Wednesday, January 9, 2013
IRS announces 1040 filing delay.
What do you tell your clients?
The IRS yesterday announced a delay to the start of e-filing of individual returns. 1040 e-filing was scheduled to begin Tuesday, January 22. The IRS announced yesterday that the start of 1040 e-filing has been pushed back to Wednesday, January 30. The IRS cited the need to finalize forms and to complete programming and testing of its processing systems after passage of the American Taxpayer Relief Act (ATRA) as the reason for the delay.
The delay in the start of 1040 e-filing will impact your clients, particularly those who receive tax refunds. The later start to the filing season means disbursement of refunds will not begin until February. It is important to let taxpayers know that no refunds will be received in January.
Sunday, December 30, 2012
Points to Keep in Mind When Choosing A Tax PreparerIRS Tax Tip 2011-06, January 10, 2011
If you pay someone to prepare your tax return, the IRS urges you to choose that preparer wisely. Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent service to their clients.
Here are a few points to keep in mind when choosing someone else to prepare your return:
- Check the person’s qualifications. Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics. New regulations require all paid tax return preparers including attorneys, CPAs and enrolled agents to apply for a Preparer Tax Identification Number — even if they already have one — before preparing any federal tax returns in 2011.
- Check on the preparer’s history. 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 Professional Responsibility for enrolled agents.
- Find out about their 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.
- 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.
- Provide all records and receipts needed to prepare your return. Most 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.
- Never sign a blank return. Avoid tax preparers that ask you to sign a blank tax form.
- 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.
- Make sure the preparer signs the form and includes their PTIN. 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.
Saturday, December 8, 2012
Issue Number: IRS Special Edition Tax Tip 2012-15 – December 6, 2012
IRS Offers Tax Tips for “The Season of Giving”
December is traditionally a month for giving generously to charities, friends and family. But it’s also a time that can have a major impact on the tax return you’ll file in the New Year. Here are some “Season of Giving” tips from the IRS covering everything from charity donations to refund planning:
· Contribute to Qualified Charities. If you plan to take an itemized charitable deduction on your 2012 tax return, your donation must go to a qualified charity by Dec. 31. Ask the charity about its tax-exempt status. You can also visit IRS.gov and use the Exempt Organizations Select Check tool to check if your favorite charity is a qualified charity. Donations charged to a credit card by Dec. 31 are deductible for 2012, even if you pay the bill in 2013. A gift by check also counts for 2012 as long as you mail it in December. Gifts given to individuals, whether to friends, family or strangers, are not deductible.
· What You Can Deduct. You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified charity. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
· Keep Records of All Donations. You need to keep a record of any donations you deduct, regardless of the amount. You must have a written record of all cash contributions to claim a deduction. This may include a cancelled check, bank or credit card statement or payroll deduction record. You can also ask the charity for a written statement that shows the charity’s name, contribution date and amount.
· Gather Records in a Safe Place. As long as you’re gathering those records for your charitable contributions, it’s a good time to start rounding up documents you will need to file your tax return in 2013. This includes receipts, canceled checks and other documents that support income or deductions you will claim on your tax return. Be sure to store them in a safe place so you can easily access them later when you file your tax return.
· Plan Ahead for Major Purchases. If you are making major purchases during the holiday season, don’t base them solely on the expectation of receiving your tax refund before the bills arrive. Many factors can impact the timing of a tax refund. The IRS issues most refunds in less than 21 days after receiving a tax return. However, if your tax return requires additional review, it may take longer to receive your refund.
Sunday, December 2, 2012
Felix Agbessi, President & CEO of My Accounting Partner, LLC has published an article in The Anointed News Journal of Chris Collins, Volume 18 Issue 9 November 2012 Edition, Page 14.
Here is a copy of the article.
It’s your responsibility! How to stay out of trouble with the IRS –
Tips for individuals and small business owners
Taxes are serious business, especially now. The automation of tax returns and our digital age has made it easier for the government to catch errors and inconsistencies. Many people who don’t enjoy the process depend on their tax preparers to keep them out of trouble and will sometimes submit their taxes without thorough reviewing, or having any understanding about what they actually say.
In the Bible, Hosea 4:6 (KJV) reads “My people perish for a lack of knowledge”.
During my career as a Tax Preparer, when I interviewed Taxpayers for the first time and they showed me their income tax return for the prior year, they used to say they didn’t know anything about their returns; “It was done by the tax preparer”. The taxpayer was unable to explain where the numbers were coming from and that is dangerous. What people don’t realize is, if it has your name on it, You are RESPONSIBLE, Period!
If you are ever audited, or the government decides to review your account, or they ask for additional information you could find yourself in BIG TROUBLE. If you can’t provide the information they need or you can’t explain where those number came from you could be signing yourself up for a headache! This principle is the same if you are doing the return by yourself.
Know What’s Expected! Your Income Tax Responsibility
The Tax Preparer should prepare your Federal and State returns based on information you provide. Although their work will not include procedures to discover irregularities or inaccuracies in the tax data you provide, they may ask for clarification of certain information, or additional information, so that they can prepare accurate and complete returns for you.
It is your responsibility to provide all necessary information related to your income and deductions for the tax year.
You are also responsible for maintaining appropriate records, such as official tax documents you receive, receipts and substantiation for your deductions, purchases and sales information for assets.
Please know that it is your responsibility to review your returns before they are filed to determine that all income has been correctly reported and that you have substantiation for your deductions. Filing your returns by the due dates is your responsibility.
The Burden of Proof Belongs to You
You should be able to justify or prove any entry, deduction, or statements on your tax return; this is called the Burden of Proof.
You must be able to prove any expenses that you have deducted. You should keep adequate records to prove your expenses or have sufficient evidence to support them just in case you ever have to give the IRS proof. You need to have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses or an item of income or a deduction, or a credit appearing on a return. For example, in order to claim a credit for child and dependent care expenses, you should be able to prove the person or organizations that provided the care to your qualifying dependents, their address, Tax ID, amount paid, etc.
Additional evidence is required for travel, entertainment, gifts, and auto expenses.
Did you know there are many hot spots on your return that can raise red flags by the IRS?
Let’s talk about two, where I saw many taxpayers used to struggle with:
Claiming the home office deduction - If you qualify, you can deduct a percentage of your rent, real estate taxes, utilities, phone bills, insurance and other costs that are properly allocated to the home office. That's a great deal. However, to take this write-off, you must use the space exclusively and regularly as your principal place of business. That makes it difficult to successfully claim a guest bedroom or children's playroom as a home office, even if you also use the space to do your work. "Exclusive use" means that a specific area of the home is used only for trade or business, not also for the family to watch TV at night. Don't be afraid to take the home office deduction if you're entitled to it. Risk of audit should not keep you from taking legitimate deductions. If you have it and can prove it, then use it.
Claiming 100% business use of a vehicle - Claiming 100% business use of an automobile is red flag for IRS agents. They know that it's extremely rare for an individual to actually use a vehicle 100% of the time for business, especially if no other vehicle is available for personal use. IRS agents are trained to focus on this issue and will examine your records. Make sure you keep detailed mileage logs and precise calendar entries for the purpose of every road trip. Sloppy recordkeeping makes it easy for the IRS agent to disallow your deduction. As a reminder, if you use the IRS' standard mileage rate, you can't also claim actual expenses for maintenance, insurance and other out-of-pocket costs. If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage.
If you want me to talk to you about how taxation issues may impact your future. Please contact Felix at My Accounting Partner at (856) 677-8052 or send your request by e-mail to felix@MyAccountingPartner.com
About the Author:
Felix Agbessi is the President & CEO of My Accounting Partner. He has more than 25 years of accounting, tax and business consulting experience in various industries. Additionally, he is an IRS Enrolled Agent, Authorized IRS e-file Provider, a Certified QuickBooks ProAdvisor and holds an MBA with a concentration in Accounting. He works with Individuals, Non-Profit Organizations and Small Business owners.
What is an Enrolled Agent?
Enrolled Agents (EAs) are America’s tax experts. They are the only federally-licensed tax practitioners who both specialize in taxation and have unlimited rights to represent taxpayers before the Internal Revenue Service. These tax specialists have earned the privilege of representing taxpayers before the IRS by either passing a stringent and comprehensive three-part examination covering individual tax returns, business tax returns and representation, practice and procedure, or through experience as a former IRS employee. All candidates are subjected to a suitability check conducted by the IRS.