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

New Clients:

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

All Clients:

  • 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 or rental properties, 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.

How long do I need to keep my tax records?

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.

Is there anything wrong with getting a big income tax refund every year?

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.

Can I get an extension of time to file my tax return?

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.

What if I can not pay the entire amount due on my federal tax return?

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.

What kind of penalties will I be charged if I pay my taxes late?

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.

What's the best filing status?

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.

Who is eligible for head of household filing status?

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.

Who can I claim as my dependent?

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.

When would my child have to file a tax return?

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

  1. Earned income from wages of more than $12,000.
  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 $1,050, or if no one claims your child as a dependent, your child has the same filing requirements as any other taxpayer.

How can I qualify for a home office deduction?

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.

What is a capital gain?

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 20%, whereas most ordinary income tax rates are much higher.

What is the AMT or alternative minimum tax?

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. Recently the AMT was indexed for inflation, so not as many taxpayers  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.