Frequently Asked Questions

Frequently Asked Questions2024-01-05T11:58:56-05:00

Sadly we are unable to accept new clients for the 2024 tax season at this time.

The extension we file in April is only an extension of the time to file your tax return.  It is not an extension of time to pay your taxes.  Much, much more HERE.

Do you have a Health Savings Account through your job?  If you do, the amount contributed to the plan for the year will be reported on your W-2.  This gets reported on your tax return.

Did you USE your HSA this year?  If so, you should receive a 1099-SA from the bank that holds your account.  It will show you how much you spent.  I need that 1099-SA to complete your return.

If you didn’t use your HSA, that is fine.  We will just report $0 spent on your return.  But that 1099-SA goes to the IRS as well.  If we don’t report the amount reported on the 1099-SA correctly, the IRS assumes that the difference was spent on non-medical stuff, and they will send you a bill.  And then I will bill you for correcting the mistake.

So get me your 1099-SA!

Please send me a copy, and include ALL of the pages.  IRS notices can be very confusing, and the notices have a lot of information that can help us understand what is going on.

I like to joke that 18 year old are worthless from a tax perspective.  Children up to age 17 are eligible for the child tax credit, which is currently $2000.  Starting their first year of college, students may be eligible for the American Opportunity Tax Credit, which is up to $2500. For many kids, depending on where their birthday falls, that means there is one year where they are only an “other dependent”, which is a $500 tax credit.  That $1500 drop can be a big deal if you aren’t prepared.  So just a heads up!

The 5498 series forms are used to report contributions to tax-favored accounts, like HSAs and IRAs, the IRS.  We generally do not need them, unless there is some confusion about your account.  But of course these forms come out in May, and are stamped “Important Tax Document”, apparently just to keep me busy.

A lot of people don’t pay to have their taxes done and do their own using free software. If your situation is very simple, or if you really like forms and numbers (like I do), there is no reason for you to pay someone else to do your taxes.

However, your situation may be a little more complicated. You may hate the numbers work, or you may worry about doing it right. Some people have very complicated situations with multiple investments or business interests. These people need to use a professional preparer with professional level software.

Most people are in the middle. They could probably do their own taxes, but it takes too much time and it is stressful. They may worry about missing something and paying more than they need to. Maybe they got a form this year and they don’t know what to with it.

I tell those people that it is probably worth it to them to have a professional do their taxes, just like I have a professional paint my house or cut my hair. I could do those things myself, but I know someone who does it all the time will have better tools and do a better job than I will.

Very simple tax returns generally run about $180. As life becomes more complex, tax returns become more expensive. Most of the tax returns I prepare cost about $280. Business tax returns are usually between $300 and $500.

Every situation is unique and I price according to the number of inputs and the knowledge required to do the return correctly. I would be happy to go through your needs with you and give you a quote.

Much of our tax law is designed to be applicable to people in specific situations. We usually think tax breaks and loopholes are for corporations or “special interest groups.” However, there are a lot of things intended for just ordinary people, especially tax credits that are supposed to go to lower income taxpayers.

Since substantial financial assistance can be involved, there is also a lot of fraud and abuse. One way the IRS cracks down on that is by making tax preparers the gatekeepers.

We are charged with asking the questions that ensure various credits are going to people who are eligible. This is called “due diligence” and the penalties for not doing our due diligence are very high. I appreciate your patience and your trust in me.

Here is the bare minimum of what I am required to do: https://www.irs.gov/pub/irs-pdf/f8867.pdf.

I get asked all the time, “How long do I have to keep all this stuff?”

The short answer? Three years.

The longer answer: What you keep and how long you keep it can depend on what you have going on. Technically, if you file an accurate tax return you should keep EVERYTHING related to that return, including receipts and diaries, for three full years after the return is filed.

If you are fudging some numbers because time is tight, you really need to keep that documentation in case the IRS needs to see proof. I also recommend keeping invoices and documents for big purchases for as long as you have the asset.

“Wait. Receipts?”  I just had this conversation with an instructor at a forum I attended because I have been advising my clients not to worry about receipts, but to keep their bank statements (which show all transactions).

She said clients need to keep all receipts. When I told her I don’t even keep my receipts, she told me she doesn’t, either. So, do what you are comfortable with when it comes to receipts. But definitely keep bank statements.

Don’t forget, we keep digital copies of your tax returns and most supporting documents for seven years. So, we’ve got your backup.

Oh, one special rule. Keep documents related to real estate for six years AFTER you sell the property. The explanation is complicated, but do it anyway.