FAQs

There is no one size fits all fee unfortunately. We recommend a quick consultation to learn about your tax situation and to review your prior year return. After this initial meeting/review, we will provide you with a competitive quote. Our fees typically range between a minimum of $ 150 to $ 400 for individual income tax preparation. Our business tax returns have a much broader range of fees depending on the service provided. We can often find tax savings that far exceed our fees.

Tax software producers claim their products can prepare complex returns, but you may want to think twice before relying on software for all your tax and financial guidance. Although software may help you make choices on your tax return that result in the lowest tax this year, you should consider the long-term effect of your choices in order to pay the lowest tax over a number of years. 

With a professional tax preparer you get more than just a tax return. An established relationship with a tax professional who is familiar with your finances, your family, and your goals can prove to be invaluable. 

If you prepare your own returns, it's a good idea to let a professional preparer review your returns at least every three years. That's because you only have three years to amend a return to change any items of income, deductions, or credits that were reported in error or omitted on your original return.

We only hire degreed professionals and CPA’s for our tax preparation. We employ the vast majority of our tax preparers full-time so they live and breathe taxes year round. Each tax preparer receives continuing education throughout the year, not a training course. This is our livelihood, not a part-time job.

A good accountant can do more than just prepare your tax return. He or she can assist you with:

• accounting and recordkeeping
• income tax planning
• business planning and problem solving
• computer selection and use
• estate tax planning
• bank loan assistance
• your other tax, business, and financial concerns

An accountant can provide you with year-round planning for your tax, financial, and business affairs. Such planning is essential if you want to realize your financial goals. They can often find savings that far exceed their fee.

Here is a check list of the most common items that we will need to complete your return:

• Completed Client Questionnaire
• All return packets or mailing labels sent to you by the various taxing agencies
• All W-2's
• All 1099 forms received confirming income from interest, dividends, retirement, social security, disability, unemployment, gambling winnings, 1009K for business credit card receipts, etc.
• All income information for children if you want us to prepare their required returns
• Year-end statement of mortgage interest (Form 1098), escrow activity and balance on mortgage or home equity loans and real estate taxes paid
• Total of all receipted charitable contributions, and details for any non-cash contributions over $500
• Copies of all Trust, Partnership or S-Corporation K-l's (send separately later if everything else is ready, and let us know it's coming)
• If you bought, sold or refinanced real estate, then a closing statement for each transaction
• If you sold any shares of mutual funds and basis information is not provided by the broker, detail all activity in the funds sold from original purchase date through date of sale date (year-end summary statements are ideal)
• If you are claiming auto mileage as a deduction- for business, rental properties or unreimbursed employee expenses, we need to know: total miles, commuting miles, and business miles driven for the year.
• If you lease your car or are deducting actual expenses, please also provide: original value of the car (what you could have bought it for) and date of lease, and all expenses for lease payments, gas, car washes, licenses, insurance, tires, repairs, etc.                  
• Copies of any federal, state or local tax correspondence during the year, including all payments made or refunds received.
• All legal documents for formation, sale or purchase of a business during the year, All legal documents for divorce decrees
• Voided check for account where refunds should be direct deposited (optional)
• Signed Engagement Letter
• If you purchased energy efficient products that may qualify for a tax credit, please provide a copy of the manufacturers certification statement and the purchase invoice.

                New Clients:

• Copies of prior federal, state and local returns and depreciation schedules if applicable (at least one year, preferably three)
• Copies of both parties’ drivers’ license

Additional forms may be found under the Resources tab above.

The IRS can audit your return for up to three years after you file a return. However, if you omit more than 25% of your income from a return, that period increases to six years. To be safe, keep tax records for seven years after the filing date. State regulations should be considered also

Yes, it means you're giving the IRS an interest-free loan when you could have the use of that money during the year to invest for yourself. As early as possible each year, you should take the time to estimate your total tax bill for that year. Consider adjusting your withholding so that the amount your employer withholds comes closer to what you will actually owe on your tax return. You can change your withholding at any time during the year by giving a new Form W-4 to your employer.

April 15* is the tax filing deadline for most individual income tax returns. If you can't complete your tax return by then, file Form 4868 with the IRS to give yourself an automatic six additional months to complete your return.

Caution: Form 4868 only extends your filing deadline; it does not extend your tax payment deadline. If your tax is not paid in full by April 15, you'll face interest and penalties on the balance owed.

* When April 15 falls on a Sunday or legal holiday, the deadline for filing is moved to the next business day.

The IRS offers several options to taxpayers who cannot pay their taxes in full when they file their return. 

1) You can charge your taxes on a credit card. The IRS’s credit card service providers charge a "convenience fee" of about 2.5% in addition to the interest rate your credit card company charges on your balance. 

2) You can request to pay your taxes to the IRS in installments. If you owe less than $25,000 and agree to pay off the balance within a five-year period, the approval process is pretty straightforward. Larger balances can be set up on an installment plan too, but they won’t be automatically approved. The IRS will continue to add interest and penalties to your account until you pay off the balance.

3) You can enter into an "offer-in-compromise" agreement with the IRS to settle your tax bill and get off to a fresh start. Under this arrangement, the IRS will settle your account for a portion of the tax you owe if you agree to file and pay your future taxes on time. You'll have to submit financial information to the IRS to prove that you don't have the money or ability to pay off the entire balance.

If you fail to pay all your taxes by the April 15* deadline, you'll have to pay the IRS interest and penalties on your underpayment. The IRS charges interest at its prevailing rate, which it publishes quarterly. The late payment penalty is generally .5% for each month there is an unpaid balance, up to a maximum 25% penalty.

When you file a late return with a balance due, another nasty penalty kicks in - the late filing penalty. This penalty amounts to 5% per month, for a maximum of five months. For example, if you owe $5,000 in taxes and failed to file a return or an extension by April 15, the failure-to-file penalty could build up to as much as 25% or $1,250.

* When April 15 falls on a Sunday or legal holiday, the deadline for filing is moved to the next business day.

It depends. The "best" filing status for you depends upon which status you can qualify for and your particular circumstances. Tax savings are only one consideration when selecting your filing status. For example, you might not want to file a joint return with your spouse for personal reasons. Here are the five filing statuses and the qualifications you must meet to use them. 

Single - You can use this status if you are unmarried at the end of the year.

Head of household - You can choose this status if you are single at the end of the year, and you have a dependent and meet certain requirements. In some cases, married, but separated individuals can also use this status. If you're eligible to claim head of household status, you'll probably pay less tax than filing as a single taxpayer.

Married filing joint - You can use this status if you are married at the end of the year. However, you cannot use this status if you are legally separated on the last day of the year.

Married filing separate - You can use this status if you are married, but choose not to file a joint return with your spouse or if you are legally separated on the last day of the year.

Qualifying widow(er) - You can choose this status if your spouse died in the last two years, you claim a dependent, and you meet certain other requirements. You then can use the more favorable tax rates for married filing jointly rather than the rates for single taxpayers.

Head of household is a very beneficial filing status. It is available for unmarried taxpayers and certain separated taxpayers who provide a home for a qualifying person, such as a child or a parent. If you qualify, you'll generally pay less tax as a head of household filer than as married filing separately or a single taxpayer.

You must pass five tests in order to claim someone as a dependent, including the support test, the citizenship test, member of household/relationship test, the gross income test, and the joint return test. The rules are complicated so give us a call for assistance. Also, just because you can claim someone as your dependent, you may not find it beneficial to do so.

Children claimed as a dependent will need to file a 2008 return if he or she has:

1) Earned income from wages of more than $5,450.

2) Earned net income from self-employment (from a paper route, for example) of $400 or more.

3) Investment income only (such as interest and dividends) of more than $900.

4) Both earned and investment income totaling more than the larger of: (a) $900 or (b) $300 plus earned income, not to exceed $5,450.

If no one claims your child as a dependent, your child has the same filing requirements as any other taxpayer.

The IRS uses various programs and techniques to determine which returns are audited, including:

Matching programs. Information returns (such as Forms W-2 and 1099) are matched to your tax returns, using your social security and other identifying numbers. Discrepancies usually generate an IRS notice requesting you to explain the differences. Unclear or evasive answers can generate a tax assessment, or you may be summoned to the local IRS office to explain the differences to an auditor.

Occupation. According to the IRS, returns filed by certain taxpayers, such as self-employed individuals and farmers, understate taxable income at a higher than average rate. Therefore, higher percentages of these returns are audited.

Statistical analysis. The IRS uses computer software to analyze hundreds of variables to arrive at ratings (called DIF scores) for tax returns. The program compares actual returns filed to "typical" taxpayer profiles. Unusual features, such as higher than average deductions, result in higher DIF scores, which increase the likelihood of an audit.

You can reduce your chances of being audited by filing an accurately prepared return with appropriate supporting documentation.

If you want to reduce your chances of being audited, make sure your return is accurately prepared. Attach supporting documentation to your return for any extraordinary items.

The IRS is suspicious of any business activity that looks like it provides personal enjoyment, such as antiques, photography, horse racing, etc. If you make a profit in any three out of five consecutive years (two out of seven years for horse activities), your activity is presumed to be a business, and any business losses are deductible. 

If you fail to show a profit, you may still qualify to deduct your losses if you are running your business with the intent of making a profit. For example, the way you keep records, the amount of time you spend in the business, and your financial risk in connection with the activity are some of the factors the IRS will consider.

Even if your hobby doesn’t qualify as a business, your hobby income must still be reported on your income tax return. If you itemize your deductions, you can write off your hobby expenses up to the amount of your hobby income.

If you run a business from home, you may be entitled to a home office deduction. Your business space doesn't have to take up an entire room, but you have to use that space exclusively for business purposes.

You must also meet at least one of the following conditions:

1) Your home must be your “principal place of business." In other words, it's the only place you have to conduct administrative and management activities, such as billing customers, keeping the books, setting up appointments, or placing orders.

2) You use the space to meet with your customers, clients, or patients.

3) You use a space in a separate structure not attached to your home; for example, a detached garage.

4) You use the space to store inventory or product samples, and your home is the only fixed location of your business. For example, you are an outside salesman, and you store product samples in your basement.

5) You use the space as a licensed day-care facility.

Caution: Taking the home office deduction will limit the tax-free gain on the future sale of your home.

A capital gain results when you sell certain property at a profit. In general, everything you own for investment or personal purposes is a capital asset, including your, stocks, bonds, collectibles, and home. Capital assets do not include business property, such as accounts receivable, inventories, and notes.

Long-term capital gains (generally gains on assets held more than one year) receive more favorable tax treatment than ordinary income. For example, the maximum long-term capital gain rate is currently 15%, whereas most ordinary income tax rates are much higher.

Many years ago, the alternative minimum tax (or AMT) was created to insure that higher-income taxpayers with lots of deductions and credits pay at least a minimum amount of tax. But, because the AMT has never been indexed for inflation, a growing number of middle-income taxpayers now face this tax.

The AMT is a separate tax calculation that disallows many of the deductions and credits used to calculate regular income tax. It also adds back certain income that is not normally taxed. The most common AMT adjustments are for personal and dependent exemptions and for certain itemized deductions, such as state and local taxes. Also, if you exercise incentive stock options, sell investments with large long-term capital gains, or take depreciation on business property, you may be hit with the AMT. You're required to calculate your tax under both the regular and AMT method. You then pay whichever tax is higher.

Roth IRAs are very attractive because once money is inside a Roth, it may never be taxed again. However, before you rush to convert your traditional IRA to a Roth, there are a number of factors you should consider.

• How much after-tax money will you end up with for retirement? You’ll need to make some assumptions about your future tax rate, your retirement age, and your investment return. Then you’ll have to run the numbers to see whether you’d end up with more money, after taxes, if you left it in your traditional IRA or if you converted to a Roth.

• Do you have enough cash to pay conversion taxes? When you convert, you'll owe regular income taxes on the amount you roll over to your Roth. If you have to sell outside investments to pay taxes on the rollover, you’ll owe taxes on any gains from those sales as well. If you have to cash out part of your IRA to pay taxes, you’ll be socked with a 10% penalty unless you are over 59½.

• How soon will you need the money? Generally, you cannot withdraw the money within five years of the conversion without a penalty.

• Will the conversion income push your adjusted gross income to the point where it will cost you valuable tax benefits, such as exemptions, deductions, and tax credits?

• Will it push you into a higher tax bracket?

As you can see, deciding whether a Roth conversion is right for you involves careful planning.