May 7, 2012 by Roger Menden, Shakopee Tax Professional
Firstly, I’m here to offer you a friendly reminder: Sunday is Mother’s Day. Do with this reminder what you will :).
And speaking of moms, if you’ve ever spoken with friends who have had to place their parents into a care facility, you know how difficult the process can be.
I was once asked to weigh in on how to make this decision, so I’ve done so, here. I did some digging, and I believe I’ve put together something helpful — and clear.
(And I know that this isn’t a “normal” topic for a Shakopee, MN Tax Preparation Business to go into — but I’m not interested in “just” sticking to the script.)
Because for far too many people, the “story” of their lives doesn’t end as well as they might have hoped. Care facilities (when they’re necessary) can be a blessing … and, well, they can be a nightmare. So, to help you make sure that your family (and your friends’ families) make the best decision possible, I’ve put together a two-part series on nursing home placement — and how to do it right.
Feel free to forward this along to anyone who may be affected by these issues. We’re always here to help!
Not Your Normal Shakopee, MN Tax Professional: Menden’s Long-Term Care Guide (Part 1)
It’s a fact: most nursing home admissions happen under extremely stressful circumstances.
It’s an overwhelming task to find the best nursing home placement for a loved one, perhaps because, well … where do you even begin?
But, although this is a job that no one wants, it can be done with forethought and confidence that the best decision was made for everyone involved. It’s easier (and better for your loved one), if that first placement is well thought out. Yes–a nursing home resident can be moved from one facility to another, but this type of disruption is rarely in everyone’s best interest, as it can be disturbing on a variety of levels.
So it’s best to do it right–from the beginning.
Here’s a great place to start your search:
The Federal Center for Medicare & Medicaid Services (CMS) has a part of its Web site called “Nursing Home Compare”. Surprisingly (for a government service), it’s actually quite handy:
This area of their site identifies facilities that have a history of poor performance–and ones which do well. In fact, the Nursing Home Compare site labels nursing homes it calls “Special Focus Facilities” — those that have repeatedly violated state and federal health and safety rules and that rank in the worst 5 to 10 percent of all inspected facilities in a given state.
You’ll want to cross those off your list from the very beginning.
Using this website, you can see detailed inspection information about each nursing facility that interests you, comparing various government-rated “quality measures” such as:
• Percent of High-Risk Residents Who Have Pressure Sores
• Percent of Residents Who Spend Most of Their Time in Bed or in a Chair
• Percent of Residents Who Have Moderate to Severe Pain
• Percent of Residents Who Were Physically Restrained
• Et cetera.
The site also rates the care and services that each facility provides to its residents, and allows you to view how each facility stacks up in staffing hours for each type of health care worker against the state and national averages.
And there’s other comparison tools available. For example, U.S. News and World Report has recently started providing rankings of America’s nursing homes.
These rankings rely on the data from the above government site–but they DO provide some advanced search engine capability. Nursing homes are presented in tiers within each star category, based on their total stars in all three of the major areas. The topmost tier, for example, consists only of five-star homes that got 15 stars. The next tier down is five-star homes with 14 total stars, and so on.
Within each tier, nursing homes are listed alphabetically. If you’re looking for a nursing home by location, and turn up too many, search terms can be combined in order to narrow the results. For example, perhaps you want to search just for nursing homes that have a religious affiliation, or that accept Medicaid residents. Or you can launch a multi-pronged search, perhaps searching for non-profit four-star nursing homes that accept Medicaid and are located within 25 miles of a particular city.
However–here’s my big caveat when it comes to just looking at ratings: Nothing can substitute for visiting a nursing home in person. After all, every nursing home will have some deficiencies; working with extremely disabled and impaired persons is very difficult.
So, to find the best possible nursing home for your family’s situation, the first step is to determine what is most important for your family in looking for a facility. And I hope that you would agree that the potential resident’s needs and desires must be included in this evaluation. Consider variables such as location of the facility, whether a special care unit (such as for dementia) is available, and what types of payment sources are accepted.
The second step is to identify the facilities in your area which meet the criteria you have established.
In my next Note, I’ll give you some pointers on how to conduct an on-site tour properly–what to look for, questions to ask, etc.
April 23, 2012 by Roger Menden, Shakopee Tax Professional
The dust is truly beginning to settle around our Shakopee, MN tax preparation offices after our very busy TY2011 tax season (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, I’ve got ONE BIG FAVOR TO ASK:
(If you haven’t already done so) Would you take three minutes, right now, to jot me a quick email about your experience with me and my staff? It really helps us to evaluate our season. Plus, it’s helpful feedback for new and potential clients. I’ve found that I can “promise the moon” with a potential client, but they really want to hear from somebody like YOU.
One more thing on this: could you be as specific as possible? You may not be comfortable disclosing savings amounts, refunds, etc, but as much as you’re willing to share, would be great!
Thanks again…and THANK YOU for trusting us with your finances this year. We know how personal it is to you!
Your Shakopee Tax Professional ‘s FAQ Guide For After The Tax Return Dust Settles
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 (952-445-8753) or send me 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.
[or go right to: http://www.irs.gov/individuals/article/0,,id=96596,00.html ]
• 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 the hours shown in your IRS form instructions. [Of course, the hold time for the IRS is … somewhat of an issue 🙂]
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 about Amended Returns, and you need a copy for that process, of course.)
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 17th 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 might have other questions, which I haven’t addressed here. Let me know!
(And don’t forget to write me a quick note about your experience! THANK YOU!)
April 16, 2012 by Roger Menden, Shakopee Tax Professional
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…
April 9, 2012 by Roger Menden, Shakopee Tax Professional
It’s the final week of tax season, and our office here in Shakopee, MN is hopping!
Which isn’t to say that I don’t have the time to step away for a moment and write to you, my friend (if you have all your papers in, and are waiting for our completion — fear not! My team is hard at work, as I type…).
This is often our busiest week of the year (so please be understanding), but it’s also the week when we receive, with clockwork regularity, many questions about extensions.
So, I’ll be clearing that up this week, but before I do so, a few quick unrelated points:
1) Next Tuesday, April 17th is the filing deadline, but it’s ALSO (by actual coincidence) “Tax Freedom Day”. This 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. 🙁
2) Don’t forget that April 17th is also the deadline to contribute to IRA’s and HSA’s in order to have them count on this year’s (2011) taxes.
And, onto this week’s Note on Extensions…
Your Shakopee, MN Tax Professional Tells The Truth About Extensions
Let’s clear some things up with some facts about getting an “extension”.
As you know, Tuesday April 17th 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 17th. This gives you an automatic six-month (until October 17, 2012) extension of time to file.
Here’s the deal: An “Extension of Time to File” is not an “Extension of Time to Pay”, unfortunately — except for certain cases (more in a moment). In normal circumstances, 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!
The exception to this rule is for:
1) Wage earners who have been unemployed at least thirty consecutive days during 2011 or in 2012 up to this year’s April 17 tax deadline; or
2) Self-employed individuals who experienced a 25 percent or greater reduction in business income in 2011 due to the economy.
So, if that’s you — let us know! We’ll get you payment relief.
For the rest of you, 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 17th), or you can call a specialized provider and pay by credit card. We can provide you with the appropriate number to call.
And it’s NOT TOO LATE! See below, and come by right away!
To more of your money in your wallet!
“PROCRASTINATORS ONLY” Special Gift Certificate
$23 Towards Any Tax Service
“Yes, I Have Procrastinated Filing My Taxes This Year … But I Still Want to Protect Myself from All the New Tax Laws and Get MORE Money Back from Uncle Sam with A Peace-Of-Mind Guarantee that’ll Keep Me Sleeping like a Baby when My Taxes are Filed with the IRS!”
Deadline April 17th
Not valid with any other offer
March 23, 2012 by Roger Menden, Shakopee Tax Professional
We’re rounding third base, and headed towards the “home plate” of April 17th, and the resultant END of “tax season”. This has already been one of our best tax seasons yet — not just because we’ve seen so many new Shakopee, MN tax preparation clients added to the “Menden office family”, but because of the stories we’ve been privileged to share.
Stories of new financial freedom and recovering from losses … new family members (both biological and adopted) … new careers and the sunsets of “old” ones.
Our clients never let us forget that what we do is never only about “which forms to fill out”, or even how much money we can save you. No, it’s always been about the stories, and it’s always worth it.
So, if you haven’t had a chance yet: would you send us YOUR “tax season story”? We’d love to hear how things went with us, but even more … we’d *really* like to know what’s underneath those tax forms we fill out for you! It truly helps us keep our vision straight through the entire year…
And one more thing we’d like to ask:
Many of our clients are active on Facebook or Twitter. If you’re willing, would you make a post about us? Here’s something you can write:
Are you procrastinating on your taxes? Well, Roger Menden wants to help! I had my taxes prepared there, and just found out that their office is making special efforts to help procrastinators this year! Give them a call: 952-445-8753 … you won’t regret it!
Or some such. We want your “procrastinating” friends to know that they don’t have to rush out and download unreliable software, or rush to some “big box” preparer. (Especially in light of stories like the one I just saw this morning: http://www.accountingtoday.com/news/HR-Block-Manager-Arrested-Identity-Theft-Tax-Clients-62102-1.html Yikes!)
Well, I also wanted to address both current and future clients with this little Note today…
Your Best Shakopee, MN Tax Professional Says: ‘It’s A Report — Not a Strategy!’
It’s true — there are certain people for whom this Note doesn’t apply. There are those who are perfectly fine paying the amount of tax they pay every year, thank you very much.
However, since YOU have chosen to invest yourself in our services (or at one point considered it), you are probably in the second group of Shakopee, MN taxpayers: those who would love to pay less in taxes, THIS year.
There are two main things which you need to understand:
Immutable Fact #1: Our tax system is not fair.
Yes indeed — the Mitt Romneys, Warren Buffetts, Barack Obamas, Rick Santorums etc etc operate under a vastly different system than most “regular” taxpayers. This is NOT because they are politically-connected (though they are), and the sooner you quit complaining about those who *seem* to be connected … and make the decision to JOIN their ranks, the sooner you will pay less in taxes.
Because all of those men, and other people like them, understand the second fact…
Immutable Fact #2: A tax return is a report, NOT a strategy.
Yes, we’re pretty good at coming behind with our magic brushes and cleaning up the mess made by many of our clients in their finances and taxes. But there is a much better way to fly.
It’s called tax planning, and it’s essentially comprised of three parts:
1) Strategic review: Assess the current situation, and identify short-, mid-, and long-term strategies to lessen your taxes, and grow your income.
2) Implementation: This can be a little tricky (especially if you do it yourself), because there are bound to be accounting and local regulatory questions which arise. We recommend that you stay with your same team who developed the tax strategy so they make sure you’re doing what you need to do.
3) Proper compliance: There are plenty of folks out there who will give you “the secrets to paying less taxes!!!” — but are they willing to put their name on a dotted line and defend it? If not, RUN from these people. They are true blowhards. Or worse, they know that their advice will lead to a fraudulent return.
But the main thing to understand is that in order to REALLY get your tax situation improved, you MUST plan ahead.
Otherwise, you’re just cleaning up a mess when filing your tax return.
I hope I didn’t ruffle too many feathers … but if so, understand that most of all, we are here to walk with you no matter WHAT kind of planning you do (or don’t do)!
Give us a call today: 952-445-8753, or drop us an email. We’re here for you!
March 19, 2012 by Roger Menden, Shakopee Tax Professional
Our clients here in Shakopee, MN are afflicted with “March Madness”, along with the rest of the country, it seems.
Unfortunately, this little national hoops holiday isn’t one which my Shakopee, MN tax preparation staff and I get much chance to participate in. We’re too busy doing your taxes!
Yep, this is close to our busiest time of the year, and we’re working like mad to handle the increased volume this year. Because with all of the economic uncertainty out there, it’s clear that people both inside and outside of the Shakopee, MN area want real answers from someone who knows them — and cares..
But let me say this: though my business does well this time of year, I’d rather things were better and our tax code was simpler! I’d rather the economy was thriving and everyone felt confident enough to handle their own situation.
The sheer complexity of the tax code keeps me in business — to take the hassle from you and other Shakopee, MN taxpayers, and apply our expertise to your situation. But wouldn’t it be more efficient if paying taxes didn’t actually require so much expertise?
I know … a bit of a controversial statement from an accountant. But I get tired of seeing new clients bring last year’s tax returns to us–and realize that if we’d helped them sooner, they would have saved a bunch of money (fortunately, we *can* file amended returns!). If things were simpler, people would keep more of their money — and THAT’S one of my passions.
Now, I have a thought or two about your refund (if you’re receiving one), and other such close-to-the-wallet thoughts. I’d love to hear your opinion…
A Shakopee, MN Tax Professional Suggests Giving Your Refund Away?
We have many clients who are receiving refunds this month, and that number of course will only be rising. So, here’s a thought for you: What would it look like for you to give your refund away?
Yes, this is a radical idea to think about, but consider: what does this refund represent to you?
If you’re like many families, it’s a bit like “found money” — i.e., an unexpected windfall. And, in those scenarios, it’s tempting to hoard, or to splurge.
However, as with other windfall scenarios which I’ve written about in the past, one of the smartest things you can do is to give a portion (at least) of it away.
Why do I suggest this?
Well, I believe it’s actually “enlightened” self-interest in the long run. And not just in our sense of feeling good.
I see the balance sheets of folks from every walk of life, and over the years I’ve noticed an interesting phenomenon: individuals and families who make giving a priority, even when they aren’t “wealthy”, seem to do better in the long run. And I mean financially–not just in their state of mind.
(Though, there are significant “state of mind” reasons for giving. Have you seen, as I have, that those who freely give seem to be more pleasant company?)
Before you write this off as being “ask the universe” mushiness, understand that A) I don’t subscribe to that baloney and B) I am merely reporting an observed phenomenon. Do with it what you will.
You see, I make it a point to seek to observe how money works. And, for some reason — money gets attracted to those who aren’t only in hot, desperate pursuit of it. It’s almost like in romance — potential lovers are usually turned off by the overly-aggressive seeker.
Consider this. I know it might feel painful. But trust me when I tell you that it can actually provide you with a deeper feeling of joy than if you choose to cling tightly to everything which comes your way.
I hope I didn’t ruffle too many feathers … but if so, understand that most of all, we are here to walk with you no matter WHAT your balance sheets look like!
March 12, 2012 by Roger Menden, Shakopee Tax Professional
The IRS just released a study which shows that the average time it takes ALL taxpayers to do their taxes is a total of 18 hours. (Editor: I wonder what the number is for Shakopee, MN-area taxpayers? Probably even higher)
The number is even higher if you don’t just use the 1040EZ form. Bet you wish you had that hour of daylight savings time back, don’t you?
Seeing that figure once again reminded me of the Shakopee, MN tax service we get to provide. Truth be told, it doesn’t require those kind of man-hours for us to complete most returns, even those which are more complicated. But that’s also because after all — we’re sort of experts at this stuff (It’s not for nothing that we’ve been called the best tax professionals in Shakopee, MN — and the most trusted).
Already, we have many, many clients who have filed, have received refunds and have written us notes telling us that they’ve never been more pleased. This makes me happy, as you might imagine.
Well, we’d like to ask you a favor, and we have a simple way to help you help us, as it were. Yes, we’re extremely busy, but we’ve set aside some capacity for friends and family of our clients. The reason we’re willing to do this is that we already know that you are a good person to work with (else we would have released you as a client!) so it stands to reason that you associate with similar people.
Would you send this blogpost to your friends (post it on Facebook, even?) and have them let us know you sent them?
Now, we posted this in the beginning of the year, but I thought it worth "re-releasing", if you will, as we reach about one month left in "tax season" …
Menden’s Tax Time Document Chase List for Shakopee, MN-area TaxPayers
Yes, this is a long list — but it’s the unfortunate reality of our tax code that it’s not even comprehensive! But these items will cover 95% of our clients. Really, this is for ensuring that we’re able to help you keep everything you deserve to keep under our tax code.
Even if for some strange reason you won’t be using our cost-effective services this year, feel free to use this list as a handy guide…
Social Security Numbers (including spouse and children)
Child care provider tax I.D. or Social Security Number
Employment & Income Data
W-2 forms for this year
Tax refunds and unemployment compensation: Form 1099-G
Miscellaneous income including rent: Form 1099-MISC
Partnership and trust income
Pensions and annuities
Jury duty pay
Gambling and lottery winnings
Prizes and awards
Scholarships and fellowships
State and local income tax refunds
Residential address(es) for this year
Mortgage interest: Form 1098
Sale of your home or other real estate: Form 1099-S
Second mortgage interest paid
Real estate taxes paid
Rent paid during tax year
Interest income statements: Form 1099-INT & 1099-OID
Dividend income statements: Form 1099-DIV
Proceeds from broker transactions: Form 1099-B
Retirement plan distribution: Form 1099-R
Capital gains or losses
Auto loans and leases (account numbers and car value) if vehicle used for business
Student loan interest paid
Early withdrawal penalties on CDs and other fixed time deposits
Personal property tax information
Department of Motor Vehicles fees
Gifts to charity (receipts for any single donations of $250 or more)
Unreimbursed expenses related to volunteer work
Unreimbursed expenses related to your job (travel expenses, entertainment, uniforms, union dues, subscriptions)
Education expenses (tuition and fees)
Child care expenses
Medical Savings Accounts
Tax return preparation expenses and fees
Estimated tax vouchers for the current year
Self-employment SEP plans
Self-employed health insurance
K-1s on all partnerships
Receipts or documentation for business-related expenses
State and local income taxes
IRA, Keogh and other retirement plan contributions
Casualty or theft losses
Other miscellaneous deductions
We hope this helps, and we really look forward to seeing you this year!
March 5, 2012 by Roger Menden, Shakopee Tax Professional
I haven’t been paying too close attention (we have been a little busy around here!), but I was sent this priceless little nugget about the Republican primaries recently…
You see, Rick Santorum recently released his tax returns. They’re nothing special, he’s doing quite well, but he is an ex-Senator so that’s no surprise. But here’s what I thought was interesting:
Santorum paid a tax rate of an average of around 28 percent — which is double the effective tax rate Romney paid on much larger earnings. So who’s to blame for such a discrepancy?
Here’s what Santorum said: "Look, I do my own taxes. Heck, Romney paid half the tax rate I did, so obviously he doesn’t do his own taxes. Maybe I should hire an accountant in the future."
The thing speaks for itself. Now, I’m not Romney’s accountant (that would be a fulltime job!), but I can tell you with good authority that Santorum is NOT alone. There’s no peer-reviewed study I can cite, but when new tax clients from all around Shakopee, MN bring in prior year returns which they prepared on their own, one of the things we often do is to review them — and we almost always find additional ways to save (and we get that for them by filling an amended return on their behalf).
But one of the "hidden" benefits to using a good Shakopee, MN tax preparer to file your taxes is that we have a hair trigger for avoiding things which might cause an audit.
And I thought that ALL of my clients and contacts would benefit from some (but not ALL) of our little internal list of what we look for, to make sure that clients are doing what they can to keep from getting socked with a notice.
Here’s what we (AND the IRS) look for …
The ‘Best’ Shakopee, MN Tax Professional Reveals: Seven Audit Red Flags
1. 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 the help of the best darn tax professionals in the Shakopee, MN area, 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. It doesn’t all add 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. Lost 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. Suspicious OVER-reporting
I’m not talking about under-reporting income, or holding necessary information back. But you’d be surprised how many Shakopee, MN tax 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. Fighting unnecessary fights.
Here’s where some of our clients here in the Shakopee, MN area 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. Ticky-Tack Prior Year Amending
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. Trying to go it alone.
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 will give you the added firepower of years of experience in handling such matters in your corner.
So to absolutely ensure that whatever happens, you’ll have such a someone at your side — and that your back will be guarded on the front end, give us a call: 952-445-8753.
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.
December 26, 2011 by Roger Menden, Shakopee Tax Professional
"Life consists not in holding good cards but in playing those you hold well."
– Josh Billings
I woke up Monday morning, after the wonderful holiday weekend … and I had a realization: after today, there are only FIVE days left in 2011.
Perhaps not a genius realization — fine. BUT, if you’re smart about how you handle these days, you can pay yourself quite well, when tax time rolls around.
The VERY good news is that we’ve been able to clear out three "FAST ACTION" appointment slots this week only for clients and friends who are committed to following our advice quickly, and who want ensure that their tax bill for the 2011 tax year is the lowest it can possibly be.
There are a veritable slew of beneficial tax provisions which are expiring on Saturday night, and some of them can still be leveraged. And with the payroll tax cut deal being struck, there aren’t any last-minute shenanigans from Congress for all of us to worry about!
For a list of them (some of which is technical, but it’s all pretty clear), see here:
Email me to snag a Fast-Action Appointment, or call: (952) 445-8753 — and may I suggest you do it quickly? These slots are sure to go fast. After that point, you’ll be put on a short waiting list.
But for those of my clients and friends who prefer to "do it yourself" (though with THIS tax code, I’m not sure that’s always wise), I’ve put together a brief, and actionable "checklist" to ensure that you’re squeezing every last drop out of the deductions available to you for 2011.
And, on the early note — let me wish you a premature Happy New Year, 2012!
Now, let’s get deducting…shall we?
"Real World" Personal Strategy
Ultra Last-Minute Tax Moves for 2011
Because time is short, and some moves do require more than this week to pull off, I’m restricting myself to those items which you can realistically affect before the end of the year.
This will be short, and (hopefully) sweet to your wallet…
1) Use Your FSA Funds
Money set aside in a flexible spending account must be spent by the end of the year, else the funds are lost. Some employers allow a 2-and-a-half month grace period. So check with your employer to see what your personal deadline is for utilizing your FSA savings.
2) Make an Extra Payment on Your Mortgage
If you own a house with a mortgage, and you can swing the cashflow hit, add an additional payment before year-end, and the interest on that payment will be deductible for 2011. Of course, that means that it WON’T be so for 2012, but perhaps you can use this as an "extra" payment … and get ahead of the escrow game.
3) Make the Switch to a Roth IRA
Roth conversions are taxed in the year the conversion happens. However taxpayers have the option to undo part or all of that conversion by their filing deadline. But in order to retroactively undo part of their conversion next year, they first have to convert this year. So if you are on the fence about converting, consider taking the plunge before the end of the year knowing that you (and/or WE) can re-characterize some or all of the amounts early next year.
4) The old standby
You know how I feel about charitable giving by now (I hope). This week, of course, is a big one for non-profits who are the happy beneficiaries of last-minute donations. You can pay early on a monthly gift, or give a lump-sum gift. The purpose (aside from the many, many benefits to the organization, and to you), of course, being to knock you into a different tax bracket, perhaps, or to simply cut your tax bill, regardless of the bracket status. Note: This is the LAST year where charitable donations from an IRA are handled generously.
Now, there are plenty others. But these are the quickest, and the easiest (aside, perhaps, from the Roth conversion — but that can be done quickly).
Do you have others you want to explore? Give us a call (952) 445-8753 or shoot me back an email, and we’ll help you out.
Best to you! We’d love to see your family THRIVE in 2012!
December 19, 2011 by Roger Menden, Shakopee Tax Professional
"People travel to wonder at the height of the mountains, at the huge waves of the seas, at the long course of the rivers, at the vast compass of the ocean, at the circular motion of the stars, and yet they pass by themselves without wondering." -St. Augustine
It seems that every year around this time that we tax professionals cast our gimlet eyes on Congress, and wait for them to resolve their year-end business — which ALWAYS affects our work.
Well, ho ho ho … this year is no different! As of this writing (Monday morning, December 19th), we’re seeing the payroll tax cut (worth up to $1K for many working families) be batted around. (A news article on it: http://on.wsj.com/sEufja )
We’ll keep you posted with the relevant details, as well as other, hopefully-pertinent information (you never know, with Congress!).
Anyway, I came in to the office this morning, and I noticed that traffic is already a little "lighter" around town. Many of us are still working, but I know of plenty of folks who have already taken time away from work, starting today.
Whatever your faith background, it’s hard to ignore the holiday clamor. In my opinion, it’s a crying shame that a season of reflection and prayer (Christmas, Hanukkah, etc) would become transformed into something so… busy. It’s almost as if we now have to rush around to "purchase" or artificially create nostalgic moments, when they would happen on their own before.
Now look — as a proud business owner, I’ve got no problem with people earning money during this season…I just wonder when it’s time to say "enough"?
But enough holiday ranting. This week, while everyone else is attempting to slow down, we tax professionals are gearing up. I thought I would take a break from my usual "financial" strategy tips, for the holidays, and pause a moment for reflection with you.
Because as I’ve been meeting with tax clients in getting ready for the season, I’ve discovered that many of you are worried and stressed–about finances, family, personal circumstances, etc. It’s not my job to save the world on your behalf of course, but I do get to be somebody in your world that can encourage you to slow down, take a breather and keep your perspective on what’s really important.
Thanks for your friendship, and for your business in 2011, and (hopefully) in 2012!
This week’s Note is to help us all keep perspective, this week…and into next year.
"Real World" Personal Strategy
A Holiday Prayer For All Of Us
"God, help us remember that the jerk who cut us off in traffic last night is a single mother who worked nine hours that day and is rushing home to cook dinner, help with homework, do the laundry and spend a few precious moments with her children.
"Help us to remember that the pierced, tattooed, disinterested young man who can’t make change correctly is a worried 19-year-old college student, balancing his apprehension over final exams with his fear of not getting his student loans for next semester.
"Remind us, Lord, that the scary-looking bum, begging for money in the same spot every day (who really ought to get a job!) is a slave to addictions that we can only imagine in our worst nightmares…
"Help us to remember that the old couple walking annoyingly slow through the store aisles and blocking our shopping progress are savoring this moment, knowing that, based on the biopsy report she got back last week, this will be the last year that they go shopping together.
"Father, remind us each day that, of all the gifts you give us, the greatest gift is love. It is not enough to share that love with those we hold dear. Open our hearts not to just those who are close to us, but to all humanity. Let us be slow to judge and quick to forgive, show patience, empathy and love. "
Best to you! May your season be truly bright.