FAQ’s

Here are the answers to some of the most Frequently Asked Questions our firm receives.

REMEMBER:
The information found on this website is general in nature and may not apply to the reader’s situation. Therefore, the reader should not rely on the information on this website alone. For specific advise, please call us at 972-264-0277

 

Q. Do you perform business valuations?

Yes. We are often engaged to conduct a business valuation. Business valuations are required or recommended in the following situations: -Divorce -Estate and gift tax valuations -Buy\Sell Agreements -Shareholder disputes -Mergers and Acquisitions -Incentive Stock Options -Employee Stock Ownership Plans -Initial public offerings -Legal claims for damages

Q. Do you service clients outside of ****STATE****?

Yes. Due to available technology, distance is no longer a problem, therefore, we service clients in all states. For example, our tax preparation software includes every state, while the internet allows us to service clients more effectively from distant locations. When necessary, we travel to distant clients.

Q. What is Long Term Care insurance?

Long Term Care insurance covers an individual for the costs of home health care, community based care (such as assisted living)and nursing home care. It works in conjunction with Medicare and\or private insurance. It is a contract between an individual and an insurance company that, in exchange for premiums, provides daily health benefits. For a man over the age of 65, the odds are one in three (33%) that he will need long term care; for a woman, the odds are one in two (50%).

Q. Do you handle Section 1031 Tax-Free Exchange Transactions?

Yes. We handle all types of tax-free exchanges, such as: Four Party, Delayed, Reverse Starker, Diversified, Built to Suit, Rehab to Suit and Consolidated. We also handle exchanges involving operating businesses, LLC, Partnerships and Alternative Methods of tax-advantaged disposition of property such as Charitable Remainder Trusts.

Q. WILL YOU GO WITH ME TO THE AUDIT?

We actually ask that you let us go and you stay home. We know what the IRS is looking for. We will know all the answers to your return. We don’t want them on a fishing expedition with you. We will have you sign a Power of Attorney giving us the right to represent you.

Q. WHAT IF I AM AUDITED?

In the event of a federal or state audit of a return, we will meet with you to review the issues of the audit, provide research and documentation for the items in questions, and prepare all needed information for the audit.

Q. An employee was married in November. Do I issue a W-2 in her married name or in her maiden name?

Do not change her name until she shows you a copy of her Social Security card with her married name on it.

Q. How do we tax wages v. a partner’s draw?

Withhold employment taxes on wages, but not on a draw (not even FIT).

Q. On a 1099-MISC, do we put the person’s name or DBA?

If people work for themselves, use the individual’s name and Social Security number. If the person is an employee of the business, use the business name and federal EIN.

Q. Can we report part-time employee wages on a 1099-MISC?

Report employee wages on a W-2 ¾ never on a 1099-Misc.

Q. Do we report a $1,000 gift to an employee on a 1099-MISC?

Report cash payments to employees on a W-2 as income, not on a 1099.

Q. Are per diem reimbursements wages subject to FIT, FITW, FICA, and FUTA?

Per diem reimbursements for travel are not wages—if the travel is properly substantiated (for time, place and business purpose) and the amount does not exceed the maximum federal rates for the location of travel. Room tax above the federal rate may be reimbursed separately and is nontaxable if receipts are provided.

Q. How do we complete Form 941 as a common pay agent?

Report the agent’s name and EIN (as registered with the IRS) on the 941. Consolidate the wages and taxes of all employers represented by the common pay agent and report the consolidated totals on the 941.

Q. How do I spread our Christmas bonuses over the year so they don’t throw off December’s income statement?

Most companies accrue for the bonuses by taking an estimated amount and dividing this amount by the number of pay periods in the year (usually 24, 26 or 52).

Q. Are paychecks mailed on Dec. 31st, still treated as that year’s wages?

Under the rule of constructive receipt, the employee did not have access to the money until the checks were delivered in the following year, so these are the following year’s wages.

Q. Should I ask employees to complete a new W-4 each year?

Employees need not complete a new W-4 unless they claimed exempt from FIT withholding the prior year, or changed marital status or number of personal exemptions.

Q. Should I reconcile my W-2, W-3 and 941 totals?

Yes, do the reconciliation every year end before employees receive their W-2 copies.

Q. Can an unsubstantiated auto allowance be reported on a Form 1099-MISC?

If an employer gives an auto allowance unrelated to actual vehicle expenses incurred and does not require the employee to substantiate or return unused amounts, the entire allowance is wages and is reported on the W-2, not the 1099.

Q. What do I do about an employee’s incorrect W-2 if copies have not gone to the SSA?

Tell the employee about the error and that you will provide another W-2 (not W-2c) to file with his/her1040. Include the new W-2 with the W-2s and W-3 sent to the SSA.

Q: What services do you provide?

We prepare all tax returns including individual, corporation, LLC and LLP, non-profit, estate and trust, partnership, payroll, sales tax, property tax, and other taxes. We also sell computers and software as well as offering training. We offer bookkeeping, financial statements, accounts payable, and accounts receivable processing–in fact, any office function, including setting up an office, as part of our services.

Q: Nothing happens when I click on the Fin. Calculators link, does this link work?

Yes it does!  This link opens in a new browser window, if nothing happens when you click the link, hold down the CTRL key while you click, a new window should open with the calculator types across the top, select one and calculate away!

Q. How do i get to your office?

Directions to our office along with a map are located on our “Contact Us” page. Feel free to call for more detailed instructions if necessary

Q. I currently use an outside payroll service, and, frankly, have not been pleased for various reasons. What alternatives do I have?

We now have access to a very good payroll alternative that you can access and use right here on our webpage. This is a reasonably priced alternative, competitive with the nationally known services, and offers you the flexibility of running your own payrolls on YOUR schedule. Direct deposit, ACH tax payments and easy import to your QuickBooks or other accounting software are features of this very good software. Call us for a demonstration!

Q. I am concerned that my business is not as profitable as I would like it to be. What can you do to help me?

We offer an operational auditing program where a team of our professionals come into your business to assess your company’s operational strengths and weaknesses. We breakdown your business into the areas that are mission critical and offer recommendations (that we can help you to implement!) to get your business on track. Organizational efficiencies and profitability structuring are the keys to your business working FOR YOU rather than vice versa.

Q. What is all this that I hear from your firm about “wealth accumulation and retention?” Come on…Is there really any thing that we can do these days?

The answer to your question is an unequivocal “YES”. Obviously, the markets have been tough on all of us over the last few years. But we have strategies available to us still that can get you on the road to developing a wealth base, and then in helping you to develop that base and RETAIN IT! Please give us a call and we will set up a time to discuss this.

Q. What are your hours and are you a seasonal company?

We are open from about 9am to 6pm Monday to Friday and by appointment on Saturdays. We have extended hours of 7.00am to 9.00pm Monday to Saturday and 1.00pm to 7.00pm on Sundays during tax season.

Q. What is a reasonable wage for S corporation owners?

Ideally, the best way to set pay is to use an amount comparable to an individual being paid similar rate in your industry. Otherwise, I use a standard rule of 50\50. Basically, 50% of income available to owners should be taken as wages and the other 50% should be taken as dividends.

Q. Do I need to visit your office to have my taxes prepared?

 It is not necessary to visit our office. Many clients utilize the mail or express services to send their information to us. For new clients, we encourage a meeting so that we can discuss your unique tax situation.

Q. What size clients do you serve?

We provide services to home based businesses, professionals, churches and non-profits, as well as larger businesses. Our owner has worked for companies with annual sales revenues in excess of $900 million.

Q. What size clients do you accept?

We accept any clients within our service range. If the engagement is very large, we will accept it if we feel we have the staff to handle it. If we don’t have the appropriate staff, we may form an alliance with another CPA firm and perform a joint engagement. There is no account too small to be considered important in our office.

Q. Can I deduct student loan interest?

Since personal interest is generally non-deductible must meet several tests: You must be the person liable on the debt and the loan must be for education only. Your income can’t exceed $130,000 on a joint return or $65,000 on a single return; married couple filing separately can’t deduct. You can’t deduct if you’re claimed as a dependent.

Q. Can I ever save tax by filing a separate return instead of jointly with my spouse?

You sometimes may benefit from filing separately instead of jointly. Consider filing separately if you meet the following criteria: One spouse has large medical expenses, miscellaneous itemized deductions, or casualty losses. The spouses’ incomes are about equal. Separate filing may benefit such couples because the adjusted gross income “floors” for taking the listed deductions will be computed separately.

Q. How do you charge for your services and how does your cost compare to other tax preparation firms?

We charge by the hour. We can give you a quotation of our expected costs. When providing our services, if we can help you reduce our time, we will tell you how. Our support, such as our tax organizer, is designed to offer professional, fast, and accurate services and to minimize our charges to you. Our overhead is kept low to allow us to pass our cost savings onto our clients. Our charges are normally less than other quality firms.

Q. Do you work with Start-up Companies?

Yes! Many of our clients are just starting in business. We will lead you through the necessary governmental forms. Through our networking, we can also assist in finding you other necessary professionals to deal with (lawyers, insurance agents, mortgage brokers, etc.) throughout the state.

Q. I want to start a new business. Can you tell me which type of business I should form?

 Yes. When setting up a new business, it is crucial to set up the right type of business, such as corporation, S corporation, limited liability company, limited liability partnership, partnership, sole proprietorship, etc. Our consulting services will help you form the right type of business based on your unique situation with consideration given to liability issues and tax advantages.

Q. How are Limited Liability Companies (LLC) taxed?

A single-owner LLC defaults to being taxed as Sole Proprietorship. Income/loss from the LLC is reported on the owner’s personal income tax return. A multi-member LLC defaults to being taxed as a Partnership. A Partnership tax return must be filed. The profit or loss is then reported on the owner’s personal tax return. Any LLC can elect to be taxed as a corporation. To do so, one must file an election within 75 days of creating the LLC.

Q. Is there any non-tax record that I should keep?

There are other records you should keep, even though they don’t appear to have any use for your tax returns. Family documents, certain medical records, insurance policies, records of major purchases, are just a few examples. These documents will be needed in the case of any emergency that may arise.

Q. Should I keep my old tax returns? If so, for how long?

Yes, you should keep your old tax returns for at least 7 years. When a return contains information pertaining to the basis of property owned, it should be kept until that property is sold. One of the benefits of keeping your tax returns from year to year is that you can look at last years return while preparing this years. If you do throw out an old return you may fill out form 4506, Request for Copy or Transcript of Tax Form, and send it to the IRS service center where you filed your return.

Q. What pieces of paper do I need to keep in order to do my taxes?

Keep detailed records of your income, expenses, and any other information you report on your tax return. A good set of records can help you save money when you do your taxes and will be a trusty ally in case you are audited.

Q. How do I know when certain taxes are due?

You can give us a call or check out the Due Date Calendar on this website.

Q. When should I give you my tax information?

You should bring all your information in as soon as you have it all together. The sooner you bring it in to us the better chance we have at making sure we’ve done the best possible job for you.

Q. What do I need to do to start a new business?

Typically, most people will go to their lawyer first, get the business set up and then contact an accountant. We would rather that you contact us at the beginning. There are many different kinds of companies and we can help you select the best one for the kind of company that you will be setting up. Then we will continue to help you with payroll, tax returns, monthly accounting, and financial statements to whatever degree you need.

Q. Should I use a lawyer or an accountant to incorporate my business?

Although lawyers can get the paperwork together to make your incorporation happen, they might not know all the different tax laws that can apply to the different kinds of incorporations. Therefore, we suggest you see an accountant first to find out exactly which kind of incorporation you should pursue. Then have your lawyer finish the paperwork.

Q. By using QuickBooks Pro, can I reduce my fees?

Our experience shows us that if you know something about accounting AND your computer software is set up properly from the beginning, it is possible that we don’t need to spend as much time on your accounting. But in some cases, the initial set up was not done properly and we end up spending more time ‘cleaning up’ the errors than if we had just entered the detail from the beginning.

Q. Are QuickBooks or Peachtree good products?

QuickBooks and Peachtree can help you with your small business accounting, but they cannot think for you. The software has to be set up properly from the beginning or you will have problems. We find that by setting it up yourself, it can cost you more in accounting fees because it takes longer for us to resolve those errors. We advise that if you are going to use one of these products you have your accountant help you set it up. We can help you with this process.

Q. Do I need a Certified Public Accountant or is an accountant okay?

Some people do not need the expertise of a Certified Public Accountant. The best way to find out is to call a CPA firm and ask them that question as each situation is different.

Q. How can I pay my taxes by credit card and which credit cards are accepted?

Credit card payments can be made by phone (1-8002PAY-TAX or 1-888-ALLTAXX, toll free) or Internet (www.officialpayments.com or www.1888ALLTAXX.com) using Discover, American Express, or MasterCard. You will be provided a confirmation number at the end of the payment transaction and your credit card statement will provide confirmation of your electronic payment. The payment and return are reconciled based on the social security number entered and type of tax selected during the transaction.

Q. Is the IRS storing credit card information?

No. IRS does not have access to credit card numbers or directly participate in the credit card transactions. The IRS relies on private credit card processors to verify the validity of the card and line of credit. The processors forward the appropriate tax payment information to the IRS.

Q. Is there a fee charged for using by credit card to pay my taxes?

The company that processes your credit card payment charges a convenience fee. You are informed of the convenience fee amount before you authorize the payment. The fee is in addition to any charges, such as interest, that may be assessed by your credit card issuer. This company has no affiliation or ties to __________________________________.

Q. If I owe, how do I pay my taxes electronically?

You can e-pay by credit card. If you e-pay by credit card, you delay out-of-pocket expenses and may earn miles, rewards or money back from you credit card issuer. Payment by check or money order is acceptable. If you do owe money, ______________________ will provide you with a voucher and addressed enveloped to mail your check into the IRS. Your return can be e-filed at any time before April 15, and then you can mail your payment in later – as long as it is postmarked on or by April 15.

Q. Where can I get additional information about IRS e-file?

You can visit the IRS website at www.irs.gov – or feel free to call our offices to ask us questions as well (734-429-7172).

Q. What is the Personal Identification Number (PIN)?

The PIN allows you to personally sign your electronic tax return using a five-digit number. The PIN serves as your signature on your tax returns. Our firm will have this form all filled out for you when you come to pick up your returns or they are mailed to you. All we need you to do is sign the form for us to keep on file and then we are able to e-file your returns.

Q. What do I gain by using IRS e-file?

Accuracy! Security! Electronic Signatures! Proof of Acceptance! Fast refunds with direct deposit! Electronic Payment Options! Federal/State e-file! Only IRS e-file offers these advantages.

Q. What is an Authorized IRS e-file Provider?

An Authorized IRS e-file Provider is a tax professional or firm who is accepted into the IRS electronic filing program. One type of Authorized IRS e-file Provider is an Electronic Return Originator (ERO). An ERO is a person or firm that taxpayers entrust with tax information for the purpose of filing income tax returns electronically to the IRS. ***** FIRM NAME *****  is an ERO.

Q. Can I pay my balance due by phone or Internet with a credit card if I’m a ‘married filing joint’ filer?

Yes. Just be sure to enter the Social Security number of the first taxpayer listed on the return’s pre-printed mailing label or postcard. This is usually the taxpayer listed on the return.

Q. Do I really get my refund faster?

With IRS e-file you get it back in half the usual time. It’s even faster and safer if you have your refund deposited directly to your bank account in as few as 10 days. ask you Authorized IRS e-file Provider for the estimated date of deposit. For more information about Direct Deposit, go to the Financial Management Service (FMS) web site, www.fins.treas.gov/eft/.

Q. Should I wait until April 15 to file electronically if I owe taxes?

No. You can e-file your return as soon as it is completed. Then send your payment in on or before April 15. ***** FIRM NAME ***** will give you a payment voucher and addressed envelope to make sure it goes to the correct IRS center.

Q. What is a Form 9465, Installment Agreement Request?

This form is available to our firm. An approved Installment Agreement allows you to make a predetermined series of partial payments after April 15. Regardless of how you pay, you are responsible for paying the amount of tax due by April 15 of each year or you will be subject to late payment penalties and interest.

Q. Do I have a greater chance of getting audited by the IRS if I use IRS e-file?

No. The chance of an audit of an e-filed return is no greater than with a paper return.

Q. How do I know that the IRS really has my return?

The IRS notifies your Authorized IRS e-file Provider within 48 hours of transmission that your return information was received. If the IRS detects any errors, it sends a message back to our firm indicating the error. Our firm will correct the error and notify you to let you know what the error was. We will then retransmit your returns to the IRS.

Q. Can my state tax return be e-filed with my Federal return at the same time?

There are 37 states and the District of Columbia currently participating in the IRS e-file program. Some of these states have returns that can’t be filed electronically unless it is with the Federal return. Other states will be filed as independent states – meaning that they can be filed without the Federal return attached to it. The Michigan return needs to be filed with the Federal return.

Q. If my return is electronic, how do I sign it?

The most convenient way for you to sign your electronic return is to use a Personal Identification Number (PIN). It’s completely paperless! Our firm has you sign a document that shows that you agree with the numbers in the return and is allowing us to e-file your return for you. The signed forms stay at our firm for four years.

Q. What if I owe and cannot pay the full balance due on my taxes?

The tax preparation software used by our firm can allow you to make partial payments. In this case, you can make a payment for less than the balance due amount on your return. If you cannot pay in full by April 15, you can file Form 9465,Installment Agreement Request.

Q. What happens if my return is filed electronically, I am receiving a refund, and I owe taxes from previous years?

The amount owed on back taxes is automatically deducted from your refund just as if you filed a paper return.

Q. Do you offer free business consultations?

Yes, we offer a free hour consultation for businesses. The consultation is to gather information about you and your business, while you find out more about us. We can usually answer a few questions at that time and determine if you have done the necessary registrations and filings. We request that you bring your last two income tax returns and financial statements (if any). Also bring anything else that you may have a question on.

Q. Do you work with Start-up (new companies)?

Yes! Many of our clients are / were new entrepreneurs that are just starting in business. We will lead you through the necessary governmental forms. Through our area networking, we can also assist in finding you other necessary professionals to deal with. (lawyers, insurance agents, mortgage brokers).

Q. I prepare my own tax return, why use your services

Many times you are correct and you can prepare and file a return. But did you take all the deductions? Did you take the available tax credit? Did you go to a tax course in the past 12 months? We find that many returns can be self-prepared but many are lacking in all the deductions that can be taken.

Q. What is the Economic Growth and Tax Relief Reconciliation Act of 2001 all about?

The Act is the most significant tax cut since 1981, at a 10-year budget cost of $1.35 trillion. The entire act sunsets (reverts back to former law) in year 2011. The act focuses on individuals, not businesses. The key benefits include: -Individual rate reduction -Marriage penalty relief -Expanded credits -Expanded retirement benefits -Repeal of estate taxes

Q. How long should I keep my tax records?

We at ***** FIRM NAME ***** recommend keeping your tax records for ten years. This is longer than recommended by the IRS, but we feel this is the safest length of time. However, documents in support of the purchase of a depreciable asset should be kept until the asset is disposed of and documents in support of loans and mortgages should be kept until the loan or mortgage is liquidated

Q. Can I save taxes by filing a separate return?

It depends. For example, if both parties’ income is approximately the same, but one has extraordinarily large itemized deductions subject to income limitations (medical expenses, casualty losses, miscellaneous deductions, etc.) it is possible to save taxes by filing separately. We at ***** FIRM NAME ***** always compute the tax result both ways, as jointly and married filing separately, to ascertain which filing status is more beneficial to our client

Q. How can I contact the IRS about my tax return?

You can call the IRS at its toll-free line at 800-829-1040. To be ready to respond, you should have your Social Security number, your filing status and your refund or payment due amounts. Allow between 4 to 6 weeks before you contact the IRS

Q. How can I obtain a copy of my tax return?

Of course, we at ***** FIRM NAME ***** supply you with a copy and if you lose it, we will furnish you with another copy. If we did not prepare the return, and for some reason you do not have a copy in your possession, you need to file form 4506, Request for Copy or Transcript of Tax Forms, with the IRS service center where you filed your missing return

Q. What records do I need for a CPA to file my tax return?

We at ***** FIRM NAME ***** will provide a data collection form for your convenience, that contains most of the items which you will need. However, a detailed record of your income and expense items will be required to support our entries and in addition, a record of any other items reported on your tax return. Since totals of each category of income and expense will help us save time and cost, it is the preferred method of information submission

Q. Can I deduct child support payments?

No. Child support payments are not deductible, because they represent a pre-existing legal obligation to support your children

Q. In a divorce who is entitled to the child dependency exemption?

The parent who had custody of the child for the greater part of the year is generally treated as the parent who provided over one-half of the child’s support and will claim the exemption if other tests are met. Custody is usually determined by the divorce, separate maintenance or custody decree or agreement. If no decree or agreement establishes custody, then the parent who had physical custody for the greater part of the year is entitled to the exemption

Q. Do you provide prospective clients with estimates of your fee?

When appropriate, we prefer to provide a fee estimate. We always provide a fee range estimate for the preparation of tax returns. Where appropriate, we also provide written fee estimates to business clients

Q. What is the most tax efficient way to save for my children’s education?

The educational savings area is very complicated. We at ***** FIRM NAME ***** recommend that taxpayers seek professional assistance. Although a Section 529 plan, under the 2001 Tax Act, is an extremely flexible and tax effective plan, there are other plans to be considered. Also when considering any educational savings plan, consideration should be given to the impact on financial aid qualification requirements