Shakopee Accountant Explains How To “Reclaim Control Over Your Taxes – Even Old Returns”

Part of me can’t believe that I’m taking the time to write this post, here, Monday morning the 16th (the day before the filing deadline). But I also know if I don’t do it now, this tax season having been so full … well, I’ll admit that we can anticipate a bit of a break being needed come Wednesday :).

And, of course, the other part of me (the wiser part) says: “Roger, helping people with their taxes is only the means to a greater end: enabling your clients to live richer lives, without having to fret about the details.”

My relationship with you (and all of our clients in and outside of the Shakopee, MN area) is worth the time investment (and more).

And speaking of investments, I know that a fair number of our clients were graciously invited to send their final “investment” to the IRS (and their state) this week.

And some of our clients also received (or will be receiving) a payment from the Treasury, as a sort of “thanks for letting us have your money for a year!” gesture. No interest paid out, of course.

Both of these circumstances are problematic in their own way.

In the following weeks, I’ll be sharing with you how you can fix that — but one of the first (and often overlooked) methods is … well, allow me to elaborate.

Shakopee, MN’s Most Trusted Tax Professional Explains The First Step To Reclaiming Control Over Your Taxes
Our clients who filed with us this year already feel the peace-of-mind that you were able to claim every possible deduction which is legally allowed in the tax code for 2011. After all, we put each return through an extensive review process to ensure you keep as much of your hard-earned income as the IRS allows.

But what about your friends, both here in Shakopee, MN and beyond? And what about your previous years?

Well, since the filing deadline is already upon us, they (and you) might think that the proverbial “fat lady” has sung on 2011 returns (and 2010 and 2009). Not so.

Because according to the most recent report on the matter, issued by the General Accounting Office, taxpayers overpay the IRS almost $1 billion every year due to incorrect itemization and preparation.

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

An excerpt from an additional report from the GAO: In a Limited Study, Chain Preparers Made Serious Errors

In GAO (United States Government Accountability Office) 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 post-secondary 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 clippings from the report:
* The 19 paid preparers we 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 our 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? And what could YOU do about it, if you didn’t have us handle your taxes in prior years?
Simple: file an “Amended” Return.

Many tax businesses don’t provide this service, but even though we’ve completed our clients’ returns, we WILL review any of your friends’ returns–at no charge.

See the below special message, for more details…

“No Charge” Return Review
Special Gift Certificate
As a complimentary service this year, we will provide a Return Review To Any Non-Client.
We will also review prior year returns from clients who did NOT have us handle their taxes during the year under question..
No charge will be made, unless we have to file an amended return.
Email our office or call 952-445-8753 to set up this complimentary service!
Deadline May 4th

Sending you our affection, through a haze of tax forms…

Could There Be a Mistake? We Can Fix It.

"If you don’t like the road you’re walking, start paving another one."
– Dolly Parton

As I write this on Monday morning, we’re all pretty distracted by the news of the capture and death of Osama bin Laden. It’s a bipartisan moment of gratification — even if it does mean celebrating the death of another human being. In this case, the world may actually be a better place right now.

All that aside, I wanted you to know that we’re starting to pick the pace up around here, after the intensity of the end of our busy season. This is the time of year when we reach out to non-clients and business owners, who are looking for real assistance in managing their tax burdens and finances.

It is, after all, what we do best.

Yes, shutting those doors at the end of the day two weeks ago (the 18th) 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.

"But…what now?"

That’s a good question–and it takes me back to our offseason preparation. Sure, we’ve taken some well-deserved rest around here … but we NEVER "shut the door" on our relationship with YOU!

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

So this week’s Strategy Note, in fact, deals with a topic which most taxpayers have no idea about.

Roger Menden’s
"Real World" Personal Strategy

Yes, You Can Still Find Deductions

As 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 for 2010. We put each return through an extensive review process to ensure to ensure you keep as much of your hard-earned income as the IRS allows.

But what about your friends?

Well, since it’s now AFTER April 18th, they might think that the proverbial "fat lady" has sung on their 2010 returns. Not so.

Did you know that according to a 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?

An excerpt from a more RECENT report from the GAO: In a Limited Study, Chain Preparers Made Serious Errors

In GAO (United States Government Accountability Office) 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 clippings from the report:
    * The 19 paid preparers we 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 our 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?
Simple: file an "Amended" Return.

Many tax businesses don’t provide this service, but even though we’ve completed our clients’ returns, we WILL review any of your friends’ returns–at no charge.

To You and Your Family’s Peace of Mind!

Thoughts During Our Final Week

The ability to concentrate and to use your time well is everything if you want to succeed in business–or almost anywhere else for that matter.
– Lee Iacocca

I’m writing this on Monday morning, the 11th, and our offices are buzzing!

Next Monday will be no different — it’s the federal deadline, after all, and we always get panicked phone calls from people on that day. There is still time for us to do an excellent job for you or for your friends, as of this writing, but the window is closing rapidly.

So, I have a solution for you in this week’s Post … but before I get to that, a couple quick points:
1) The averted government shutdown means that refunds will NOT be delayed — more than normal, that is. If you’re curious about the status of yours, go here:,,id=96596,00.html

2) Tomorrow (Tuesday) is "Tax Freedom Day", which is calculated each year by the non-partisan Tax Foundation (if the government *had* shut down, it would be even later!). Here’s that information, if you’re interested: One of the fun little facts:

Americans will pay more in taxes in 2011 than they will spend on groceries, clothing and shelter combined.

Which, of course, is why I and my staff are here: keeping your tax bill as low as legally and ethically possible.

And, of course, we can always do this …

Roger Menden’s
"Real World" Personal Strategy

Extensions, Explained

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

As you know, this upcoming Monday, April 18, 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) this form…

…with the IRS by the end of the day on the 18th.  This gives you an automatic six-month (until October 17, 2011) 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 18th), or you can call a specialized provider and pay by credit card. We can provide you with the appropriate number to call.

To You and Your Family’s Peace of Mind!

The Japan Disaster And You

He who loses wealth loses much; he who loses a friend loses more; but he that loses his courage loses all.
– Miguel De Cervantes

It’s deja vu all over again, with another massive earthquake coming during tax time this year. Last year, it was Haiti … this year, of course, it’s Japan.

The fallout (if you’ll forgive that term, not intended as an insensitive pun) has been radically different for each event — but, as was the case with the Haitian earthquake, the real problems and ramifications for everyone are yet to be seen … but what *is* clear is that many lives have been lost, and many more have been radically altered.

So, how have you been processing this one?

Last year, I was struck by how different my daily existence was, from the devastation wrought in Haiti. The same is true here … but I must confess to feeling (at least at first) some "disaster fatigue" setting in.

It seems that the world has spawned disaster after disaster over the last year.

But that doesn’t mean we turn away. No, this is the time where we actually need to "press in" a little, and care.

(So, as an aside, I’d also be interested to find out if you have located an effective place to send donations–the big organizations spend so much money on "overhead", that (as I mentioned about this time last year, for Haiti) I find it difficult to believe I’d get the most "bang for my buck" in donating to them (as we unfortunately saw with Hurricane Katrina). Any thoughts?)

So, rather than my normal tax or financial fare this week, I have something different. I’ve stopped apologizing for being such an obsessive planner … it sort of pays to be that way, in my profession, after all! This week, I wanted to remind you of what we almost never think about during "good" times: How to prepare your family for "grid-failure" emergencies.

This isn’t an area of extensive expertise for me, but it’s so important, I did some research, and have a good framework for you to consider… (after the jump)

Roger Menden’s
"Real World" Personal Strategy

How To Prepare Now For a "Japan-Type" Disaster

With the images of devastation we’ve been seeing, in addition to being moved for those who are currently experiencing all this, I’ve been reminded how important having a plan really is.

This is true for finances (a tax plan, an estate plan, etc. — let us know if you need to set one of those up! 952-445-8753), and it’s equally true for a big disaster.

We can be so complacent about the security of our daily existence, that an event like this seems unrealistic. But, we’re getting continued reminders, every year, at how fragile our modern world truly can be.

But that doesn’t mean you have to panic.

No, with a few basic points of preparation, you and your family could be vastly more prepared than your neighbors, even giving you the opportunity to be ones who can support and assist your neighbors, rather than have to *ask* for support.

There are three primary areas where you need to be prepared:
1)    Energy/Power/Heat
2)    Water & Food
3)    Family

1) Energy: However unlikely a massive grid failure might seem now, it’s important that you at least think through what you and your family would do about heating your home during the winter (wood stove? indoor propane heater? burning your furniture?), and/or cooling your home during the summer (which may not be quite as critical).

Additionally, consider what parts of your existence are dependent on power, and what it would be like to live without it. Write down your plan.

2) Food & Water: For water and food, it’s a very good idea to have food and water for at least 3 days on hand, and in permanent storage. Typically, you need about a gallon of water, per person, per day … and non-perishable food is now so readily-available, that you have your pick for how to stock up. You can save water in a leech-proof plastic jug and just switch it out every 5 years.

3) Family Plan:
* Identify meeting places where you and your family would come together, in the event of some sort of catastrophic grid failure or event, in which you aren’t able to stay at home.
* Put together a "Go Bag" for your family, which carries critical supplies and information for whatever circumstance you may run across. Here is what your bag should include
•    A disaster plan including location of emergency centers, rallying points, possible evacuation routes, etc.
•    Positive Identification, such as drivers license, state I.D. card, or social security card
•    Enough medicine to last an extended evacuation period
•    Cash and change, as electronic banking transactions may not be available during the initial period following an emergency or evacuation
•    A first aid kit
•    Fire starting tool (e.g., matches, ferrocerium rod, lighter, etc.)
•    Professional emergency literature explaining what to do in various types of disaster, studied and understood before the actual disaster but kept for reference
•    Maps and travel information
•    Standard camping equipment, including sanitation supplies
•    Weather-appropriate clothing (e.g., poncho, headwear, gloves, etc.)
•    Bedding items such as sleeping bags and blankets
•    Medical records
•    Pet, child, and elderly care needs
•    Battery- or crank-operated Radio
•    Lighting (battery- or crank-operated flashlight, glow sticks)
•    Firearms and appropriate ammunition
•    Fixed-blade and folding knife
•    Duct Tape and rope/para-cord
•    Plastic tarps for shelter and water collection
•    Slingshot, pellet gun, blowgun or other small game hunting equipment
•    Wire for binding and animal traps

This all might seem a bit excessive now … but so does every disaster plan — until disaster actually strikes.

So, perhaps make it a fun family activity to work through setting up these plans, and you’ll sleep much better knowing you’re prepared!

To you and your family’s safety!

Are You Working Without A Net?

“Then give to the world the best you have, and the best will come back to you.”

– Madeline Bridges

Before I get to what I wrote this week, I wanted you to know that there are a few important “announcements”, following my Note, which affect your tax situation for 2010 (i.e. the taxes we’re helping you prepare NOW), or for this year.

I’m always fascinated by the “behind the scenes” of what happens in different businesses. For instance, I wonder what the board meetings are really like for professional sports teams, for tv stations. Some people think about the teams, the shows … I find myself thinking a lot about the business behind them. That’s just how I’m wired.

Well, one of the “behind the scenes” aspects of OUR work is our interaction with other tax professionals. We go to conferences (put on by the IRS, etc.), we share strategy with one another (unless we’re in fierce local competition — but even then, I make it a point to be giving), and we often get to see each other’s work (reviewing returns).

But one of the problems with many tax professionals are the “terms” by which they operate, and a  lack of communication about what happens when … well, read on.

Roger Menden’s

“Real World” Personal Strategy

When The Tax Return is Wrong

Do you have a tax accountant who guarantees their work…in writing?

Sure, some guys might say: “We’ll make it right if we screw up”, but then the stuff hits the fan and they fight you every step of the way.

I’ve heard too many horror stories about taxpayers getting a letter from the IRS, then they take it to their accountant, and then the letter sits on a desk gathering dust.

Or stories about the EA who makes some calls on your behalf, but then you get charged an arm and a leg in the process.  Or sadly, a taxpayer doesn’t get any help from the person who prepared their taxes for them so they “go it alone”, call the IRS themselves and have to try to figure out what to do and not to do during this normally ugly IRS correspondence … THIS can be a nightmare!

Don’t let that happen to you. You need to have a written understanding with your tax professional that you won’t be left in the lurch. Oh, and also-does this guarantee actually do something you want it to?

I’ve seen some accountants guarantee they will file your taxes for you by April 15th or they will file an extension for you.  Well…great!  That sure makes you feel good in the morning, doesn’t it?   Other weak guarantees I’ve seen in the tax industry are, “We guarantee we will begin preparing your tax return the same day we meet with you.”

That means nothing to me.  I don’t care when you start preparing my taxes.  I want to know how long it is going to take you to finish it and do so without leaving out silly errors you know you should have caught.

So remember:  the guarantees should be in areas you care about, like:

Tax Return Accuracy … Speed of Service … Most Money Legally Yours … Ongoing IRS Protection For Years After Filing …

These are the things YOU care about!  Make sure the tax professional you choose stands behind these critical areas of tax filing so you get the most out of your tax filing experience.

Now for those announcements:

1) There are (literally) BILLIONS of dollars in unclaimed refund money available from the IRS from 2007 returns. Here’s the catch: You must claim it by April 18th, 2011. How do you do that? Have us take a look at your return, and file an amendment if we find something which needs changing, updating, etc. There are all kinds of reasons why this might be — suffice to say that nothing ventured, nothing gained.

Or, alternatively, there are people who simply didn’t FILE a return, but just trusted that the taxes withheld from paychecks was correct. Oops — that’s where the IRS gets the billions figure, because there are unclaimed refunds due to unfiled returns.

Either way, we can help (and routinely do). Call us: 952-445-8753

2) About that deadline: We have three extra days to work on your information this year, but this does NOT mean that you should procrastinate!

The three extra days have been added because of Emancipation Day, which is a little-known Washington, DC holiday that celebrates the freeing of slaves in the district. The holiday actually falls on Saturday, April 16 this year, but will officially be observed on Friday, April 15. As a result, the IRS pushed the filing deadline to Monday, April 18 – since the tax code states that filing deadlines can’t fall on Saturdays, Sundays or holidays.

Despite this short extension, the federal filing deadline is approaching quickly. Don’t wait until the last minute to get your paper work in order.

With gratitude for your trust!

A Friendly Tip (Not About Taxes)

“It is well to give when asked, but it is better to give unasked.”

– Kahlil Gibran

Last Monday, there was a certain holiday to attend to,

and it’s pretty easy to let things sort of slide on by after

that point. But here’s my advice for you:

Don’t stop there.

Yes, yes — the old canard: EVERY day is Valentine’s Day!

And I’m very aware that you may have had a budget

for your expressions of love, so I’m taking a different approach.

These are some non-budget-busting ways to go “above and beyond” —

when it matters. Sure, wives may scoff at this list, and be gratified

when their husbands successfully surpass it. And husbands, well,

I know some are skilled at romance; and others …

well, here’s some help!

You see, how nice would it be to have “come through” last week

(or, well, not, as the case may be), but then follow up with

something more?

And again, I know that many families on my list have a certain

amount of means at their disposal, and others don’t. Which

makes this list even more helpful. Because *whatever* your budget,

the simple gesture of coming back around AFTER Valentine’s Day

is how real magic happens.

So, yes — today’s Note is not about taxes, per se … but as part of my

continuing quest to serve you “above and beyond”, I thought I’d offer

you a friendly reminder.

[But, on that note: Have you contacted us yet to get your taxes

in order? Because our schedule is rapidly filling up. Oh, and we

do generously reward for referrals, so send your friends our way! Just

have them let us know you sent them, and we’ll give them a special

deal — just from you.]

Roger Menden’s

“Real World” Personal Strategy

Making Your Love Gestures Stick

It’s no secret that our economy is in tough shape. And whatever your particular financial situation, wouldn’t it be great to create romance “magic” without spending an arm and two legs? So, perhaps you’ve done the old “flowers, candy and chocolate” routine already last week. Well,  here are a few modest and occasionally tongue-in-cheek suggestions for a sizzling follow-through … that won’t torch your wallet!

Be Green – Save Money and the Environment at the Same Time!

With the economy taking its toll on virtually every industry, even the high-rollers are looking for ways to spend their cash more effectively. One Hollywood studio saved $40,000 on cards and postage by doing e-Cards and videos for all of their clients and friends.

Seem cheap?  Spin it this way – you’re being green by not using snail mail – that’s so 20th century anyway. You’re keeping with the times, utilizing powerful technology and reducing your “footprint” at the same time! What environmentally-conscious woman could resist?!

Make a Video.

You can use the video setting on your digital camera, and create a heartfelt message of love for your sweetie. Then, you can post it to YouTube, or another online video-sharing site and send it on! Um, just be sure to adjust that YouTube setting to “private” unless you want to share with the world your dying love for your honey (hopefully with clothes on!).

Learn a Romantic Song and Sing it to Your Sweetheart.

Well, I’m no singer, so I can’t say I’ve tried this … but I hear it works well. Even better, if you can’t sing, your more-than-a-valentine will give you kudos for the effort! You could step it up by writing an original song and then sing it. Or, for the slightly-less courageous, you could pull a page out of John Cusack’s book in Say Anything and hold a boombox (or iPod) above your head and blare Peter Gabriel’s “In Your Eyes”. That seemed to work.

Not a singer? More of a writer? Or artist? For the artistically and/or musically inclined:

– You could pen a poem on nice paper

– or even paint it

– You can paint a picture of your honey. Just be sure it looks good.

The “Mix Tape” (or Playlist)

This is an old standby of high school kids everywhere. Except these days, the “tape” part is a bit less convenient. Instead, make a CD or mp3 playlist of Sweet Love Songs and make a cover list/ liner notes on the memories of you and your honey from the songs. And you can make a Personalized Photo Album using a service like Apple’s iBook service and iPhoto.

Romantic Picnic

Surprise your love with a ‘picnic’ in the park, at the beach, or any other outdoor nature spot. If the weather isn’t ideal for outdoors, you could bring the outdoors inside -find a fake palm tree, flowers, sand, beach umbrella, radio, towels. Nothing says “I love you” like fake palm trees!

Write a Message To Be “Stumbled Upon”

Well, perhaps not *literally* stumbled upon, but try a nice outdoor surprise. If you do have snow outside, you could stomp out the message and fill in the letters with spray paint or flower pedals or rocks.  If there’s no snow, you can use sidewalk chalk to write a message to your sweetie.

You see, anybody can go out and “buy something” – but it takes effort and thoughtfulness to make it personal … and it doesn’t require a lot of money!

Just remember … follow-through is everything!

‘They’re All The Same’, And Other Untruths

“If you do not tell the truth about yourself you cannot tell it about other people.”

– Virginia Woolf

So the really important question: How’d you do on Valentine’s Day?

Many people say it’s a “Hallmark Holiday”, but well–some spouses and significant others think otherwise, right? Well, if you blew it, I’ve heard that it’s NEVER too late. Make this week count, my friend.

In fact, I briefly considered writing a treatise on love for you this week, but, well — I figure I should stick to my area of most expertise. And this week’s Note is about a marriage of a different sort.

There’s a news story floating around this week about politicians having to prepare their own taxes. (Here’s what I’m referring to, btw: Apparently, the proposal gets a few laughs from those who hear about it, because, really — it’s becoming mind-numbingly complex, even for many professionals.

You think I’m kidding on that one? Well, you should see some of the returns we review for people who have had them prepared elsewhere … yikes.

So, just as the choice to file taxes via robotic software fails the test, selecting the wrong professional to file your returns can be a big, big mistake.

Here’s what I mean.

Roger Menden’s

“Real World” Personal Strategy

Is There Really Any Difference?

Unfortunately, with the way that most tax professionals and EA’s present themselves to the world, it seems like we’re all the same. We all seem to offer the same services, for pretty similar fees. If I weren’t working every day in this industry, I’m pretty sure I would think that all accountants and EA’s were the same. Nothing could be further from the truth.

You see, each tax professional does have certain qualifications. Some might be experts at this sort of tax law, or in working with farmers or with getting money back through IRS representation, or a whole variety of different things…but are they really providing what you, the consumer, wants?

What do you want from a tax preparer?

When I sit down and talk with regular consumers, here’s what I discover:

You want to be able to work with a caring professional…NOT one of those “cattle call” shops, where you’re squeezed in with a bunch of other people, and seen by harried, poorly-trained employees that just took a basic tax course.

You want an accurately filed tax return.  You want the whole thing broken down in terms that you understand, and in a way that you don’t need a translator to communicate. You want there to be processes in place to ensure that the most money is kept out of the grasping hands of Uncle Sam, and in your wallet (legally).

You want a “heads up” about future ways you can legally add deductions and make sure that you can get even more money back in the future. You want assurances everything your tax preparer is doing for you is valid and correct, so a guarantee(s) is essential to the process.

And of course, you want do it fast.  Look, I know this is a big deal for consumers…you don’t want your accountant pushing back at you all the time, saying “give me more time”, when you know it’s not because they’re working hard on your behalf, but that they’re so poorly organized that they’re not getting ANYBODY’S work done on time!

Oh, and if you ARE getting a refund, you want a tax firm who can get you the most money back the fastest … with the most electronic filing options available.

Here’s the bottom line:  You want professionalism … accuracy … you want clarity … you want to be aware of beneficial tax options … you want peace of mind … you want an efficient use of your time …. you want your refund money back in your hands fast …. And at the end of the day, you want to KNOW you got the most money back from Uncle Sam AND know that the IRS will stay off your back so you can sleep like a baby at night!

If the accountant or tax professional you are talking to can’t do these things, you need to call one that can.

To your family’s financial and emotional peace!

Well-Publicized Mistakes, And Going Alone

The important work of moving the world forward does not wait to be done by perfect men.

– George Eliot

This week after the Super Bowl is leaving football fans at a bit of a loss. But an interesting fact about the winning Green Bay Packers: They’re the only professional sports team operating as a non-profit organization. There are exactly 112,015 owners of the club. That’s why it was the team “President” receiving the trophy the other night, rather than the usual team owner.

Now for the awkward segue into what I want to tell you about — and warn you about: The Green Bay Packers ownership isn’t a “lonely” enterprise, but you know what is? Trying to prepare your taxes correctly on your own.

[Sorry for that. Sometimes I have to stretch events to fit the narrative:). But stay with me, as this is important — especially for you or your friends & family who may choose to go this route.]

You see, I don’t like to crow about other people’s mistakes.

In fact, in our line of work, much of what we get to do is to *fix* or alleviate those mistakes, at least when it comes to their tax implications.

And many of the mistakes we see, every year, are when taxpayers decide to tame the tax code on their own, or with the “help” of off-the-shelf software. Do you remember last year when even the Treasury Secretary, Tim Geithner, testified about tax irregularities in his personal returns? Do you remember where he placed the blame?

Turbo Tax.

And he’s not alone. But there’s a good way to fix that problem…

Roger Menden’s

“Real World” Personal Strategy

Don’t File Your Taxes By Yourself

The “Free” Online Options

Did you know that we accountants like to joke to one another about how good these online software programs (TaxCut, TurboTax, etc.) are for our business? Firstly, they are not as “easy to use” as claimed, and secondly…they cost you an arm and a leg.

You might think they’re cheap. And on the surface, you might be right (though, last year, a $1 Billion class action lawsuit was filed in the federal court in Philadelphia alleging gross misstatement of fees and deceptive standards of the federal “FreeFile” program … so even on the surface, it wasn’t always cheap). But I’m not even talking about the money for the service itself.

Using those programs can end up leaving hundreds, or even thousands of your dollars in the coffers of Uncle Sam … even if you follow all of their instructions to a tee. I see it all the time–frustrated clients bringing in their prior year’s tax return, astonished at all the “hidden money” my staff and I are able to find for them!

Even worse…

Choosing the wrong method, or forms, in filing your taxes can place you directly in the crosshairs for an audit.

Even if I don’t owe a ton of back taxes, I still don’t want my record to show some IRS agent that there has been some discrepancy in the past so that red flags start to fly, and more bureaucratic people begin looking through all my past tax filings and current income holdings … basically taking my social security number and poking around in my private life.

(If you think they won’t do this, read a little online about the increased “enforcement” measures the IRS is taking this year.)

They can do a lot of things you won’t want them to do. However, if you keep a clean slate (no IRS correspondence with you related to filing your taxes correctly), the opportunities for them to mess with your personal stuff will be limited.

Here’s another reason why this is so important … now more than ever. New government regulations in 2010, delays in Congressional action, and issues with refund “loans” from the big chains are creating a mess in the tax industry… and the “Big Brand Names” (you know who I’m talking about) do NOT want you to know about it. In fact, they’re doing all they can this year to hold on to their business, and trust me — it is not good for you.

Yes, it can be seductive to “go it alone”…to trust a piece of software to point out possible deductions. To trust your work to poorly-trained preparers in a big box office.

But it can be a big trap.

Just ask Tim Geithner.

To your family’s financial and emotional peace!

Clearing The Fog Of Common Mistakes

Derive happiness in oneself from a good day’s work, from illuminating the fog that surrounds us.

– Henri Matisse

This is the time of year, during which we get to do exactly what Monsieur Matisse, up there, advises.

We clear the fog of the (unnecessarily, in my opinion) burdensome pile of forms and regulations which form our tax process. Yes, some people get paid to create tasty food, others to patrol our streets … and we, well we put out financial and regulatory fires.

And it can be a lot of fun — really! There are stories every year, which circulate around our office, about the grateful client who was utterly hopeless about their financial and tax situation … until they met with us, we crunched their forms and numbers, and not only gave them the nice news of a lower tax bill (or higher refund) than they expected — but that we were able to speak into the overall situation of their finances.

But for some strange reason, many taxpayers STILL choose to “go it alone” when it comes to preparing their returns.

Well, far be it from me to have such hardy souls be left in the dark. While what I’m writing this week may seem “professionally risky”, we are sincere about wanting everyone in the area to pay the least amount in taxes possible.

So, even though it might encourage some people towards the risks of software-powered self-preparation, instead of our cost-effective, quick-but-meticulous services … here is a list of the most common errors I see when I review self-prepared returns.

(Warning: There’s no “app” for experience.)

Roger Menden’s

“Real World” Personal Strategy

Most Common Self-Preparation Tax Errors

As all of your information is coming into your mailbox this month to prepare for your taxes (Doctor’s bills, old W-2’s, interest statements for student loans, etc.), it can be tempting (to some folks, at least) to forego the  perceived “expense” of using a professional to help you save on your taxes for the year.

So, if you decide to go down that lonely road, please do at least watch out for these common errors which we routinely correct for those who have us review their previous-year returns:

* Filing the wrong status (dependent or independent, 0 instead of 1, etc.)

* Missing forms

* Forgetting to sign it (this is incredibly common! Make SURE you sign!)

* Not adhering to new laws (a biggie)

* Math errors or mixing up numbers

* Standardized deduction (one lump sum) when itemizing may return more

* Forgetting earned interest

* Not claiming your charitable donations (more common than you’d think!)

* Incorrect social security numbers

* Missing the deadlines

* Not checking last year’s taxes to see if anything carries over (again, very common — and a good reason to have a pro check it out)

* Not taking deductions where they’re pertinent (IRA’s, too much Social Security being taken out)

* Failing to include dependents who don’t live with you

* Claiming someone as a dependent who claimed themselves as independent

* Not filing domestic or self-employment taxes

* Not claiming credits where they’re due (Child Tax Credit, Earned Income Credit)

So what can you do to correct all of these errors?

1) Double check. And triple check. Then check again. The idea here is that when another pair of eyes look at it, they can see stuff you don’t. Your mind will tell you that things that you write or calculate are correct, even if they aren’t.

2) Go to a professional. Self-serving? Why, yes. But as I mentioned in my introduction, we get paid to know what we do, and following the tax code permutations is our J-O-B. We’ve seen so many tax returns, even already this year, that what would take you 12 hours — can be accomplished by me and my practiced team in one.

I’m not suggesting we never make mistakes … but can you really afford to skimp when thousands are on the line?

To your family’s financial and emotional peace!

Audit-proof your life

“The past does not define you, the present does.”
– Jillian Michaels

I hope your weekend went well–our family has been enjoying the Olympics, and, in particular, many of the stories which go with it.

If you’ve paid any attention, you probably heard about American, Lindsey Vonn. She’s known as perhaps the world’s top female skier having dominated the World Cup the last couple years–but she entered these Olympics with a serious shin injury which left her hopes seriously dimmed.

Well, in her first event, she came through.

And the sheer explosion of joy when she saw her time…well, it will bring tears to your eyes. Watch it here:

It’s stories like this which always make the Olympics compelling, in my opinion–the story of lives in pursuit of an audacious goal.

Now…there’s stories like this, and, of course, the stories of our own lives which capture most of our attention. And here’s a BAD chapter to live through: an IRS audit.

We’ve dealt with this for clients in the past, and it’s never fun. So, with that in mind, I’ve put together some excellent ways to MINIMIZE your chances of getting audited. Unfortunately, I can’t *guarantee* that you would never get audited…but following this advice will significantly reduce your chances.

Read on, and leave your feedback!

“Real World” Personal Strategy
8 Ways To Keep The IRS Audit-Hounds at Bay

1. Don’t make indefensible claims

There are so many old wives tales saying that certain items trigger an audit: home office deductions, passive losses, schedule C (sole proprietorship) activities, etc. But you really can’t predict the trigger (and you can drive yourself crazy trying), but you *can* adopt the “be reasonable” mantra about every item on your return (with our help, of course), including these. So if you don’t have a decent claim for a home office, we’ll help you not to claim it. If your money-losing sole proprietorship is really more a fun hobby, treat it as such.

Look–don’t be scared to take deductions and losses you’re entitled to, but don’t take tax positions you aren’t comfortable defending. If you take reasonable tax positions, you’ll likely find you won’t end up needing to defend them. And if you do face an audit, it will likely be far easier.

2. Make sure it all adds up!

This seems like it should go without saying, but make sure you add, subtract and multiply accurately. Check your numbers through each step and do some simple math checks when you finish. If you do make a math mistake, you are likely to get a math correction notice from the IRS. This isn’t an audit. But our goal is to minimize your interaction with the IRS bureaucracy, which, ah… isn’t known for the best mail handling practices.

3. Don’t miss a 1099

This can be confusing, because the Form 1099 comes in many varieties, including 1099-INT for interest, 1099-DIV for dividends, 1099-G for tax refunds, 1099-R for pensions and 1099-MISC for miscellaneous income. These forms are sent by payers of such funds to both you and the IRS.

So regardless of how many 1099s you receive, make sure they all are accounted for on your return. There are also Forms 1098 which lenders send (to you and the IRS) recording how much interest you paid. The IRS matches your return against the 1098s and 1099s. So one sure way to guarantee an IRS query is to fail to account for something! If a Form 1099 is wrong–say it reports more income than you had–you can explain or deduct it on the return, but you need to first report it.

4. Report “just enough”

I’m not talking about under-reporting income, or holding necessary information back. But you’d be surprised how many professionals and amateurs alike try to submit too much *supporting* information. True, if your return is complex, you may need to add explanations or disclosures in footnotes. Be concise, truthful and accurate, but don’t provide copies of sales agreements, settlement agreements, bank statements, etc., unless you are later asked to by the IRS.

Disclosures can be made on regular paper or special IRS forms. A Form 8275 “Disclosure Statement” on plain paper can be used any time you need to disclose something that can’t be adequately disclosed on the forms. Form 8275-R “Regulation Disclosure Statement,” is for disclosing positions that are contrary to IRS Regulations or other authority. You shouldn’t be filing a Form 8275-R–or taking a tax return position that would require it–without professional help.

Frankly, though, any disclosure statement should be checked with someone who can take you by the hand and ensure it’s done properly (ahem).

5. Don’t fight what you don’t need to fight

Here’s where some clients have gotten in trouble in the past, despite our admonitions: If you take reasonable tax positions, and complete your return accurately, checking your math, why should you pay a bill if the IRS sends you one? Frankly, it’s a matter of practicality (and wisdom) rather than principle. It just doesn’t pay to fight with the IRS on small matters. So don’t get into the bureaucratic system and risk bigger problems for a few dollars. Just pay it and move on.

6. Avoid minor amendments

Here’s the reverse situation of my previous point: amended returns are reviewed much more regularly than initial returns. So if you forgot a deduction or otherwise think you can get a small amount back by amending, think twice before amending your return (i.e.–consult with a pro). Consider whether you might have bigger problems if other matters on your return, unrelated to the amendment, are reviewed. Yes, you can win a battle…and lose a larger one.

7. Don’t ask for cash

Perhaps you’ve received a notice that you are entitled to a refund. Well, you might consider applying it to your next year’s tax payments, rather than asking for the refund in cash. If you have a big refund, you’ll simply have a lower “profile” to the computers and to the bureaucrats if you file a return applying a whopping refund to estimated tax payments for the current or future years. This logic applies to both initial returns and to amended ones.

8. Go with a pro

Yes, this is a bit self-serving–but I’ll also make a “damaging admission” here: some tax professionals argue that a return prepared by a professional is less likely to be audited. However the facts are that there’s little reliable data to support it. That being said, having a professional prepare your return–or at least advise on anything quirky–is simply a wise investment.

So to absolutely ensure that whatever happens, you’ll have someone at your side–give us a call!

And a last word: No matter how careful you are, there’s no way to guarantee you’ll never have a tax controversy. Sometimes your number just comes up. But when your number is called…make sure you aren’t alone.

I hope this helps.

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