Appointments

Posted by on Jan 20, 2012 in | 0 comments

Items to Bring to Your Individual Tax Preparation Appointment

Tax Preparation

Image by agrilifetoday via Flickr

 Be it for a return filed on time, or for the extension you might now be working on. No mater when you do this, most everybody is going to need to bring the same things.

  • Be sure to include any changes in address, dependents, filing status, or any other substantive changes from the prior year which would have impact on this years return.
  • W-2s from all jobs.
  • Forms 1099 from all investments and bank accounts (be sure they are all accounted for as the IRS has a complete – list – sometimes).
  • Brokerage statements, interest, dividends, etc.
  • Student loan interest, child care expenses, tuition, and any other miscellaneous deductions/income.
  • Summary of property taxes with copies of all individual items over $1,000.
  • Summary of All valorem Taxes (property tax on cars) with copies of all individual items over $1,000.
  • Form 1098 reporting home mortgage interest.
  • Documentation of mortgage insurance
  • Form K-1s from any estate(s), partnership(s), or S corporation(s) from which you’ve received an inheritance. Call and check if you are missing any, as these often do not arrive until March or April.
  • Summary of all medical expenses with copies of all individual items/receipts over $1,000. Along with mileage, and any insurance reimbursements.
  • Records of gambling profits and losses. To offset reportable profits, you must have an accurate log of expenses and losses including amounts, dates, and locations.
  • Itemized record of charitable donations, including cash, checks and donated property.  Keep all receipts.  If value of donated property exceeds $500, an itemized list is necessary.

Example list: “12 shirts, 3 suits, and2 jackets” with Fair market values, as opposed to a “bag of clothes,” will allow a true value for the items. (You can find my researched FMV guide at Fair Market Value Guide for Used Items . I have recently updated the cost for this year –filing for 2011 returns)

Charitable gifts over $500 must include a receipt from the charity.

  • A copy of last year’s tax return. (last three years if you  are a new client to your preparer)
  • A list of financial goals and the last three years of returns, if seeking counsel.

Some additional items you may need to give:

  • Alimony paid or received, including Social Security Number of recipient (save cancelled checks)
  • Records of purchase and sale of a personal residence, including the settlement statement from closing (Keep records of all home improvements.)
  • Schedule of estimated federal, state and local taxes paid during the year
  • Child care expenses and provider information.  The tax identification number of the provider is required.
  • Information on IRA contributions made or to be made for the tax year
  • Summary of moving expenses, if eligible for the moving expense deduction
  • Summary of casualty losses from fire, theft or natural disaster
  • Receipts and records for all business-related income and expenses
  • Job-related expenses, such as union or professional association dues, work clothing, tools, supplies, job-hunting and job-related education.
  • Log book for business use of a vehicle.
  • Other records relating to vehicles purchased or leased during the year for which you are claiming business expense deductions
  • Receipts for travel, lodging and meals while on business
  • Records of all income from and expenses paid for rental real estate you own

If You Can Answer Yes to the Following Questions, You Should Give All Related Documents to Your Tax Preparer.

  • Did you pay interest on higher education loans?
  • Were there any births, deaths, adoptions, divorces or marriages in your household?
  • Did you convert a traditional IRA to a Roth, or re-characterize a Roth back to a traditional IRA?
  • Did you receive tip income?
  • Did you receive a notice from the IRS, state or local taxing agency regarding a prior year tax return?
  • Did you receive installment payments on property sales?
  • Did your children under 14 years of age receive investment income?
  • Did you support anyone other an your own children?
  • Did you make gifts to any individual other than your spouse of more than $12,000?
  • Do you have a foreign bank account?
  • Did you refinance your mortgage during the year?
  • Did you pay points to purchase a home or refinance a mortgage during the year?
  • Did you receive non-taxable sick pay?
  • Did you have household employees?
  • If you did not receive a W-2 from a former employer, do you have the final pay stub from that employer?
  • Did you receive money from a lawsuit?
  • Did you receive money from any other source not previously mentioned in this checklist?

As you can tell by the last question, this is not all inclusive. It is this reason I regularly encourage taxpayers to have enough trust in their prepares to be able to tell them everything.

When Choosing a tax preparer. . ., “If the tax professional you are talking to (or the tax practitioner you currently use) can’t do what you want honestly, don’t give him/her your business.”

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More of “Things your tax pro may not tell you”

Posted by on Jan 1, 2012 in Choosing a preparer, Opinions, Preparer | 0 comments

Tax

Image by 401K via Flickr

“You wouldn’t believe it.”

Complaints about tax preparers, including allegations of inaccuracies and returns that weren’t filed on time, are up 80% in the past five years, says the Council of Better Business Bureaus. But when it comes to the Internal Revenue Service policing problem preparers, “the lifeguard is still asleep.” 

Less than 1.5% of returns get audited, and while that may pacify nervous taxpayers, audits are the primary way to catch bad tax pros. The GAO found that a year after it reported poor preparers by name to the IRS, the agency had failed to audit a single one. Professional organizations, such as the American Institute of Certified Public Accountants and the National Association of Enrolled Agents, pack even less of a wallop because they often wait for the IRS to act. Then the institute will strip membership and report bad accountants to the relevant state-licensing group.

Finding this information is a two-step process. If your CPA is an AICPA member, you can find out if he’s been disciplined by the institute by checking on the AICPA website. You can retrieve details by putting his name in the site’s search box. If your CPA has been disciplined, it’s important to note the reasons why, “There is a whole range of situations where the (institute) would discipline a member.” Those could include not returning client records, disclosing confidential client information and not exercising due care in preparing a tax return. To find out if a CPA’s license has been revoked, you should check with your state board of accountancy.

“What are your qualifications?”

Concerned about unethical, unlicensed tax preparers and what has been called “sharks in the water.” “Anyone can call himself a tax preparer.”  Many have.  At one point as many as 600,000 tax preparers were unregulated, according to the National Taxpayer Advocate, the taxpayer assistance wing of the IRS. Some set up shop in a local real-estate office, but many work for the big chains.

This all changed with the IRS RTRP program. If your preparer doesn’t have an PTIN, they are not allowed, by law, to prepare your return for profit. (This includes any CPA, EA, Attorney, RTRP anyone who prepares) by the end of this year (2012) All non-CPA’s, EA’s, or Attorneys will have had to pass a competency test.  A minimum competency test is now live and by the end of 2013, all preparers will have to pass the test in order to prepare tax returns for compensation. The new RTRP (Registered Tax Return Preparers) will also have an annual continuing education requirement of 15 hours. All the hours will be tax related.RTRP  - Ask your Representative why it is that CPA’s, and Attorneys are exempt from these requirements. I say this because As it stands now, They are not and will not be tested concerning tax issues nor will they need to take CPE related to tax matters like an EA or RTRP.

“If it’s February, you’re late.”

A savvy tax pro may be able to cut your tax bill or juice your refund. But don’t expect to find one come mid February. From that point through April, tax pros are generally too busy to talk to new clients. So if you don’t already have a preparer lined up, by the time you actually have your W-2s in hand, you’re probably not going to get good service.

This means you should be talking to tax preparers in October, November or even as late as early January. They’ll have time to answer questions, look over your old returns and suggest changes. Not only that, but talking to a tax pro in the fall means you still have time to plan. If you wait until you have all your W-2s, you’ve locked in all your income for the year. But in the fall a good preparer can help you figure out ways to manipulate your income by increasing your 401(k) contributions, deferring a bonus until the new year or taking taxable losses.

Wait until spring and a professional can help you make small decisions, like whether to itemize or think about different deductions, but you’ve lost most of your flexibility.

“Taxes, whatever — let me see what else I can sell you.”

The real money in tax prep has nothing to do with 1040 forms and W-2s. For the big-chain preparers, as well as your local accountant, the register really lights up only when they persuade you to take a loan, open a retirement account or buy insurance. Chances are you don’t need what they’re selling, but the sales pitch may blur the issue. GAO staffers reported that when they visited the big-chain tax preparers, loans were described as “options” or “bank products”; on one visit a customer was asked to sign a loan application without being told what it was. RAL means Refund Anticipation Loan.

Worse, these extras can do you more harm than good: More than 80% of those who opened an “Express IRA” at H&R Block, for example, paid more in fees than they earned in interest, according to a lawsuit filed by the New York attorney general. (H&R Block says most Express IRA accounts opened between 2001 and 2005 have yielded “positive net tax savings benefits and interest earnings,” even as the company “has lost money operating this program.”)

CPAs, too, are in the sales game, ever since the AICPA allowed members to sell insurance products. When commissions can be $20,000, it’s easy to get greedy.

“If I screw up, I’ll pay up.”

Worried about an audit? H&R Block and Jackson Hewitt are happy to ease your mind — for a price. Both offer the option of buying a geared-up guarantee that promises to cover any back taxes you owe, plus interest, fees and penalties.

Here’s what they don’t say: You don’t need the extra protection. If it turns out you owe back taxes, the big chains’ basic (read: free) guarantee already covers fines, penalties and interest. Many CPAs and EAs and RTRP will do the same; they often have insurance for that very purpose. Just be sure to ask about it before one does your return. But what about the back taxes?

True, they could amount to a bigger expense than the fines and penalties, which may be why some chains can sell that extra guarantee. But H&R Block and Jackson Hewitt will cover you only up to $5,000 and exclude the most complicated returns. If you’re tempted, know there may be an unintended consequence: If someone pays your taxes, the IRS considers that taxable income.

In other words if you buy the guarantee, and H&R Block ends up paying your back taxes, expect to get a 1099 next January.

“Tax preparation is an art, not a science.”

Recent law changes (EIC to name one) tightened penalties for tax preparers who play fast and loose with the tax code, taking far-fetched positions because they know 99% of returns never get audited. That said, for anyone with a complicated or unusual financial life, there’s still lots of wiggle room, I’ve never heard “It’s about 10% black, 10% white, and everything else is in the middle.”

Chances are good you have room to maneuver if you have income in a category the tax code treats flexibly — you’re self-employed, for example, or own rental property. Ditto if you’ve earned big capital gains or incurred high or unusual medical expenses. In short, if you’re attaching a schedule to your return, a good tax preparer will pay for himself.

Now, that may mean raising a red flag with the IRS, and a good preparer should explain if he’s taking risky positions. If you can’t stomach the specter of an audit, you’ll want a pro to travel on the side of caution.

Think twice before paying someone to look for loopholes if your income picture is relatively simple. If you’ve got one W-2, you don’t need someone fancy, there’s not a lot we can do for you.

“You’d be better off.”

Maybe you’re hiring a tax preparer because you’ve got better things to do with your weekend or numbers make you dizzy — more power to you. But if you’re hiring a pro because you think he’s smarter than you, think again. On average, tax preparers make more mistakes, and costlier ones, than John Q. Taxpayer does.

According to a study of IRS data, 56% of professionally prepared returns showed significant errors, compared with 47% of those done by the taxpayer. And audited taxpayers who used preparers owed an average of $363, while those who filed themselves owed $185.

Of course, tax preparers often see more-difficult returns, which could lead to more errors.

For a family with one W-2, mortgage interest and a couple of kids, TurboTax is just fine. If, on the other hand, you’re attaching a schedule for self-employment income or capital losses, consider getting help. And even then, if a return is made complicated by a one-time event — say, the birth of a child or the acquisition of a rental property — you might need only one year’s worth of advice. If nothing changes, you should be able to copy it from year to year, so long as you keep up with tax law changes to your situation.

“You should shop around.”

There’s no standard price for doing taxes. Some preparers charge by the hour, others by the form; either way the cost depends on where you live, the complexity of your situation and the qualifications of your tax pro. Consider: The average H&R Block customer pays about $150; a CPA may charge 15 times that.

People rely too much on word of mouth; they don’t shop prices. If they did, they might be surprised. A licensed local pro may not cost much more than a national chain. 

I charge by the form, and a simple return could cost just under $150.00 – not much more than what you might pay at a big chain.

Even among franchises, prices vary. The return that cost $90 to prepare at one big store cost more than three times that at another, according to a GAO study. To be fair, it may be hard to know what your return will cost before the preparer actually spends time on it. Ask for estimates using last year’s return — that’ll give you a point of comparison to find the best price.

 Shop around.

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A Week in Perspective

Posted by on Oct 3, 2010 in Choosing a preparer, Information, Preparer regulations, Week in review | 1 comment

New PTIN System Set in Motion by IRS – On Tuesday, the IRS officially implemented its new Preparer Tax Identification Number (PTIN) system. From now on, all tax preparers will have to be issued PTIN (even if they already have one) in order to be qualified to prepare and submit tax returns for their clients in 2011. This included all paid classes of tax preparers including CPAs, enrolled agents and tax attorneys. This is in line with the IRS initiative to properly register and regulate the thousands of tax preparers in the country.

Tax Professionals Must Now Pay The IRS For The Right to Prepare Tax Returns PTIN’s Are Now For Sale – Well, now a tax professional must buy the right to prepare a tax return.  I suppose this isn’t any different from having to pay a fee every year to renew my CPA license.  Just one more thing to add to my overhead costs.

WHAT A MUCKING FESS!

Problems with PTIN Online System? Don’t Wait to Register – Tax preparers heads up, according to the new IRS rules, you have until January 1, 2011 to register for your PTIN (preparers tax identification number).   I’m getting a little concerned about the IRS’s ability to GET IT DONE by the January 1, 2011 due date.

Online PTIN Application Now Available, But… – The IRS released the final regulations for the new PTIN process for tax professionals. There’s an FAQ available, too.

Russ’ PTIN Adventure, Part 2

Thank You For Not Waiting

Don’t you feel more competent already?

Is it reasonable for Congress to demand “Plain Talk” from the IRS? – Bottom line: if we Americans want a tax code that we can understand, we need to demand it directly from Congress. This is my favorite post this week.

Don’t Let a Rule of Thumb Rule Your Wallet – Rules of thumb are great little guidelines when you’re talking to large groups of people. A perfect example is the “rule” that you should have “1.5 times your annual salary by age 35″ described in the recent retirement checklist from CNNMoney. If you’re in that age group, you can read that rule of thumb and quickly compare your current retirement savings to get a general idea of what kind of shape you’re. If you have $5,000 and you make $35,000 a year, you might be panicked enough to start beefing up your retirement savings. If you’ve make $35,000 a year and you’ve got $100,000 socked away, you’ll probably feel that you’re ahead of the game. There’s just one problem…

Varying cost of living – it depends on the lifestyle you aspire to.

Taxes on garage sale earnings – The federal tax laws provide for IRS collection of tax on capital gains. So, notes IRS Publication 525, “if you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, your gain is taxable as a capital gain.”

But who’s ever had a capital gain on an exercise bicycle, old toys or an out-of-style suit sold at a garage sale?

Now we know what happened or is happing with Monica L. over at Confessions of a CPA. She landed a job. Nicely done Monica. She explains in her post First Days.

Tax-Exempt Tips For Oct. 15 Due Date –

BlogRoll Beans – September 28th edition.

Cure for the Financially Overwhelmed - Do you experience any of these symptoms when thinking about your personal finances: Budget dizziness, Debt fever, Sweaty emergency fund palms,  Late fee hair pulling, Banking knots in your stomach, Retirement savings rash. If you experience any of these symptoms when you think about your finances, I am not a doctor but I believe you have what is called financial overwhelmedness.

Tax cut timing could be costly

Bye, Bye Paper – The IRS has announced that they will no longer be sending tax packages to individuals or businesses. Later in the year, they will send a card to taxpayers (ind and business) who prepared their own paper return last year notifying them of the change and telling them how to obtain the forms they need.

Tax Help News: Seven Deadly Sins of Tax Resolution Every Taxpayer Needs to Know

Tax Foundation Releases Two Reports Focusing on High-Income Taxpayers – The Tax Foundation has released two reports focusing on the expiration of the Bush-era tax cuts and high-income taxpayers: one examining top marginal effective tax rates by state, and another profiling demographic characteristics among top earners.

Should the IRS Give Taxpayers an Itemized Receipt? – What is provided to a taxpayer with a $5,400 tax bill? Nothing. For many Americans, the amount they pay in taxes is larger than any purchase they make during the year, but studies show they know almost nothing about where that money goes to.

US Savings Bonds – What Are Savings Bonds and How do They Work?

The Importance of Cash Flow Management – One of the most important aspects of managing your personal economy is understanding where your money is coming from, and where it is going. You should also know when all of this is happening. Cash flow management in your personal finances is important, since it keeps you from overdrawing your account and helps you plan ahead for larger expenses. When you know how money flows through your personal economy, you are in control.

What is the Difference Between HSA and FSA Accounts?

Use Flexible Spending Account Balance by End of Year – If your health insurance plan provides a Flexible Spending Account or FSA option I highly recommend you use it. You are getting a tax break for every dollar you put into the account. If you use those dollars toward eligible healthcare expenses then you never pay taxes on that money.

Yes, you read that correctly.

The Soft Skills You Need to Get Hired There are Old School tactics and there are New School tactics for every facet of job seeking. One key to your success today is knowing how to capitalize on your soft skills. Wondering what your “soft skills” are? Read on!

H&R Share Prices Expected to Drop due to IRS Action – H&R Share Prices Expected to Drop Due to IRS Action. In the next tax year, the IRS has declared they will no longer supply tax preparers the ‘debt indicator’ of a taxpayer. The debt indicator is a code the IRS has provided every year to tax preparers that indicate the amount of tax refunds the taxpayer is entitled to receive. The debt indicator information supplied by the IRS would include any amounts of child support, back taxes and other debts that would reduce the amount of refunds.

Making Work Pay Credit not likely to be extended – Congress’ effort to stimulate the economy included pushing through a series of tax breaks in 2009. The centerpiece of the legislation was the Making Work Pay Credit, which was intended to provide tax relief for working and middle class families. It may not last beyond this year. The idea was to allow more taxpayers to have cash in their pocket during the year, as opposed to at tax time, by adjusting the amount of earned income withholding.

Life After the CPA Exam…

Tax Reform Discussions in 2011? – “Rep. Levin seeks early action on tax reform next year” reports that the House Ways & Means Committee chair wants to have lots of tax reform hearings in 2011. He says: “We’re serious about looking at our tax code.” The Hill also reports Congressman Levin saying that reform needs to happen in a non-election year.

Something about tax cuts from The Onion – Follow her link it is a must read for sure.

ARE WE BEING RUN BY ARSEHOLES? – THE DAILY SHOW had a bit that asked the question “Are We Being Run By Arseholes?”. The answer they came up with was an obvious “Yes”.

Tax breaks in the new small business bill

Small Business Jobs Act of 2010 – On September 27, 2010 (Monday), President Obama signed an additional economic stimulus bill – the Small Business Jobs Act of 2010 (H.R. 5297).

Small Business Jobs Act of 2010 Into Law – What it Means for You

HR 5297 Small Business Jobs Act of 2010 Outline of Tax Stuff – This is wonderful. Thanks Stacie.

Buying Long-Term Care Insurance To Save For The High Cost of Assisted Living – There’s a great deal of talk today about the “graying of America.” Thanks to advances in medical technology, many people are now living 20 or more years beyond normal retirement age. However, quite a few of these people must deal with poor health during those years. And, the increased longevity, coupled with expanded health care needs, can place enormous social and financial strain on these individuals and their loved ones.

A week about What is a Series LLC and more. Be sure to check out the whole week of post over at Diane Kennedy’s US Tax Aide blog.

An great answer to a frequent question Ask the taxgirl: Reporting Income Not on a W-2

Also today another round up A Post Wall Roundup.

The blogroll works now  Thanks Joe.

Currency – A New Financial Site for Young Adults – Currency offers great content, featuring writing from over 25 leading personal finance writers (including yours truly!) from various backgrounds, including journalists from major publications, best-selling authors, and a variety of bloggers from different genres such as personal finance, career advice, travel, lifestyle, and related topics. The articles are written in a fun and informative manner, featuring a more personal and conversational approach than you will find at most financial websites.

In a blogging friend scurry to get his clients extensions done, he posted yesterday  A TAX FIX, directing you to his other writing gig as he hasn’t been posting at TWTP in his effort to “GIT-R-DONE”

Three Quickbooks Shortcuts to Save You Time!

Homemade Gift Series #3: Caramel Apple Jam – So what exactly do you do with eight and a half pounds of apples? You make something with them, of course.

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Reads From Last Week

Posted by on Jul 4, 2010 in Opinions, Week in review | 0 comments

Last week I wrote two post that weren’t exactly about taxes. In them I mention taxes, but Each one isn’t “about”  taxes. In my post The Company Balance Sheet I talk about what is in a balance sheet. Thursday I posted Mistakes made in QuickBooks. In this I talk about things I get tired of seeing when I go out and help clients with their QuickBooks bookkeeping. Simple mistakes, that can ultimately, can and will affect the survival of a small business. If you’re a business owner all prejudice aside I say you should read them both.

Today’s taxes aren’t too bad –Kay Bell writes, “when compared to where tax rates have been over the years, we’re in pretty good shape” I agree. She also continues her mid year tax tips with

And everyone seems to be writing about it but, here it is in easy to understand words Homebuyer tax credit extended; closing date deadline is now Sept. 30. Also from Kay:

A little humor about the oil spill/leak – BP Spills Coffee

My friend The Wondering Tax Pro re-reveals his thought on the new rules pertaining to the mandate for all prepares to e-file. In his post WORDS FROM THE WISE, he shares comments from friends and colleagues’ and his points as well. I can assure all, his efforts on how he proceeds will be of great interest to myself.

In His Saturday BUZZ Robert writes:

* The IRS wants to hear from you, or so they say in “IRS Requests Public Input on Expanded Information Reporting Requirement”.

The Service is soliciting “public comment on how to most effectively carry out a law change that, starting in 2012, will require businesses to report a wider range of payments to contractors, vendors and others, usually on Form 1099. These comments will help the IRS issue guidance that implements this provision in a manner that minimizes burden and avoids duplicate reporting.”

If you plan to give the IRS a piece of your mind please be gentle. Remember, the IRS does not make up this nonsense – the cafones in Congress do!

Musings on artisan bakers and tax preparers is more on this from fellow blogger Mary O’Keeffe over at Bed buffaloes in your tax code . She is great. Unfortunately however the Free Fillable Forms option isn’t as good as it sounds as she continues with I withdraw my suggestion of Free Fillable Forms! If you have ever wondered about free filing your forms read this first.

Friday Mary Wrote Do US Presidents efile their tax returns? Not only is the information thought provoking, but it has a link that will take you to site where you can see the returns of past presidents. It also mentions another return that H & R fail at. A great article in all. So you know this follows the ever growing movement concerning mandatory e-filing for tax preparers.  

My friend also writes about home ownership in THE AMERICAN DREAM? Damn,  he has a good idea.

I sincerely believe that all high school students (or perhaps starting earlier) should be required to take a full-year course of study in financial stewardship (which would include a chapter or two on income tax).

If you only read one link from this list, make it THE AMERICAN DREAM?.

Waiting on a refund from your state? Roni Deutch tells on “7 States that Still Owe their Citizens Refunds”  Sadly I have been dealing with this as I have clients in two if the seven.

Jim Maule write the Blog MauledAgain. He has these post that I think are great reads so go read these.

If you receive a notice from the IRS. The IRS Hitman has some great advise in his post Watch our for IRS Notices. One of the best things to do when you receive an IRS Notice in the mail is to contact a Tax Professional immediately. Here’s what you need to know before your submit an Offer in Compromise to the IRS. More Harsh Truths on Settling Tax Debt

 I really liked the  math in Joes post 600 million becomes 100 million; 75 jobs becomes 25

The other post from JK that I really liked was If you remodel by starting over, you need to move back in. To get the whole just of this make sure you read the whole thing.

Kelly Phillips Writes Are Middle class increases on the way over at WalletPop

Tans are taxable today – Alrighty then. A 10% tax on indoor tanning services.

The providers will have to pay the tax via quarterly filings on Form 720. The IRS has posted “Nine Tips on the 10 Percent Tax on Tanning Services” This Started July 1rst, 2010. Oh man, can you believe it? – Nine Tips on the 10 Percent Tax on Tanning Services

New CBO Report Shows Rich Paying More than Fair Share – interesting article from the Tax Policy blog, kind of goes on with premise that today’s taxes aren’t so bad.

Presidents, the Tax Burden and Corruption – Explaining Economic Growth I originally found this over at the Tax Prof blog titled Raising Taxes Leads to More Economic Growth and Private Investment. Wow what a theory.  

Last week I didn’t get any PF blogs in as I wrote that post in a hurry. One that still holds in my mind though is from Kevin over at No Debt Plan.  His post Is a Housing Shortage Headed Our Way? Is an interesting read.

My friend Penelope over at Pecuniarities, re posted her article Put Your Brain Where Your Money Is: Think to Save. This is a well to know lesson and one that I feel is in need more than ever. People need to think. (And not just about money.) Week before last she also posted The Frugal Literate’s Guide to Affordable Reading. I love to read. Thanks Penelope, I learned a few things I think I’ll teach my children.

Handling Debt Collection Calls and Stopping Creditor Harassment by Knowing Your Rights, is a great article, filled with exact advise. A guest post over at Saving to Invest.

Essential Personal Finance Tips For Women in 2010 has some scary statistics, but also holds a valuable read.

Personal Finance Advanced Tips For Young Adults Parents, a must read then have you children read it. Other great reads from A Personal Finance Guide: 

Classic Debate: Should You Pay Off Your Mortgage or Invest That Extra Money? If you thought or think about this read this post.

Cash Money Life has a few great post that are good reads:

 Realizing the Cost is a thought provoking post if you are considering a new pet or children. And if you like that then be sure to read Involuntary Simplicity.

De-cluttering and Your Money

For those of you who are persistent and plan to buy that house, How Much Can I Afford For A House? A Checklist Is a good read.

Importance Of Knowing About Tax Tips And Benefits

According to the Washington Post “Money Can Buy One Form of Happiness, Massive Global Study Concludes”.

 

P.S. There seems to have been an addition over at Alltop in the tax section, but it isn’t us, not yet. If you’d like to have The Missouri taxguy added to their “magizne rack” please let them know.

 

Also I have added The Missouri taxguy over to (over at) Alexa a Web Information site. If you’d like please add a review of The Missouri taxguy.

 

Thank you and have a great Fourth.

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IRS TAX TIP 2010-06

Posted by on Jan 15, 2010 in Uncategorized | 0 comments

I have and will continue to post extensively on choosing a Tax pro. I am hopful everyone uses cation when doing so. If you haven’t read my post (several indivdual and a few series of. . .) please do so, for you. The IRS puts this out every year but not to the extent that your tax bloggers do.

Get started here, then please serch my blog and the web for what is being said on this.

Eight Tips to Help You Choose a Tax Preparer

The IRS urges people to use care and caution when choosing a tax preparer.  Remember, you are legally responsible for what’s on your tax return even if it was prepared by an another individual or firm.

Most tax return preparers are professional, honest and provide excellent service to their clients. However, unscrupulous tax return preparers do exist and can cause considerable financial and legal problems for their clients.  Therefore, it’s important to find a qualified tax professional.

The following tips will help you choose a preparer who will offer the best service for your tax preparation needs.

  1. 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.
  2. Check on the preparer’s history Check to see if the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs or the state’s bar association for attorneys.
  3. Find out about their service fees Avoid preparers that base their fee on a percentage of the amount of your refund or those who claim they can obtain larger refunds than other preparers.
  4. 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 April 15, in case questions arise.
  5. 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.
  6. Never sign a blank return Avoid tax preparers that ask you to sign a blank tax form.
  7. 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.
  8. Make sure the preparer signs the form  A paid preparer must sign the return 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.

You can report abusive tax preparers and suspected tax fraud to the IRS on Form 3949-A, Information Referral or by sending a letter to Internal Revenue Service, Fresno, CA 93888.  Download Form 3949-A from IRS.gov or order by mail at 800-829-3676.      

 

Links:

Where Do You Report Suspected Fraud Activity?

With e-file up and running, it is time to find yourself a preparer.

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A little Professionalism, if you please.

Posted by on Oct 19, 2009 in Choosing a preparer, Information, News Flash, Opinions, Preparer | 10 comments

          Earlier this past week I noticed a post(1) from a blogging colleague. I mention this as although his said intentions were set and designed to inform taxpayers, I found not only a few things wrong with the post, but also felt like the post was an attack. The attack was not to just a good blogging friend and colleague, but to other such professionals as well. Moreover, I am not just referring to tax professionals. 

Please, let me explain better. 

          There has been an ongoing, somewhat group, discussion about the pending and upcoming regulation of tax preparers. In the post referenced above it is clear that the subject is surrounding this topic. 

          It is clearly pointed out “Although these tax preparers may in some cases be quite competent. . . in the author’s  own right, he continues with “. . . the fact is (the highlight is mine) they are unregulated and not answerable to a direct regulatory authority or held to an objectively determined set of standards.”

I argue this. I argued this point a while back and do so still today. 

          I have written many posts, and a series of posts and guest post, covering the topic at hand, hiring a competent professional preparer. (2) However, taxpayers, we are finding, still manage to find those preparers who, well for the sake of not having a longer post than necessary, are plain unworthy. 

          However, let us back up a bit. First, to be clear, what/who that is being discussed, is what the IRS classifies as an “unenrolled tax preparer”. (Defined below)

          Now then, let us correct the highlighted statement above. It says clearly,  “. . . they are unregulated and not answerable to a direct regulatory authority or held to an objectively determined set of standards.” 

Yes they are. 

          Let me say that more informatively, quoting from IRS Publication 470 Limited Practice Without Enrollment: 

            First lets understand what IRS Publication 470 is:

      “The purpose of this revenue procedure is to prescribe the standards of conduct, the scope of authority, and the circumstances and conditions under which an individual preparer of tax returns may exercise, without enrollment, the privilege of limited practice as a taxpayer’s representative before the Internal Revenue Service, pursuant to section 10.7(a)(7) of Treasury Department Circular No. 230”

           Okay as I read the above, IRS pub 470, and revenue procedure 81-38 has a purpose. This purpose – to “prescribe the standards of conduct, the scope of authority, and the circumstances and conditions under which an individual preparer of tax returns may exercise, without enrollment” By all rights, that should end the argument there, but no, let’s keep going. 

          For a moment lets go back to our highlight, is says unenrolled preparers are unregulated. Since definitions are important –by way of Merriam-Webster Dictionary

Regulated means:

      1 a : to govern or direct according to rule

      b (1) : to bring under the control of law or constituted authority (2) : to make regulations for or 2 : to bring order, method, or uniformity to 

So unregulated would be the opposite of the above quote box, accurate? 

          If I put this all together, I see that according to this IRS publication, Unenrolled prepares are regulated by the IRS as prescribed within Publication 470. Therefore, to say they are not is, well, not accurate.

          Surely, we can all agree that the IRS is a regulatory authority. Humm, I would think yes. 

          Thus, one may conclude that the IRS is the regulatory authority over all unenrolled preparers. Yes? 

      “Sec. 3. Applicability.01 This revenue procedure, issued pursuant to section 10.7(a)(7) of Circular 230, applies to all unenrolled individual preparers of returns who seek to represent taxpayers, within the United States, before examining officers in the Examination Division of an Office of a District Director of Internal Revenue or in the Office of International Operations.”

       Clearly, this publication applies to all unenrolled preparers. 

      “.02 This revenue procedure does not apply to attorneys, certified public accountants, or agents who are enrolled to practice before the Internal Revenue Service. The rules governing the practice of such persons before the Service are contained in the provisions of Circular 230.”

        Clearly this publication does not apply to attorneys, certified public accountants, or agents who are enrolled to practice before the IRS. 

So now we know what this publication is for and who it is for. 

      Okay, so if you turn to page 2 of this publication, Section 7 is titled, Ethics and conduct. But wait according the post (1)  unenrolled preparers have no such guidance.

       Sec. 7. Ethics and Conduct .01 An unenrolled preparer shall act in such manner as not to commit any act of disreputable conduct. Disreputable conduct includes, but is not limited to, the items contained in section 10.51 of Circular 230. 

          Wow, unenrolled prepares are held to the same ethics and standards of conduct as all those who are regulated by Circular 230 Regulations Governing the Practice of  Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, Enrolled Retirement Plan Agents, and Appraisers before the Internal Revenue Service. 

         My point here? Well, the post that questions unenrolled prepares does so with the premise that unenrolled preparers are not “held to an objectively determined set of standards.” 

         Although IRS Publication 470 Limited Practice Without Enrollment is out dated and needs to be updated, the premise of what it states is clear, within this publication are the rules and guidelines for which unenrolled preparers are being held to an objectively determined set of standards.

          And within that document, if one is truly in the know about IRS rules and regulations, they know unenrolled prepares are held to the same high standards in Circular 230 as those for whom it was written for, prepares of tax returns.   

          When I first read the post, I asked the author, “Are you Serious?” The response: “I am dead serious. What part of what I wrote do you disagree with?”  Well, I think above I covered much of what I disagree with. He continued with “What is your definition of a “profession?” Now in the post, he defines this for us by way of Merriam-Webster Dictionary:

       1 a : of, relating to, or characteristic of a profession b : engaged in one of the learned professions c (1) : characterized by or conforming to the technical or ethical standards of a profession (2) : exhibiting a courteous, conscientious, and generally businesslike manner in the workplace.

 Lets add his other definition:

       Investor Words.Com defines profession as, – An occupation, especially one which requires an advanced education.

          A profession is indeed an occupation. A professional then would be one who held an advanced knowledge of his/her profession. Yes? 

          Now here is where he and I will bump heads so to speak. Could the forklift operator of 30 plus years be a professional, because he does his/her job, proficiently? He/she may have been trained, yet he/she may have many years of experience doing this job. If experience were the best teacher, would not years of doing the same thing repeatedly, at some point, make him/her a professional fork truck operator?

          My colleague says no. “The reason for this is simple and obvious: No impartial third party regulatory body has determined his core competence.” Really? What of the dancer, the actor, or musician and comic? So what of the landscaper? What of the carpet cleaner? Are they truly not professionals because no “impartial third party regulatory body has determined there core competence”? Not the same thing? I beg to differ, it is. These are all professions, and they all are called professionals.

          By what he is saying, Paul McCartney is not a professional. Disagree? Then please point out for us what impartial third party regulatory body has determined his core competence in music. Remember he says “impartial”

Going back to Merriam-Webster Dictionary:

      impartial – not partial or biased : treating or affecting all equally 

Sadly, I fear my colleague sees only white-collar professions, by the definitions that are posted on his site. 

          Yet my biggest problem of all, this post drags a good friend and colleague, down to mist of the idiots. He will not see this and that is fine.

      My grandmother is very much as he is, really the only difference in the two, is she is over 90. I have to wonder then if he, like her, believes that one should not wear black all the time.

          She told me once that professionals do not wear black all the time, in her mind only convicts and truck drivers wear black all the time. That very same year Jeff Goldblum (a professional actor), in an article voiced that he always wears black.

      Hummm that story should be for another time.

           Anyway, I felt obligated to share the post with my friend. In turn he wrote “I AM A PROFESSIONAL!”

           And in good debate-like a lawyer form, this post was written Professionalism: The Cafone’s Rebuttal.

          For which I asked him, “Was this really necessary?” referring to did he really truly feel he needed to continue the professional insult to our colleague, my friend.

The reply:

\”Bruce, I suppose nothing I write is \”necessary.\” But I thought it was appropriate given the recent proposals by the IRS to regulate unlicensed tax preparers.

And in response to your email, I didn’t personally attack anyone. You and Robert, more than anyone else should want IRS regulation of preparers so you can differentiate yourself from all the shmucks’ out there who call themselves tax pros. I never once said or implied that Robert or you are NOT excellent tax preparers. After reading your blogs, I’d refer clients to you myself.rt, more than anyone else should want IRS regulation of preparers so you can differentiate yourself from all the shmucks out there who call themselves tax pros. I never once said or implied that Robert or you are NOT excellent tax preparers. After reading your blogs, I’d refer clients to you myself.\”

           I politely thanked him for any referrals sent my way and left it at that other to let him know I would be writing this post. (This can be seen on my facebook page) 

          Before I was able to get this post out, two more post were published. Profession Defined is a post that in a clearer manner, explains or defines the word “profession”. Then this, Beware the Unlicensed Preparer. 

          Sadly, I found this in poor taste. Believe what you will about “the unregulated or unenrolled preparer”.

Try this:

I challenge any attorney, tax or otherwise, CPA, EA, or what have you, whom are clearly defined in Circular 230 and not living in California, Oregon, Maryland and New York (After 01/01/2010), or other such States – show me your license to prepare tax returns. 

Well?

Humm.

I wonder, if you are following the words being said;

“IRS Commissioner Doug Shulman says the agency is working on a series of recommendations that are meant to increase taxpayer compliance and improve the work of tax preparers. Those recommendations may include a call for all paid tax preparers to be licensed in the hopes of “reducing mistakes and combating fraud.”

          That includes everyone, CPAs, Attorneys, EAs, and unenrolled preparers alike. Then at that point, those who will be licensed will be all of it. Meaning, the unenrolled preparer is going to be added to the list of folks who “are” allowed to represent taxpayers100%.

          Or is that why some of you are so defensive and abrasive to those who are unenrolled? Your pissed because not only will you, the Tax Attorney, or you, the CPA, or you, the EA may have to get a license (maybe, the ground rules are still not set), but you’ll no longer have the market on representation of taxpayers before the IRS.

          News flash, monopolies are illegal. Taxpayers need to know the truth about the misconceptions within those ranks. Others are just as / can be as capable of taking the tax classes being held at those reputable universities. Earning CPE in taxation, and as pointed out, ethics.

          Aside from the required CPE that Attorneys and CPAs are required to take, there are only a few true differences between what they can do and what an unenrolled preparer cannot.

          I would also point out that the Attorney isn’t required to take CPE in taxation. The CPA isn’t required to have taxation CPE. The only ones in the IRS group of specialist that are required to take CPE in taxation are, EA’s.

          For those of you in those ranks whom I have or may have or may later offend, I am not a part of your click, been there done that, unimpressed.

Don’t like it?

FO!

Learn to be civil.    

 

(1)     Who is a Professional?

(2)     Choosing a preparer – this link will take you to post that appear here (this blog) covering this. There are 24 in all.

 Reference material:

Definitions:

  • unenrolled tax preparers – An individual who prepares and signs a tax return as the preparer, or who prepares a tax return but is not required to sign the tax return.
  • Practice before the Internal Revenue Service – comprehends all matters connected with a presentation to the Internal Revenue Service or any of its officers or employees relating to a taxpayer’s rights, privileges, or liabilities under laws or regulations administered by the Internal Revenue Service. Such presentations include, but are not limited to, preparing and filing documents, corresponding and communicating with the Internal Revenue Service, rendering written advice with respect to any entity, transaction plan or arrangement, or other plan or arrangement having a potential for tax avoidance or evasion, and representing a client at conferences, hearings and meetings.
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I’m Back with “Who is”

Posted by on Jul 8, 2009 in Choosing a preparer, Opinions, Preparer, Re post | 0 comments

            Okay, things have settled and for the most part organized. Taking up this blogging thing again as before; Monday, Wednesday, Friday, with a recap of the past week on Sunday’s. I have missed being active regularly and I have been missed, but things are going strong again. 

            For my readers who have hung with me thank you. I apologize in advance for the repost below but given everything, I find it necessary. 

            So much talk about hiring a tax professional and so much debate about who is a professional I want this out again. 

            The biggest point I want to make is that just because someone is a CPA, doesn’t automatically make them a tax professional. 

            Tax professionals are hard to find because as you may have heard, there is no accreditation from the AICPA (American Institute of Certified Public Accountants) that says “Tax Professional”.

             Hope you enjoy my return to active blogging.

 Repost of Who is. . .

        As a tax preparer I am often asked what is the difference between a tax attorney, an accountant/CPA, a bookkeeper, an Enrolled Agent, and a tax preparer.

A Tax Attorney is not the same as an accountant. The accountant can work with the financial issues and has a general knowledge of tax laws; however a tax attorney is a specialist in all aspects of tax law. Although they often work closely together, they are two complete different services. Typically large and even small businesses will meet with a tax attorney once every quarter or once a year to ensure that they are making the best possible business choices with regards to investments and tax issues. Since the taxation laws change constantly, this is an important step.

            A Bookkeeper is responsible for keeping accurate, up-to-date business records for proper cash flow management, balance sheet preparation, and developing expansion and investment plans. A bookkeeper also assists in filing tax returns with updated tax records. Accurate bookkeeping is a legal requirement and should be kept well within the standards that are set by local and federal tax agencies. A bookkeeper accurately records all of the financial transactions. It is the responsibility of bookkeeper to note all monetary transactions that are received and paid out. The records also include outstanding balances that the company owes to other parties and others who owe to the business. Business bookkeeping takes a lot of time and cannot be done in a hurry. At small businesses, bookkeepers also double as company accountants. Perhaps bookkeepers have the biggest responsibilities in the company as business planning, payroll management, and tax return preparations are dependent on accurate bookkeeping. Bookkeepers often do not have the qualifications or certifications of accountants, but the responsibility is not any less. Bookkeepers that have a great deal of experience can market themselves as accountants or managers. For that, they also need to supplement their profession with certificate courses, seminar attendance, and on-job training. All types of businesses require bookkeepers who are experienced in their specific business functions.

Accountants keep track of a company’s money. The company’s managers and people outside the company read their reports. Managers look at the accountants’ reports to see how well their companies are doing. There are four kinds of accountants:

Public accountants work for public accounting companies. They do accounting, auditing, tax, and consulting work. Some have their own businesses. They do many different kinds of accounting for people outside the company.

Management accountants keep track of the money spent and made by the companies for which they work.

Accountants generally work a standard 40-hour week, but some work 50 hours a week or more. Tax accountants often work long hours during the tax season, from January to April. Most accountants have a college degree in accounting. Public accountants have to take a special test as well, resulting in a certification. Public accountants also must have a special license from the State in which they live. Accountants are generally good mathematicians, and have good analytical skills.

An Enrolled Agent (EA) is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals. “Enrolled” means to be licensed to practice by the federal government, and “Agent” means authorized to appear in the place of the taxpayer at the IRS.  Only Enrolled Agents, attorneys, and CPAs may represent taxpayers before the IRS.  The Enrolled Agent profession dates back to 1884 when, after questionable claims had been presented for Civil War losses, Congress acted to regulate persons who represented citizens in their dealings with the U.S. Treasury Department.

A professional Tax Preparer is an individual who prepares tax returns. A professional tax preparer can be a Tax Attorney, an Accountant/CPA, a Bookkeeper, an Enrolled Agent, or anyone who professionally prepares tax returns for clients. Most return preparers are professional, honest and provide excellent service to their clients.

            So there you have it.

How do you choose the right one to prepare your taxes? There is no one factor to use in determining this. I suggest you read the IRS Tips for Choosing a Tax Preparer. Or my website page Finding a Qualified Tax Preparer. I would also hope you to read 5 Biggest Mistakes most taxpayers make when choosing a tax professional!

 

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