax returns. Where appropriate, we also provide written fee estimates to business clients |
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Q. Do you service clients outside of ****STATE****? A. Yes. Due to available technology, distance is no longer a problem, therefore, we service clients in all states. For example, our tax preparation software includes every state, while the internet allows us to service clients more effectively from distant locations. When necessary, we travel to distant clients. |
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Q. Do you perform business valuations? A. Yes. We are often engaged to conduct a business valuation. Business valuations are required or recommended in the following situations: -Divorce -Estate and gift tax valuations -Buy\Sell Agreements -Shareholder disputes -Mergers and Acquisitions -Incentive Stock Options -Employee Stock Ownership Plans -Initial public offerings -Legal claims for damages |
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Q. What is Long Term Care insurance? A. Long Term Care insurance covers an individual for the costs of home health care, community based care (such as assisted living)and nursing home care. It works in conjunction with Medicare and\or private insurance. It is a contract between an individual and an insurance company that, in exchange for premiums, provides daily health benefits. For a man over the age of 65, the odds are one in three (33%) that he will need long term care; for a woman, the odds are one in two (50%). |
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Q. Do you handle Section 1031 Tax-Free Exchange Transactions? A. Yes. We handle all types of tax-free exchanges, such as: Four Party, Delayed, Reverse Starker, Diversified, Built to Suit, Rehab to Suit and Consolidated. We also handle exchanges involving operating businesses, LLC, Partnerships and Alternative Methods of tax-advantaged disposition of property such as Charitable Remainder Trusts. |
Q. WHAT IF I AM AUDITED?
A. In the event of a federal or state audit of a return, we will meet with you to review the issues of the audit, provide research and documentation for the items in questions, and prepare all needed information for the audit.
Q. WILL YOU GO WITH ME TO THE AUDIT?
A. We actually ask that you let us go and you stay home. We know what the IRS is looking for. We will know all the answers to your return. We don't want them on a fishing expedition with you. We will have you sign a Power of Attorney giving us the right to represent you.
Q. An employee was married in November, 2005. Do I issue a W-2 in her married name or in her maiden name?
A. Do not change her name until she shows you a copy of her Social Security card with her married name on it.
Q. How do we tax wages v. a partner's draw?
A. Withhold employment taxes on wages, but not on a draw (not even FIT).
Q. On a 1099-MISC, do we put the person's name or DBA?
A. If people work for themselves, use the individual's name and Social Security number. If the person is an employee of the business, use the business name and federal EIN.
Q. Can we report part-time employee wages on a 1099-MISC?
A. Report employee wages on a W-2 ¾ never on a 1099-Misc.
Q. Do we report a $1,000 gift to an employee on a 1099-MISC?
A. Report cash payments to employees on a W-2 as income, not on a 1099.
Q. Are per diem reimbursements wages subject to FIT, FITW, FICA, and FUTA?
A. Per diem reimbursements for travel are not wages—if the travel is properly substantiated (for time, place and business purpose) and the amount does not exceed the maximum federal rates for the location of travel. Room tax above the federal rate may be reimbursed separately and is nontaxable if receipts are provided.
Q. How do we complete Form 941 as a common pay agent?
A. Report the agent's name and EIN (as registered with the IRS) on the 941. Consolidate the wages and taxes of all employers represented by the common pay agent and report the consolidated totals on the 941.
Q. How do I spread our Christmas bonuses over the year so they don't throw off December's income statement?
A. Most companies accrue for the bonuses by taking an estimated amount and dividing this amount by the number of pay periods in the year (usually 24, 26 or 52).
Q. Are paychecks mailed on Dec. 31, 2004, still treated as 2004 wages?
A. Under the rule of constructive receipt, the employee did not have access to the money until the checks were delivered in 2005, so these are 2005 wages.
Q. Should I ask employees to complete a new W-4 each year?
A. Employees need not complete a new W-4 unless they claimed exempt from FIT withholding the prior year, or changed marital status or number of personal exemptions.
Q. Should I reconcile my W-2, W-3 and 941 totals?
A. Yes, do the reconciliation every year end before employees receive their W-2 copies.
Q. Can an unsubstantiated auto allowance be reported on a Form 1099-MISC?
A. If an employer gives an auto allowance unrelated to actual vehicle expenses incurred and does not require the employee to substantiate or return unused amounts, the entire allowance is wages and is reported on the W-2, not the 1099.
Q. What do I do about an employee's incorrect W-2 if copies have not gone to the SSA?
A. Tell the employee about the error and that you will provide another W-2 (not W-2c) to file with his/her1040. Include the new W-2 with the W-2s and W-3 sent to the SSA.