“Real World” Personal Strategy Blog

May Flowers Are Blooming!

“An inexhaustible good nature is one of the most precious gifts of heaven, spreading itself like oil over the troubled sea of thought, and keeping the mind smooth and equable in the roughest weather.”

- Washington Irving

The dust is truly beginning to settle around here (ok, maybe that’s just pollen).

Regardless, we’re beginning the process of serving you during the “off season”, and evaluating how things went. To that end, if you’re one of the many good folks we helped this season, then–THANK YOU for trusting us with your finances this year. We know how personal it is to you!

Speaking of tax returns (and personal details)…how would you like to see former President George W. Bush’s *actual* tax return from 1997? It’s been obtained by CNN, and is available here: http://i.cdn.turner.com/cnn/interactive/allpolitics/0804/bush.cheney.taxes/bush.pdf

(I like that he and Laura seemed to be very generous with their charitable contributions–which, if you’ve read my previous posts, you know is a big deal to me!)

On to this week’s Strategy Note. Last week, I wrote about Amended Returns, and how most folks had no idea how much we could improve their return–EVEN if they’d already filed it with somebody else.

This week, will be one of my final “tax-related” items for a while. It’s all about the question…

“Real World” Personal Strategy

“What Now?”

It’s a familiar feeling.

Relief. Exhilaration (or frustration at having to pay *more* taxes!). Gratitude for a job well done by your preparer.

Unless you’ve filed for an Extension, however you feel about your tax return…chances are, it’s done.

But, even now, we do get some questions. So, I thought I would answer some of the basic ones for you. If you have any additional questions, feel free to give us a call or send us an email.

We’re here for you!

1. “When will I get my refund?”

Well, the IRS does seem to have entered the 21st century.

If you had us “e-file” your return, you can check your status right now, or if you had us mail a paper return, after about 3 to 4 weeks.

When you’re checking with the following options, make sure you have a copy of your tax return on hand or know your “filing status”, SSN and the exact dollar amount of the anticipated refund.

• Online: Go to IRS.gov and click on Where’s My Refund. (http://www.irs.gov/individuals/article/0,,id=96596,00.html?portlet=4)
• Automated Phone: Call 1-800-829-4477 24 hours a day, 7 days a week for automated refund information.
• In-Person Phone: Call 1-800-829-1954 during normal business hours.

2. “Do I need to keep a copy of my return?”

Yes, for a *minimum* of three years. There’s all kinds of contexts where it’s useful. We do keep one on file, on your behalf, but it’s just smart and safe for you to keep one in a secure place at home. (I’ve already written a previous post here on the site about Amended Returns; give that a read for more info.)

As for the supporting documents from your return, anything that relates to a home purchase or sale, stock transactions, retirement, business or rental property, should be kept much longer than the three years.

3. “I think there’s a mistake in my return. What should I do?”

Sometimes, you’ll find a receipt or a documentation after April 15th which really would have changed your prior year tax return. That’s, again, when you would have us file an “Amended Return”. Here are some other, common reasons to Amend…

• You neglected to report some income earned.
• You claimed deductions or credits you should not have claimed.
• You did not claim deductions or credits you could have claimed.
• You filed under one filing status, but you should have filed under another.
• You bought a residence and didn’t claim the First Time Homebuyers Credit.

You might have other questions, which I haven’t addressed here. Give us a call!

To more of your money in your wallet!

We Don’t Stop Now

“It’s not what you do once in a while, it’s what you do day in and day out that makes the difference.” - Jenny Craig

Last week was crazy. We had so many last-minute folks come through our doors before the 15th, that I was (briefly) tempted to shut our doors so we could handle the flow!

But we didn’t. I’m glad to say that we worked very hard during the “offseason” so that we would be prepared for the tax season rush. We were able to work with everybody that came in, even folks who walked in on the 15th.

That said…shutting those doors at the end of the day on Wednesday (the 15th) was sweet. My staff and I could look back on months of hard work, and take real satisfaction in hard work and a bunch of new client relationships which we’re excited to see last for years.

“So…what now?”

That’s a good question–and it takes me back to our offseason preparation. Sure, we’ll be taking some well-deserved vacation around here soon…but we NEVER “shut the door” on our relationship with YOU!

That’s why I’ll continue to post thoughts for you here on a weekly basis, and we’ll continue to be here for you for all of your tax and financial needs. If you came to us this year for your first time…you’ll soon find out that we make big deal around here of keeping in touch, and offering you hope and wisdom about the current state of the economy–and YOUR wallet!

Many tax businesses shut their doors pretty firmly during the summer and fall. Not us. This week’s Strategy Note, in fact, deals with a topic which most taxpayers have no idea about.

“Real World” Personal Strategy

Little-Known “Secret”: Amended Returns

If you’re a client of mine, you’ve already got the peace-of-mind that you were able to claim every possible deduction legally allowed in the tax code. We put each return through an extensive review process to ensure that you’re keeping all the income you deserve to keep.

But what about your friends?

Well, since it’s now AFTER April 15th, they might think that the proverbial “fat lady” has sung on their 2008 returns. Not so.

Did you know that according to a 2002 report issued by the General Accounting Office, taxpayers overpay the IRS almost $950 million every year, which equates to an average overpayment of $400 per taxpayer. That’s a somewhat dated report…and the current numbers are certain to be higher.

What’s worse, is that folks who prepared their own taxes (with a software, or on their own) are the most vulnerable. But did you also know that taxpayers who used one of the “big chain’ preparers are almost as bad off?

A more RECENT report from the GAO (2006): In a Limited Study, Chain Preparers Made Serious Errors

In GAO visits to chain preparers, paid preparers often prepared returns that were incorrect, with tax consequences that were sometimes significant. Some of the most serious problems involved these preparers…

1. Not reporting business income in 10 of 19 cases;

2. Failing to take the most advantageous postsecondary education tax benefit in 3 out of the 9 applicable cases; and

3. Failing to itemize deductions at all or failing to claim all available deductions in 7 out of the 9 applicable cases.

More items from the report:

* The 19 paid preparers visited arrived at the correct refund amount only twice. On 5 returns, all for the plumber, they understated our refund amount by a total of $3,465.

* All 19 of the visits to tax return preparers affiliated with chains showed problems. Nearly all of the returns prepared for us were incorrect to some degree, and several of the preparers gave us very bad tax advice, particularly when it came to reporting non-W-2 business income. Only 2 of 19 tax returns showed the correct refund amount, and in both of those visits the paid preparer made mistakes that did not affect the final refund amount.

So what can your friends do about this (or you, if you haven’t seen us)? Simple: file an “Amended” Return. Many tax businesses don’t provide this service (and most taxpayers don’t even realize it’s POSSIBLE!), but even though we’ve completed our clients’ returns, we WILL review any of your friends’ returns (or yours)–at no charge. Contact our office about it for more details…

To more of your money in your wallet!

This Is THE Week…

“If you want to feel rich, just count the things you have that money can’t buy.”

- Unknown

Yes, this is it. This week a couple things happen.

1) Monday is “Tax Freedom Day”. I hate to start on this downer note, but April 13th is the date pegged by the Tax Foundation as the date when you’ve finally worked to pay off your taxes. The rest of the year is “take home” pay.

The Tax Foundation is a non-partisan educational organization dedicated to informing US–the taxpayers–about the burdens of our tax liabilities, and according to the Foundation: Tax Freedom Day answers the basic question, “What price is the nation paying for government?” An official government figure for total tax collections is divided by the nation’s total income. The answer this year is that taxes will amount to 28.2 percent of our income, and the stretch of 103 days from January 1 to April 13 is 28.2 percent of the year.

The date varies year to year, and more information is here: http://www.taxfoundation.org/taxfreedomday/.

2) Wednesday is April 15th. You know what this is by now, I hope. Don’t get slammed by the deadline! Have you come to see us yet? Have your friends? If not, give us a call and come on in!

Moving on…there’s some nice news showing up these days. Our brave shipping captain was freed over the holiday weekend by the decisive action of our military…unexpected profit announcements are boosting the stock market (see here: http://finance.yahoo.com/news/Stocks-surge-as-profits-at-apf-14891590.html ) … new jobless claims fell last week … mortgage rates were down (though looking to rise this week) … etc.

Could it be that things are looking up?

Personally, I take a “wait and see” approach on this stuff, but I’m also happy to point out bright spots. My primary reason for pointing this stuff out, however, is to continue to encourage you to keep your eyes fixed on that which will lift you UP and OUT of a sense of personal “malaise”. Even if your personal “books” aren’t looking so hot right now, use this week to take productive, empowering action to change your situation–and steer clear of the doom and gloom, ok?

That said, though I normally do try to avoid getting too “tax heavy” in these notes, this particular week necessitates a few last minute pieces of advice in my Strategy Note. Read on… (and don’t forget to call us soon!).

“Real World” Personal Strategy

Just In Case You Can’t Come In This Week…

Let’s clear some things up with some facts about getting an “extension”.

As you know, Wednesday, April 15 is the filing deadline for a federal tax return. If you need more time to get your paperwork complete, you need to file (or have us file on your behalf) Form 4868 (Automatic Extension of Time to File) with the IRS by the end of the day on the 15th. This gives you an automatic six-month (until October 15, 2009) extension of time to file.

Here’s the deal: An “Extension of Time to File” is not an “Extension of Time to Pay”, unfortunately. The Extension simply gives you an automatic six months of additional time to get your paperwork together and file that return. But, if you owe more than what you paid with your estimate, you’ll be accumulating penalties and interest on the difference–so PLEASE don’t take the entire six months to do this!

So, when filing your “Extension of Time to File”, you’ll need to estimate what you think you owe to the IRS. This should not be pulling numbers out of thin air (or other various body parts)! You’ll still need to go through your receipts and tax documents and get them “somewhat” organized.

From here, you can estimate both your income and your expenses, and then approximate what you owe Uncle Sam. Keep in mind that this is an ESTIMATE. And, you’ll have to pay what you estimate you owe at the time we file for the extension.

You can do this all electronically through our office, you can mail in the form WITH estimated payment (must be postmarked by the 15th), or you can call a specialized provider and pay by credit card. We can provide you with the appropriate number to call.

But it’s NOT TOO LATE! Just come by right away!

To more of your money in your wallet!

PS–If you’ve already filed your taxes with us, recommend us to a procrastinating friend. We’ll be grateful, and so will they!

Do You Procrastinate?

Through humor, you can soften some of the worst blows that life delivers. And once you find laughter, no matter how painful your situation might be, you can survive it.

- Bill Cosby

Well, I was meaning to write a blog post this morning, but something else came up. I had to go outside and…I don’t know, sit for while.

I mean, writing these every week is a grind! Especially with barely one week left in tax season…I swear I’ll get to it soon though. I know how important it is. But it can wait–for now. Hey, now that I’m outside maybe I’ll go for a walk!

Hopefully by now you realize I’m kidding.

I truly don’t mean to mock procrastination. I’m guilty just as much as the next person, when it comes to things I don’t really want to do. And I’ve heard rumors that (for some unknown reason) people don’t like to file taxes?

It appears that people do NOT like to fill out reams of paperwork only to finally discover how much money they are really giving to the IRS!

This, of course, is why we work so hard–to make this process as painless as possible, and to ensure that you keep all the money you deserve to keep, legally and ethically under the current tax code.

And we’re in full “all-irons-in-the-fire” mode around here these days, with about a week left to go in tax season. Here’s my question–have you been in to see us yet? If you haven’t, give us a call now!

In fact, did you know that many tax firms (and “off the shelf” software companies) actually raise their prices on procrastinators? That’s not how I believe clients should be treated.

But, though I will NOT raise prices this week…I will have a little more fun at their expense (plus an update on an item I wrote about a few weeks ago).

“Real World” Personal Strategy

Procrastination Nation

We in the tax and accounting industry have sort of mixed feelings about Turbo Tax.

Sure, it’s a competitor…sort of. The reason I say this is that every year, we get a bunch of phone calls from frustrated Turbo Tax users who eventually throw their hands up in the air because of the complexity and/or the hassle.

And, of course, every year we get a few people who take us up on our No Charge “Return Review” service after tax season who used Turbo Tax, and we regularly find plenty of missing deductions and additional savings for these (new) clients.

But sometimes the company can be helpful, especially when they share their statistics. They’ve issued a new release which lists the Top 10 Procrastinating Cities in America for online tax filing in 2008.

I wonder how Shakopee will do this year?

Anyway, since we’re so late in the tax season, I thought this little light-hearted tribute to procrastination was in order! Here’s the list… determined by the number of tax returns electronically filed online via the TurboTax Online service from April 13-April 17, 2008 (previous year ranking in parenthesis):

1. San Francisco, Calif. – (#5) Maybe it’s the fog?

2. Houston, Texas – (#3) For some reason, Houston is always near the top.

3. New York, N.Y. – (#2) The Big Apple likely has a bunch of complicated tax returns flying around this year!

4. Chicago, Ill. – (#1) The “Windy City” drops from number 1.

5. San Diego, Calif. – (#6) When it’s sunny and 70’s 330 days out of the year, do you blame San Diego?

6. Phoenix, Ariz. – (#13) Desert living does funny things to paperwork.

7. Seattle, Wash. – (#7) Too much coffee?

8. Los Angeles, Calif. – (#10) Too many movies to watch, people to see?

9. Dallas, Texas – (#11) Everything is big in Dallas, including procrastination.

10. Las Vegas, Nev. – (#8) Gambling winnings and losses can be tricky.

Remember that you still have until April 15th to contribute to an IRA and have it count against 2008 taxes.

Will you miss the deadline? File for an extension. Taxpayers will get an extra 6 months to file (to Oct. 15 2009). But remember…an extension to file is NOT an extension to pay taxes. If you think you’ll owe the IRS money, you still need to pay the bill on time, or you’ll face penalties.

The good news? We don’t penalize procrastinators!

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A note on something I wrote about a few weeks ago…

I got passionate about how we shouldn’t let possible changes in the tax code affect our giving to charity a few weeks back. But here’s even better news! Congress has decided against lowering how much charitable gifts deduct from taxes owed by high-income households. See below.

[http://www.bloomberg.com/apps/news?pid=20601087&sid=aAKl4RpzgwpY&refer=worldwide]

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To more of your money in your wallet!