| What
are your office hours:
I am available days, evenings and weekends. I also
offer on-site appointments at your business location.
What should I bring to my tax appointment:
Bring a copy of last years return if it is convenient,
it's always very helpful because you may have carry forward deductions
from the previous year. Also, the state tax you paid last year is
an itemized deduction this year. Additionally, if you didn't itemize
your deductions last year then your state tax refund from last year
will not taxable this year.
If you deducted your car for business purposes
I need to know whether you used the standard mileage rate or actual
expenses last year and I need to see the depreciation schedule for
the car (or for any other depreciable item such as rental property)
because I need to know the depreciation taken to date, the date
it was placed in service and the amount originally depreciated.
Also, if you use your car for business purposes
bring the current odometer reading. If you bring your odometer reading
in every year I can help you keep track of the total miles you are
driving each year which is an item that needs to be reported on
your tax return every year.
Even if you don't use your car for business bring
in the car registration cost for all your vehicles as it is deductible
if you itemize.
What do you charge if I get audited:
I do not like to charge hourly for audit representation.
I will generally negotiate a flat fee based on the audit issues
involved. However, an audit will generally take between 10 - 20
or more hours of my time. For a modest fee I offer audit insurance.
This means that if you are audited for the year covered there is
no cost for representation during the entire audit process (including
through appeals). I will provide you with a signed letter stating
that you are insured for the cost of audit representation for the
year you get insurance for.
I have W2's from a couple of other states:
We do multiple state returns and all 50 states
I also keep current instruction booklets for all 50 states in my
files.
I'm not sure my last couple year’s
tax returns were done right:
There is no charge to review past years tax returns.
Just bring the returns in question to your tax appointment.
When do I pay for my return:
A check when you pick up is fine. No deposit is
necessary. If you are in a distressed financial position I can take
a postdated check and not deposit until you call me and inform me
that you have received your refund. I also take credit card payments
through Pay pal to dezski@pacbell.net email address
Do you electronically file and what is the
extra charge:
We electronically file all returns unless you request
us not to. The electronic filing fee for your federal return and
one state is built into your tax return fee.
What are the advantages of electronically
filing:
Very fast refunds! I have seen refunds reach bank
accounts in less than 2 weeks by both the IRS and California. You
are also saving the government large amounts of money by keeping
them from having to process your return by hand.
I'm being audited should I handle it myself
or hire you:
Many taxpayers decide to handle a tax audit themselves
and discover that they may have been "penny wise" by avoiding
a representatives fee but "pound foolish" because they
received a bill for a significant tax deficiency.
Why does it make such a difference whether you
have a qualified representative handle your audit? First, a qualified
representative speaks the same language as the IRS agent, so they
can effectively communicate your position. Second, the representative
is a peer with the agent, which removes the intimidation element.
Third, the representative is aware of potential issues and can help
you properly prepare for the examination. Fourth, I know your rights
and when the IRS is treading on ground that they are not permitted
to touch. By representing you on a neutral ground, a representative
can help avoid damaging issues from arising.
What do you do when you don't know the answer:
I am an experienced tax researcher. I have access
to complete tax research libraries. I keep current with all Tax
Court and Tax Memorandum decisions. I also attend Tax Roundtable
Meetings twice a month (three times during tax season). Here members
bring tax questions before the group for input from others having
experience with that issue.
How long should I keep my receipts and tax
records;
You must keep records as long as they may be needed
for administration of any portion of the Internal Revenue Code.
The Statute of Limitations to audit a return is 3 years from the
date filed unless the understatement of tax is greater than 25%,
then the Statute of Limitations for audit is 6 years.
You should never throw away any of the W2
forms you receive from employers. When you go to apply for Social
Security after you retire, having copies of your old W2 forms greatly
simplifies correction of any recordkeeping error in the Social Security
system.
What are adequate books and records:
You generally must have documentary evidence, such
as receipts, cancelled checks, or bills to support your expenses.
The exception is when the expense is less than $75(other than lodging).
A cancelled check or credit card charge together with a bill from
the payee is the form of documentary evidence that the IRS would
prefer to see at an audit.
What type of records do I need to keep for
meal and entertainment expenses:
The IRS loves to audit this area because it is
so often abused. So in your appointment book you should have all
of the following 4 items listed.
1 - Who you met
2 - The business purpose of the meal - what you discussed
3 - The business relationship (i.e. potential client, supplier)
4 - The place you met
Can I take the Office in Home deduction:
Under the present rules, pretty much everyone who
operates a business has a legitimate claim to an office in home
deduction.
To take the Office in Home deduction the use of the
business part of your home must be:
Exclusive
Regular
For your trade or business
The business part of your home must be one of the
following:
Your principal place of business
A place where you meet or deal with clients or customers in the
normal course of your trade/business
A separate structure (not attached to your home) you use in connection
with your trade or business.
Your office does not have to be a whole room, it
can be part of a room. It doesn't have to be just a room, it can
also include closet space, garage space, carport or a parking pad
for your primary business vehicles or tools.
The problem is, it will be 2 or 3 years after you
take the deduction that they will audit you. The best way to protect
your deduction is to take photographs of all the areas you use for
business.
Should I buy or lease my car:
First are you self employed or an employee? Self
employed people have the advantage of being able to deduct the interest
on a car loan which employees cannot. If you drive more than 12,000
miles on leases you are penalized so make sure to take into account
the additional costs for the excessive mileage. Also look at the
down payment. Often it is as much or more than the down payment
to buy the car, so that makes the total cost over the lease less
attractive.
If you lease a car you must use the actual expense
method to figure your vehicle expense. The only time you really
get a tax advantage from leasing is when you lease a very expensive
car like a Mercedes, BMW or Cadillac because the depreciation deduction
is extremely limited for luxury automobiles when you buy.
I haven't filed for a few years but I know
that I have refunds for all those years:
If you have refunds due you and you file more than
3 years after the due date you'll lose those refunds.
I understand our discussions are protected
by the Accountant Client Privilege:
Effective 7/98 the new accountant-client privilege
extends to taxpayers confidentially protection for "tax advice"
given by Enrolled Agents and CPA's. However, the accountant-client
privilege however does not extend to criminal tax matters (understatement
of tax > 60,000 over 3 years)
Are you flexible with accounting software:
Yes, however we specialize in QuickBooks and Quicken.
In order for us to maintain our efficiency we may make a recommendation
regarding the accounting software you use. With the above products
we can provide the very best of services, including technical support
and problem solving. Also, they are a good value, easy to use, high
quality and reasonably priced.
Are you a CPA firm:
No, but I can do everything a CPA can except perform
the attest function which is express an opinion on financial statements.
And I also can't sign form Q40 for publicly held companies that
must be sent to the FCC each year.
Do you prepare financial statements:
I can prepare financial statements in accordance
with professional bookkeeping standards, but can express no opinion
or give any other form of assurance on the underlying information
included in them. Expressing an opinion on your financial statements
is performing the attest function which state law only permits CPA's
to do.
I may have to file bankruptcy can I discharge
the taxes I owe
In order for taxes to be discharged in a chapter 7
bankruptcy the rules are:
Taxes must be owed 3 years
Taxes must be filed 2 years
Taxes must be assessed 240 days
What about payroll taxes? There are two portions
which make up a payroll tax return, the trust fund which is taxes
withheld from the employees and the non trust fund which is taxes
paid by the employer. Only the non trust fund portion can be discharged
and that is about 1/3 of the tax. In addition if you were a corporate
officer and personally assessed the Trust Fund Recovery Penalty,
don't look to the bankruptcy courts for help as that is never dischargeable.
Also, even when taxes are dischargeable, it does
not mean that you simply walk away from the entire tax bill. Exempt
assets to which the court does not attach are still subject to a
Notice of Federal Tax Lien if the IRS filed before the bankruptcy.
Exempt assets include equity in a home, equity in a car and accounts
receivable.
How long can the IRS collect back taxes:
For assessments of tax or levy made after 11/5/90
the IRS cannot either collect or levy any tax 10 years after the
date of assessment of tax or levy. The statute of limitations does
not apply in the case of a false or fraudulent tax return filed
with the IRS with intent to evade any tax or if the return was prepared
by the IRS,
Can the IRS really seize my home, car or
business for back taxes:
Yes, but it is not done often unless it is a serious
problem that has persisted a long time. The IRS can take anything
that has enough equity. That is because they are authorized to take
only your "right, title or interest" in the property.
Before the IRS conducts a seizure, they normally do an investigation
to determine the equity in the item to be seized. In 99% of all
cases unless there is at least 20% equity, the IRS will not seize
the asset. Recently Congress made it more difficult for the IRS
to seize your personal residence.
In order to seize a business the IRS needs a writ
from a Federal judge. Then, once the business is seized every single
item must be inventoried. Then, the business must be sold by auction
individually selling every item in the business. The IRS more often
forces a business owner to shut down by continually levying accounts
receivable and seizing bank accounts, but a seizure of a business
in today's business climate is pretty unlikely.
How much should I offer the IRS on my Offer
in Compromise:
A taxpayer must offer as a minimum the Reasonable
Collection Potential which in simple language is the net equity
in assets plus 48 months income after allowable expenses.
The percentage of the tax offered or the total
tax owed is not a significant factor in determining an acceptable
offer.
I'd like to gift my business to my child,
how do I handle this:
If you gift it you'll have to file a gift tax return
and this is not recommended because the tax would be prohibitive.
The son should set up a competitive business and allow it to grow
as the parents business begins to disappear. There is no gift problem
in this situation.
My bookkeeping is not complete and I can't
seem to get around to getting it finished because I have questions:
This is a common problem. Many clients just can't
finish the bookkeeping chore because of questions they have and
sometimes endlessly push off getting their tax return done because
of it. If you bring in what you have along with a written list of
what you need to finish I will bid you a flat rate to finish it
for you. Most of the time I will direct you what numbers I need
from you and I can tell you where to get them and how to get them.
I've done no bookkeeping at all this year
but everything is organized can you help:
I offer what I like to call a bookkeeping marathon.
Basically you bring all your cancelled checks, bank statements,
credit card statements and cash receipts to my office. I will sit
at the computer and input into an Excel spreadsheet the numbers
and categories that you call out. Of course you will be able to
ask questions at anytime and rely on my expertise. Before starting
I will direct you how to make the most efficient and practical use
of your time in this process. I will also direct, guide and teach
you throughout the process. This generally takes from 5 to 10 hours.
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