Wednesday, January 9, 2013
IRS announces 1040 filing delay.
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 Preparer
Points to Keep in Mind When Choosing A Tax Preparer
IRS Tax Tip 2011-06, January 10, 2011If 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
IRS Offers Tax Tips for “The Season of Giving”
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
How to stay out of trouble with the IRS
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
Website:
www.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.
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