PART THREE: IMPORTANT YEARLY DATES

PART THREE: IMPORTANT YEARLY DATES

Just in case there’s a glitch, here’s a master link to all the states (http://www.taxadmin.org/fta/link/default.php?lnk=2). To be able to read and print the .pdf files, you’ll need Adobe Acrobat Reader. Please let me know ASAP if you don’t want to e-file. We’ll have to send in extra paperwork…no kidding! And in a handful of situations, we will NOT be able to e-file. Regardless, it is IMPERATIVE you hang on to the permanent copies of your tax returns! Some states’ statute of limitations is three years, some four years. Realistically, keep them forever.

LOWERING YOUR TAX PREP BILL

1. Bring or send totals of categories.

If we go through each individual receipt or I have to decipher a logbook, the time element (and your cost) will skyrocket. Similarly, open envelopes and discard carbons. Some receipts need clarification and explanation; most don’t. Bring or send the questions along. Reminder for your records: only the store receipt is valid on amounts $75 or more, and business lodging requires you to keep the original receipt, regardless.

I’ll need to compare and check depreciation. I’ll also double check prior returns for mistakes and hopefully, opportunities. For returning clients, I keep your past Federal and State returns since 2010, but no Local returns, so returning clients, be sure to nab your “tax paid” to your city and fill out line 23 on the worksheet. If you get both W-2s and self-employment income, there would probably be TWO amounts, one for your wages and one for your profits. All too often it becomes a case of me not having the info, and you not getting the deduction.

Every tax form that allows any write-offs involving cars ask the same eight questions.

If you have kids, remember to include the daycare amounts, provider addresses and Federal ID numbers, and the kids’ birth dates and Social Security numbers. Include statements showing amounts earned of interest, dividends, pensions, and unemployment. Don't forget personal property taxes! If you pay for health insurance, include that amount. If you were penalized for early withdrawal of savings (except IRAs) or paid alimony (not child support), include those amounts. If you got $100 or more in Dividends, get the State Tax Exempt Percentage Chart(s) from your stock or mutual fund companies, and bring them or send them along. Also, any sale of securities (stocks, bonds, mutual funds, etc.) requires the entire history of the investment.

It’s more expensive in mid-April than mid-February.

Wait until you have all seven answers. Re-opening and re-closing the return—complete with new notes, new questions, and new e-mails—adds time, which adds to your cost.

If I haven’t returned your call within 48 hrs, please assume a bad connection and I couldn’t get all the numbers correctly. Every year I get a handful of garbled messages from cell callers. Similarly, I try to answer e-mails within 24 hours but no later than 48 hours. I’ve also been known to, um…misplace my cell phone from time to time, so the home phone or e-mail might be best. But if you haven’t heard back after 48 hours, please try again, or try a different method of contact. Thanks!

The cost of getting your taxes done depends on the complexity of the return, the time of year you come, and how well organized you are. I charge based on the time it takes to do the returns.

January 1-February 20 $80/hr

February 21-March 14 $95/hr

March 15-April 9 $105/hr

April 10-15 $115/hr

April 16-31 In my annual coma!

May 1-September 30 $80/hr

October 1-15 $115/hr

October 16-December 31 $80/hr

Tax years 2010 and prior will be billed at the highest rates.

All year Add $20/hr

Why? There are always additional issues, including piecemeal information, multiple contacts, long distance, e-mails, packaging, postage, etc.

E-filing fees

All year Add $10/return

Due to NY law, NY returns are e-filed free, but instead have a $10 “tax certificate” fee.

Billing based on time spent—in-person, phone, e-mail

Billing is based on my time spent, in 15-minute increments, with a one hour minimum for initial appointments. Billing begins at appointment time or start time, whichever is earlier, unless I make you wait.

For mailed returns, I bill depending on when I get the information. If you send me a packet I receive by Feb. 20, I’ll do all I can based on that info at the lowest rates. Work done based on any information I receive after that will be billed at that new day’s rate.

A well-organized single taxpayer who worked in only one state should be able to get the federal return, the home state return, and the home city return done within about an hour to an hour and a half, so the hourly rate plus the e-filing fees in the earliest billing period would usually range between $100-$150. Rates bump up Feb 21, March 15 and April 10.

The following items all add layers of complexity and time: a spouse, working in additional states, running businesses in multi states (say, a 1099 from Colorado or Iowa), stock/securities sales, lots of W-2s and/or 1099s, lots of equipment to expense or depreciate, vast amounts of deductions, charitable contributions over $500, a home office, disorganization, and using your template vs. mine.

FAQs

How do we set up an appointment?

E-mail me at aaktor@sbcglobal.net, or call me at 816-523-3476.

If you’re contacting me for an appointment in February, please, please, please give me at least one and ideally two options for your perfect date and time on the message. In March and April, please leave two to three options with your message; I’m almost always able to accommodate. Why do I want you to tell me a date and time? It’s important we meet when it’s most comfortable for you, when you’re at your best and don’t have to rush to prepare or arrive. So don’t be shy about “setting the date”. Oh, and be sure to include a cell number in case something comes up at the last minute. Many thanks!

How early in the season do you get totally booked?

Never. Call, I’ll fit you in.

I don’t do January returns because they have a very high rate of redo, due to late-arriving paperwork, which doesn’t have to be received until January 31. It ends up frustrating you and costing you more. This year the IRS has announced they will not even begin processing returns until January 31. Just to be safe, I’ll start doing taxes Saturday, Feb 1.

WHAT TO DO AND EXPECT FROM THE PROCESS

FAQs

What should I bring to the in-person tax return appointment?

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  Last year’s taxes, plus any and all prior returns you want me to see.
  
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  All income information: W-2s, 1099s, bank interest statements, K-1s, dividend statements, tax refund statements, any info on buying or selling of any investment, rental property info, pension payouts, unemployment statements, social security statements, disability payment statements, farm payments, anything else regarding income.
  
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  Adjustment information: Info on IRAs, 401(k)s, etc., info on student loan interest, info regarding Health Saving Accounts (HSAs), 1098-T for educational expenses; SS# of ex-spouse to whom you pay alimony.
  
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  Other stuff: Info on purchase/sale of a home, including the settlement statement, mortgage interest statement, info on real estate and personal property taxes, charitable deductions, children and childcare, all info regarding big purchases (computer, piano, etc), and any receipts about which you have questions.
  
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  For expenses, fill out the Part Five Worksheets, and bring (for your reference) your check register and charge statements, so we can find that unexpected write-off.
  

No problem; just let me know ahead of time! Call or e-mail as soon as you can, so I can plan for other work. Not showing up and not calling until after the appointment start time will add 15 minutes to your bill.

Yes. I currently have about 300 clients all over the country, including dozens I’ve never met.

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  Send all the paperwork listed for the in-person appointment, along with the filled-out worksheets.
  
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  I’ll boil it down to a handful of questions and contact you for the answers.
  
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  Then I’ll send a .pdf copy, you’ll review it, and when you’re happy everything is correct, you’ll sign and snail-mail me the e-file authorizations. Both of you must sign if filing jointly. This is the legal equivalent of signing your tax returns under penalties of perjury, so review the .pdf file carefully.
  
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  Once I get the signed e-file authorizations, I’ll e-file the return and send you a full copy for your records and your paperwork, plus a checklist of things to complete if there are timely investments to make or paper returns to file.
  

I don’t need actual receipts, bank statements, check registers, log books, or charge statements. I also don’t need last year’s taxes, unless you’re a new client. But it’s very important the Part Five Worksheets get filled out completely.

You’ll get a packet with one copy of your Federal return, one copy of every State and Local return, a copy of the e-file authorizations, and all your original paperwork. Don’t lose the packet! If you have paper-filing requirements, you’ll get a packet of paperwork for those returns clearly marked, and an addressed envelope for each. Finally, you’ll get a “To Do” checklist as a cover sheet with any further instructions, as well as my bill. Follow the checklist north to south.

No. Just the one “live” copy of any returns you’re mailing. Look for the blue! The copies will be in copy-black, while originals for filing will have blue stamps and my blue-inked signature. Otherwise, your signature on the e-file authorization IS your legal signature on the return.

Some states “piggyback” off the Federal Signature Form, so signing Form 8879 is legally signing the Federal return and any and all states which accept the 8879 as their signature form. These include Connecticut, Indiana, Kansas, Maine, Montana, Nebraska, Ohio, and Utah.

Save your paper copy, it’s the only one in existence! Also, watch for your deposits if you’re getting refunds or debits if you owe, so you’ll know things are being processed smoothly. In general, debits will be scheduled for April 15, 2014, unless you tell me otherwise. If it’s been a week since the debit was scheduled to come out of your account and it hasn’t, contact me immediately! I’ll fix any of my mistakes found and addressed within a month of the filing date.

Payment is expected when you pick up your taxes, or when you receive them in the mail. Please note: YOU will be responsible for these costs if it is your return, or if you’re the one who has legally engaged me for someone else.

It depends on the root of the problem. If it’s my mistake, I’ll fix it for free, and usually pay all penalties and interest. You’ll just pay the tax you would’ve owed anyway, if additional tax was due. If, however, it’s the Fed/State/Local’s mistake, a routine inquiry, or your error, I’ll bill at the normal rates after a brief consultation.

My fee will be prorated to the percentage of my portion of the mistakes. If you missed $400 in income because you forgot a W-2, and I missed a back page showing $600 of dividend income, I’ll charge 40% of my normal fee.

Wrong: time limits only apply on filed returns. Non-filers are subject to IRS action forever. Many states have a four-year statute of limitations, but again, only with filed returns. If the IRS believes you have underreported your income by 25% or more, they can go back six years, and if they suspect you of fraud, they can go back forever, so keep your tax records in a permanent and accessible file. Currently, the IRS goes back 10 years if you haven’t filed.

ABSOLUTELY! First, realize filing an extension just extends the time to file, not the time to pay. You’ll still need to estimate the final numbers and try to pay what you can toward what’s owed. But not having money to pay your taxes isn’t a crime. Regardless…file. NOT FILING CAN BE TWENTY TIMES MORE EXPENSIVE THAN NOT PAYING!

If you file your return more than 60 days after the due date without extending your taxes, the minimum penalty is the smaller of $135 or the amount of tax due. Failure-to-file rates are 5% a month, with a max of 25% (so…not filing an extension and waiting 6 months for the October deadline is EXPENSIVE). Failure-to-pay rates are 6% annually (double the current Federal rate), and they kick in once the failure-to-file penalties have maxed out. However…if you pay at least 90% of taxes due with an extension, and the balance with the timely return, you won’t be hit with a failure-to-pay penalty. Penalties and interest can also be abated if you had a reasonable cause (say, serious illness) and not due to what the IRS calls “willful neglect”.

All the income info I’d need to do your taxes, including W-2s. 1099s, other income, and breakdowns as to states and cities. If you’re a new client, last year’s taxes.

Yes. Always pay in the order of smallest to largest entity: the local taxes first, then state(s), and finally Fed. Usually, the smaller the taxing entity, the worse the penalties and interest. For example, the IRS currently charges 3% interest. KS charges 4%. KCMO charges 12%.

It depends whether you think you can pay it off in full within four months or not. If you can, I’d suggest paying as much as you can with the initial filing. When they remind you of the balance remaining (plus 3% annual interest, pro-rated), again, pay as much as you can. The second notice basically says pay in full or get on their payment plan, but that’s about four months down the road. If you can’t pay it off within a few months, you’ll need to get on the IRS payment plan, where you can stretch your payments out up to 60 months, although “you must keep current with all other taxes owed, in full and on time”. In other words, they will not fold the next year’s bill into a current payment plan, because they expect next year’s bill to be ZERO.

Getting on an installment plan costs $120, but only $52 if you agree to monthly electronic debits from your account, and only $43 if you agree to debits and qualify as “low-income”. Note: The IRS is very aware of the recent downturns, and has indicated a willingness to forgo some interest and penalties if you truly can’t pay. The important thing is to contact them and let them know. For example, if you’ve lost your job, the IRS cannot continue collections if it would cause you a hardship, i.e., if it would make you unable to pay your rent.

For those who truly can’t pay and will never be able to, an Offer in Compromise is possible. The application fee is $186, plus a 20% upfront payment of taxes owed. After that, they’re willing to make a deal, based on what they believe you have the ability to pay.

It’s always a good idea to specify which year the IRS should apply the payment; otherwise, they can apply it where they want, including to an old tax beef, if they choose. Be specific: if it’s for tax year 2011, write “TY 2011” on the memo line of your check.

Usually not. There’s a 2.5% “convenience fee”, plus, if you’re carrying a balance on the credit card, that rate is probably higher than the current 3% Federal interest rate. The fees and interest are deductible as a Miscellaneous Expense, but that’s a very poor trade.

It’s almost never a good idea. Certain numbers transfer from one year to the next.

Absolutely not. Not declaring income can get you sent to jail. Don’t do it. Similarly, sending me false information and then signing your return is perjury.

I’m not allowed to transmit it to your lender without a signed piece of paper in my hand before I send it, so I’ll send it to you, and you can forward it to your lender. You’ll be billed by time, with a minimum charge of $20. If you only need a transcript from the IRS, it’s free; go here.

Common reasons are if the lower earning spouse has a lot of deductions and the higher-earning spouse has few, if one has a lot of medical bills compared to income, or if one spouse has a legal judgment against him or her which would eat up any refund if you filed jointly. Otherwise, it’s almost always better to file together. If you married or divorced during the year, your filing status is your marital status on Dec 31.

About 1%, and yes, that’s much lower than it used to be, but the IRS has written state-of-the-art algorithms to target taxpayers outside the norm. They’ve also announced particular targets: charitable contributions, and (as always) the self-employed. Regardless, the best plan is to prepare as if you’re getting ready for the microscope. There’s an old saying in the tax biz: Everyone gets audited if they live long enough.

You’ll have to prove your deductions in whatever area they’re auditing, and probably have to provide a statement from your employer detailing reimbursement policies. If I did your taxes and you kept the records, odds are we’ll go over the area in question with a fine tooth comb and bring in a clear and compelling case proving the numbers to the penny.

One final word of advice: never, EVER lie in an audit. Lying to the IRS is a crime, and it’s a very good way to get them to disallow a large chunk of deductions, as well as use the lie as a reason to look closely at multiple years. Besides, it’s a good guess they already know the answers to many of their questions, as they have checked you out via Google, Facebook, etc. No truth you tell in an audit will EVER cost you more than telling one lie.