Frequently Asked Questions 


 

 

 

What is an enrolled agent and why do you need one?

 

An enrolled agent is someone who is licensed to practice before the IRS.  He or she can represent you in all matters concerning your income tax return.  Conversely, an unenrolled tax preparer can only represent you before the IRS for the return that he or she prepared for you.  If you did your own return and have received a letter from the IRS, you may want an enrolled agent to help you.

 

 

 

How long should I keep my records?

 

The general rule of thumb is three years after the tax year.  There are some exceptions.  If you own rental property, for example, you should keep your records of capital improvements, and for the property itself, for as long as you own the property plus three years after the tax year in which you disposed of it.  There is no statute of limitations if the IRS suspects fraud.

 

 

 

What do you do if you get a letter from the IRS?

 

First and foremost, DO NOT ignore it!  It will not go away!  We knew of a person who had sold her house for $400,000 and had elected not to file a return—against my advice.  Shortly after the tax year ended, she received a letter from the IRS stating that she owed taxes on the entire $400,000!  Had she ignored the letter, interest and penalties would have piled up creating a debt in the thousands of dollars.  We completed her tax return for her, subtracting the exemption of $250,000 she was entitled to (the IRS did not do this), and figuring out her basis, etc, which resulted in a zero tax liability.

 

 

 

By the way, what is basis?

 

Basis is normally what you pay for an item such as a share of stock plus broker commission.  When you sell the stock, you do not have to pay tax on the basis since you already paid taxes when you earned the money.  Say, for example, you bought a share of stock for $100 in ABC Corporation.  Three years later, you sold it for $150.  Only $50 of that money is taxable.

 

 

Should I make estimated tax payments?

 

Our tax system is a pay-as-you go system.  The IRS expects you to pay your taxes on your money as you earn it, not on April 15th.  If you do not have enough withholding out of your taxable income, you may have to pay a penalty.  A good rule of thumb is to look at last year’s return and see if you owed money or received a refund.  You might want to consider having more taxes taken out of your pension, social security payment, or wages rather than mailing in quarterly payments.  That way, you have a more accurate record and do not have to worry about payments not being properly credited to you. 

 

 

 

Why do I need to know anything about taxes?  Isn’t that what I am paying you for?

 

Not necessarily.  Not all tax preparers will ask the “right” questions for your particular circumstances.  Two examples come to mind: 

 

1.      There was a contractor who was in business for himself.  He correctly reported his 1099 income but was subsequently charged with a $10,000 debt to the IRS.  Seems he didn’t know that he could deduct the expenses of his business, such as tools and mileage.  Chances are, if he amends his prior year returns, the IRS will owe him money!

2.      A family had a handicapped son; he was crippled in an automobile accident that left him in a wheelchair along with a host of other injuries.  His parents installed a wheelchair ramp into the house but did not know it was deductible.  By the time they found out that it was, in a passing conversation, it was too late to amend their returns.

 

 

 

Good points!  How long can you go back and amend your return?

 

You can generally amend your returns for the past three tax years.

 

 

 

My house went into foreclosure.  Now, I’m being told I have to pay taxes on the “sale” of the house.  Is that true?

 

It may be.  There are various provisions in this scenario whereby the forgiven debt may or may not be taxable.  This question is too complicated to be answered here.  It is best if you contact your “tax lady.”

What do I do if I get a call from the IRS demanding money to pay back taxes or threatening to freeze my bank accounts, etc.?

Hang up.  It is a scam.  The IRS will NEVER call you out of the blue.  They will send you a letter through regular mail.  They always give you an opportunity to correct any deficiency before they talk about putting a lien on your assets.  It is quite a lengthy process!

What do you charge?

It’s natural to want to know how much something costs prior to purchasing it.  However, when purchasing tax preparation services, a more prudent question is:  “What are your qualifications?”  The IRS requires anyone who gets paid to prepare taxes to obtain a PTIN (Preparer Tax ID Number).  Within three years of obtaining the PTIN, tax preparers are required to take and pass a proficiency exam.  Passing this test awards the tax practitioner Registered Tax Return Preparer.

I  have earned Enrolled Agent status which is actually a higher designation than the Registered Tax Return Preparer.

I charge by the form and will charge you the lowest price possible.  Please note our 10% off coupon on our home page.  For our satisfied customers, we are offering a $10.00 rebate on next year's taxes for every paid referral you send me.


What do your customers say about you?

"Excellent", "just what we were looking for," "I will tell all of my friends," "without your help, we wouldn't have been able to complete the application for our ministry's 501 (c) (3)...a big thank you from our board of directors!" And, from Tom, "You did a superb job on my taxes...For the price, you are a great bargain.  I even received a carry bag and you covered your cost by finding an error in the previous year's return.  What a deal and thank you very much.  I will spread your name far and wide!" "I am thrilled!"  "Thank you so much for finding Teresa for me!  She was everything you said---competent, reliable and cheap.  What more could I ask?  And I am so glad I had her because I knew nothing about K-1s when a trust is closed out…"  " I  wanted to say thank you for making it so easy for me.  It's lovely to have all the envelopes ready to go!  I
remember when I was first widowed and you came to do my taxes.  I was pretty scared but, three years later I just feel so comfortable that you're in my
corner handling something that intimidated me.  Your service is so appreciated."

 

 

 

 

 

 

 

 

 

 

 

 

 

Website Builder