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Q: I received an email from a coworker stating that my health
insurance benefits at work are going to be taxed now! Is this true?
A: No. While it is true that, beginning in 2011, the IRS will require employers to disclose on
each employee's annual W2 the value of the employee's health coverage, it is not subject to any actual tax. The value
of the employer-provided health insurance benefits is for informational purposes only.
Q: I converted my traditional IRA to a Roth IRA in 2010, but both you and
my financial planner told me I didn't have to pay the taxes right away, so I didn't. Now remind me again - when do I
have to pay those taxes?
A: The special rules for a tax-deferred conversion from a traditional IRA to a Roth IRA in 2010 only allow you to pay half
the tax on your 2011 return and the other half on your 2012 return.
Q:
What is the difference between an ordinary dividend and a qualified dividend?
A:
A qualified dividend meets certain criteria and "qualifies" for lower capital gains tax rates. Most dividend
distributions currently qualify for the lower rates, but depending on time frame, source, and type, some dividends are taxed
at higher "ordinary" rates. Generally, the dividend payor will identity qualified dividends in box 1b
of the 1099-DIV they issue to payees at year-end.
Q: I need my refund quickly this year, but I haven't received my W2 yet. But
my brother-in-law told me that tax preparers can still file my return by taking information from my last paystub - is
that correct?
A: No. In recent years,
one large aggressive tax preparation firm tried to get the tax season started earlier by claiming they could prepare
your tax return using your end-of-the-year paystub. Already aware that this was a somewhat complicated and risky methodology
to employ, many CPAs saw where this was going right away - a big firm using non-CPAs to prepare tax returns using paystubs
was just asking for trouble. Sure enough, the IRS saw a big jump in income reporting errors and amended
returns, and subsequently threw the "false start" penalty flag, now prohibiting tax preparers from completing and electronically filing tax returns with anything
other than the proper tax documents - Forms W2, W2-G, or 1099-R.
Q: Over the past few years, I have been able to deduct my
state sales tax as an itemized deduction because it generally exceeds my state income tax, but I read somewhere that I won't
be able to do that anymore. Is this true?
A: No. Initially, this
provision was set to expire on December 31, 2007, but, more recently, that provision was extended. And
here's a handy IRS article on how to go about calculating that deduction.
Q: When must I stop claiming my child as a dependent?
A: While you can usually claim your non-student child until his or her 19th birthday, in
general, you can continue claiming a child living under your roof as a dependent indefinitely, as long as that
child has a gross income of less than $3,700 (and as long as that child is not considered a taxpayer, a taxpayers spouse, or
a dependent to someone else).
Q: My nephew told me about a new law that requires me to file my 2011
tax return electronically! Is that true?
A: Yes and no. While
it is true that there is a new electronic filing mandate set by the IRS that requires most paid tax preparers to file
all federal tax returns electronically, as of the moment, taxpayers still have the option of "opting out"
if they do not wish to (or cannot) file their federal return electronically.
Q: I keep hearing stuff about the alternative minimum tax - what exactly
is that and what's all the fuss about?
A: The alternative minimum
tax (ATM) was created in 1969 when Congress noticed that folks with high incomes were legally using so many deductions
and other tax breaks that they were paying less taxes than some middle-class taxpayers. As you might imagine, the
IRS was not amused, so they came up with another tax system that uses its own accounting method and forces
those taxpayers to pay the higher of the "regular" tax or the "alternative" tax. Unfortunately,
the AMT, unlike most of the other tax tables/exemptions/deductions, had never been indexed for inflation until recently.
So, while only 19,000 people were affected by AMT in 1970 (the year it was rolled out), every year since then, AMT
has crept up on new, unsuspecting taxpayers, and nowadays, AMT is affecting many millions of filers, many
of whom could hardly be described as "wealthy". But there is some good news. For 2011, Congress
approved what is being referred to as an AMT "patch", which increases the AMT exemption and keeps another 26 million
taxpayers from falling into the not-so-pleasant grip of AMT. However, to date, nothing has been done about 2012 and
beyond, and, by then, without further legislation, AMT could affect two-fifths of all U.S. taxpayers. Ouch.
Stay tuned.
Q: I owe Uncle Sam some money, but one of my friends told me I
can't erase this debt by filing for Chapter 7 bankrupcy. Is that true?
A: No. While most bankruptcies do not eliminate accumulated federal income
taxes in arrears, if a tax debt is from a tax return with a due date over three years before the bankruptcy filing,
the debt may be discharged if four other rules are met. 1), the tax return was filed at least two years ago, 2), the
tax assessment is at least 240 days old, 3), the tax return was not fraudulent, and, 4), the taxpayer is not guilty of tax
evasion.
Q: I'm sick of working and want to retire. My 401(k) is
pretty fat, and I'd like to live off that for awhile, but I'm not 59.5 yet and it just kills me
to think I'll have to pay a 10% early withdrawal penalty. Is there any way around that?
A: Yes. There is a "loophole" is called a 72(t) (after the IRS Code section it
is contained in), and it allows taxpayers to take penalty-free distributions from their IRAs. This
is accomplished by using what the IRS calls "substantially equal periodic payments", which is essentially a
fancy way of saying you must withdraw money at least once a year. The catch is, you have to keep making withdrawals
for five years or until you reach 59.5, whichever comes last. If you have a 401(k), you must roll that over into an
IRA after you terminate your employment (yes, retiring is another requirement of a 72(t)). There are other
requirements as well, and if all of them are not met, the IRS will grab their 10% and then hit you with retro interest
as well, so you really need a qualified financial advisor to set you up properly on this one. And if you're
still reading, check out this 72(t) calculator.
Q: I love
having our tax refund deposited directly into our bank account, but is there a way to split the refund between our checking
and our savings accounts?
A: Yes. Individual tax filers can
designate up to three separate bank or investment accounts to receive direct deposit tax refunds. Taxpayers who opt to split
their refund between two or three accounts should provide account information on Form 8888.
Q: How can I get a copy of a previously filed federal tax return?
A: If you filed the return yourself, and you need an exact copy of a previously
filed federal tax return, you will need to complete Form 4506 and mail it, along with a $57 fee for each tax year requested, to the address listed in the instructions. If you had
your return prepared professionally, your accountant should be able to provide you with a copy for a nominal fee. However,
most needs for tax return information can be satisfied with a computer printout of your return called a transcript,
which may be obtained free of charge from the IRS by either calling 1.800.829.1040 or by filing Form 4506T-EZ.
Q: Should I file my return electronically?
A: The vast majority
of tax preparers, including myself, highly recommend filing your tax returns electronically for a number of reasons.
First, unlike mailing your return, a receipt is generated upon filing, so not only is there no risk of the return
getting lost in the mail, the taxing body in question can never say they didn't receive your return. Second,
your refund generally arrives much faster. And third, these days, it's usually offered by most tax preparers who
are also authorized EROs (electronic return originators) - like me - at no additional charge.
Q: When should I expect my refund?
A:
If you file electronically utilizing the direct deposit option, your federal refund will likely appear in your checking or
savings account in 7 to 10 business days (the fastest refund I've heard of to date was 4 days after e-filing). If you
file electronically, but choose to have a check mailed to you, that appears to take 2 to 4 weeks these days. And if
you choose to mail your return, the refund check takes 4-6 weeks on average. But please remember - there are no guarantees on exactly when you will receive your refund (they do get hung
up sometimes), so don't spend it until you are sure it is there! And
if you wish to check the status of your pending federal tax refund, click here.
Q: What is the difference between a credit and a deduction - and which is better?
A:
A tax credit is a direct reduction in tax liability, independent of tax bracket. For example, a $2,000 tax credit
lowers an individual's tax liability by $2,000, resulting in a bigger refund (or a smaller tax due) of $2,000.
Common credits are the earned income credit, educations credits, and child tax credits. A tax deduction is
an adjustment to income, like home mortgage interest, state income taxes paid, or charitable contributions, and,
in contrast to a tax credit, will only result in lowering an individual's tax liability by the
tax deduction multiplied by that individual's tax bracket. Thus, for a taxpayer in the 15%
tax bracket, a $2,000 tax deduction will result in a bigger refund (or a smaller tax due) of only $300. So you can see
why that, in general, it's much better to get a tax credit than a tax deduction.
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Q:
What is the current standard mileage deduction?
A: For 2012, the standard mileage deduction rate for business
will stay at 55.5 cents per mile. For the first half of 2011 (January 1st to June 30th), the rate was adjusted up to 51cents per mile (from 50 cents in 2010), and for the second half of 2011 (July
1st to December 31st), the rate was again increased, this time to 55.5 cents per mile. For the complete table of
standard mileage rates, including charity, medical, and moving, click here.
A B O U T T H I S O F F I C E
Q:
What are your credentials?
A: I am a certified public accountant, certified by the state of Illinois in
1992. I am registered with the Illinois Department of Financial and Professional Regulation. I have 19 years experience
preparing tax returns professionally, and I meet annually all continuing education requirements of my profession to stay
abreast of the latest changes in taxation law. Also, I am a member of the AICPA (American Institute of Certified
Public Accountants), the NSA (National Society of Accountants), the NSTP (National Society of Tax Preparers) and the
Woodridge Chamber of Commerce, as well as several other professional affiliations. And I'm a taxpayer too!
Q:
What services do you offer?
A: My forte is tax preparation for individuals and small businesses,
and therefore, most of the services I offer center around taxes. Besides full-service tax preparation, I handle IRS
inquiries (from letters received to audit representation), tax planning and tax law consultation, business
start-up consultation, and taxation tutorial. I also do accounting and bookkeeping for small businesses.
If you have any questions, please feel free to contact me.
Q:
Why should I choose you to prepare my tax returns?
A: I hope you will consider me for your tax preparation
and consultation needs, as I promise to apply all of my knowledge and expertise to minimize your tax liability to the
fullest extent of the law. I will offer you personalized, friendly, honest, and complete service year after
year. I am available even after the tax season ends to answer any pressing tax questions you may have, so
you can make informed decisions as you go through your day-to-day financial life. I have built up a solid
and verifiable track record of outstanding customer service (click here to view reviews from my clients). One
thing I do not offer is refund anticipation loans - also known as "rapid refunds" - as these loans are,
in general, horribly imprudent financial decisions, which flies in the face of everything I preach to my clients.
Another thing I do not offer (and will not try to sell you) are gimmicks (i.e., add-on "warranties"
that charge you extra for guaranteeing the accuracy of your return - I offer that on every return I prepare and I wouldn't have the
nerve to charge extra for it!). Another thing I do not
offer is a different tax preparer every year; I feel it is important to have a preparer who knows you and your personal, unique situation,
year after year. Note that, when you choose me to prepare
your taxes, you are guaranteed that the same CPA will be personally preparing your returns every year
- me!... Lastly, in the unlikely
event I make a mistake on your return, I will pay all penalties and interest you are liable for, and, even if I didn't make
an error, I will be available to represent you and assist you in resolving any disputes with the IRS.
Q: But I really don't have an overly complicated return - and
those places in the strip mall are cheaper, right?
A: Because
I have only a small fraction of their overhead costs, my prices are always competitive with (and usually less than) the
big tax prep franchises, even though I offer most of the same services as their commercials advertise. Also,
the IRS advises that you exercise caution when choosing a tax preparer - only CPAs, tax attorneys, and enrolled
agents can represent taxpayers before the IRS in all matters including audits, collection actions and appeals. Before
choosing a tax preparer, I'd advise you to check out the IRS's tips for choosing a tax preparer.
Q:
How do I know what I am going to be charged for your services?
A: I realize that one of the most
uncomfortable aspects of seeking professional services like a tax preparer is getting an idea of the cost before
the work begins. This is why I offer a free no-obligation initial consultation and quote for my services. I
can generally give a fairly accurate quote in just 90 seconds by simply asking a small handful of specific questions
to the taxpayer. Please try me - I like to believe I am approachable, honest, clear, and never pushy.
Q: Do you offer discounts to seniors and/or veterans?
A: Yes, I offer a 10% discount to all senior citizens, veterans, and active duty military. Further,
my per-form rates stay "frozen" for all seniors from year to year - in other words, if you are a senior, and
your tax situation is the same from year-to-year, your fee will never go up.
Q: Do I need to be present while my return is prepared?
A: My "default" plan is to prepare your tax return while you wait (as this is generally
considered the quickest and most accurate way to complete a return), but that is certainly not a requirement,
as I understand and respect the value of your time. If you would prefer to drop off, mail, email,
or even fax your tax information and documents, I will gladly prepare your return and contact you via the medium of your
choice (phone, email. etc.), either with any questions or upon completion of the return.
Q:
What forms of payment do you accept?
A: I accept nearly all forms of payment, including cash, money orders,
personal checks, and all major credit cards.
Q: I'm kinda short on funds, but I have a refund coming and so I really
need my return prepared immediately - what can you do for me?
A: While I don't offer refund
anticipation loans (sometimes referred to as a "rapid refund"), I do offer a much less expensive option for
clients who cannot pay upfront. For an addition fee of $45, your tax preparation fees can be deducted from your refund
and the balance deposited directly into your bank account or applied to a prepaid debit card.
Q: I need my refund as quickly as possible - what
is the fastest option you offer and how much do you charge?
A: The speed at which taxing bodies
process tax refunds has come a long way in the past few years - taxpayers filing their returns electronically
utilizing direct deposit into a bank account are waiting an average of less than 10 business days for their
federal refunds to be processed. I never charge extra for direct deposit or electronic filing.
Q: I hear alot about identity theft these days;
how secure is my personal information?
A: I assure all my clients that I take great care in the security
of personal and confidential information. Electronic files are stored on a secure network and are frequently backed
up to an external hard drive, which is stored in a fireproof safe. Hardcopies of any documents in my possession
are kept in locked file drawers and, for security reasons, I never print or store hardcopies of your actual
returns. I have a cross-cut shredder right at my desk and it is well-fed with any documents that have been
revised or are no longer needed. I only use one computer to prepare returns, and that computer locks after it has
been inactive for more than 10 minutes. And you can rest assured that, unless it is subpoenaed by a court
of law, I will never ever share any of your personal information with anyone else.
Q:
How do I get to your office?
A: I maintain a comfy home office on a quiet cul-de-sac in southern
Woodridge. Mapquest seems to give perfect directions to my home, but in any case, you can find me from Route 53 by going east
on 83rd Street for one-half mile and then making a right onto Mendingwall Drive, and finally making a left at your first
opportunity; that will be Frost Court, and you will find me in the house on the left with the light-colored roof.
Q: Do you accept walk-ins?
A: Because I am trying
to maintain a household as well as run a business, I work by appointment only and cannot accept walk-ins.
But I encourge you to call me, email me, text me, or write me anytime you need me - I promise I will get back
to you as soon as I am able.
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