The Tax Factor was created to educate individuals and small-business owners about taxes. Let’s face it, nothing in life is guaranteed except death and taxes. Okay, maybe that sounded pretty depressing but the goal of this blog is to help you find the information to learn how to make taxes work for you. Taxes can be extremely complicated but knowing about deductions and credits can save you thousands of dollars per year.
The New Inductee to the Tax Preparers' Hall of Shame goes to a..........FAMILY!!!!
YES, A FAMILY!!!!
In Brownsville, Texas, Judy Lynn McCune, Loretta Ann McCune and Rania Ann Sanchez have been sent to prison for conspiring to defraud the federal government by preparing federal returns and cashing refund checks in the name of deceased individuals. The three women entered guilty pleas in April.
Judy received a sentence of 57 months, Loretta Ann 20 months and Sanchez 24 months in prison. Restitution of $223,098 was also ordered paid to the IRS, and the women will be required to serve three years of supervised release following completion of their prison terms.
McCune admitted that she recruited members of her family, including her mother, Loretta Ann McCune, and her sister, Sanchez, into the scheme.
The story gets real crazy. Read more about this story by visiting to www.accountingtoday.com.
Well, I wouldn't want to attend the next McCune family reunion. This should be a lesson to not let bad relatives bring you down. Just because they are family, doesn't make them right! Keep it clean folks!
"Every client you keep, is one less that you need to find." -Nigel Sanders
I agree with Mr. Sanders' quote but only to a certain point. Some clients are just not worth the headache.
My parents taught me that "hate" is a strong word. I rarely use the word "hate" because hating is bad for your health. Therefore, when I say that I hate bum clients, it's a real feeling. Luckily, most of the clients that I dealt with in the past and present are great individuals. However, it is always that rare one percent of clients that were bums. As an entrepreneur, there is nothing worst than dealing with a disrespectful clients. These bum clients can ruin a nice summer day. I will only give "bum" clients two chances to prove that I should keep them as clients. In some cases, two chances may be too much. Here are some reasons a "bum" client won't make it to the second chance:
I can't keep clients that wanted everything done yesterday but you have to chase them down for your fees. I have no problem dealing with urgent situations but it is so disrespectful when the client decides to disappear when it is time to pay. All of sudden, your calls are not being returned like you are a ex-boyfriend!
I can't keep clients that want a deep discount but you have to do double the amount of work. Even worse, they won't even give you referrals for your great service! I have performed deep discount services and almost always get burnt in the end. I don't know how I always fall for it. The clients comes to me very humble and appreciative. However when the work is done, it is almost like they forget how I helped them in a tight situation. Some bum clients even try to repeat the same action like nothing happened in the past. This can only happen to me once then it is "good bye!"
I can't keep clients that think taxes are easy. These clients come into your office with an arrogant attitude. It is almost like they think that they are doing you a favor by coming to your office. Telling me that "taxes are easy" is a big slap in my face and my fellow tax professionals. I will not allow someone to disrespect my profession. If taxes are so easy then the client should save their money and complete their own taxes.
I can't keep clients that will disregard the law because their friend got away with the proposed scam. These type of clients will only help you lose your professional license. When they get into trouble, they will blame everything on you. Don't fall victim to these bum clients.
I can't keep clients that get mad at me for owing the government money. It is not my fault that they withheld too little taxes from their paycheck. I'm not dumb, most of these type of clients know exactly why they owe money. How can you claim six exemptions on your paycheck when you are single with no kids?
There is nothing wrong with firing bum clients. Life is too and complex to deal with them! Firing bum clients will give you more time to concentrate on your valuable clients.
It’s a good idea to have all your tax documents together before preparing your 2012 tax return. You will need your W-2, Wage and Tax Statement, which employers should send by the end of January. Give it two weeks to arrive by mail.
If you have not received your W-2, follow these three steps:
1. Contact your employer first. Ask your employer – or former employer – to send your W-2 if it has not already been sent. Make sure your employer has your correct address.
2. Contact the IRS. After February 14, you may call the IRS at 800-829-1040 if you have not yet received your W-2. Be prepared to provide your name, address, Social Security number and phone number. You should also have the following information when you call:
• Your employer’s name, address and phone number;
• Your employment dates; and
• An estimate of your wages and federal income tax withheld in 2012, based upon your final pay stub or leave-and-earnings statement, if available.
3. File your return on time. You should still file your tax return on or before April 15, 2013, even if you have not yet received your W-2. File Form 4852, Substitute for Form W-2, Wage and Tax Statement, in place of the W-2. Use the form to estimate your income and withholding taxes as accurately as possible. The IRS may delay processing your return while it verifies your information.
If you need more time to file you can get a six-month extension of time. File Form 4868, Application for Automatic Extension of Time to File US Individual Income Tax Return. If you are requesting an extension, you must file this form on or before April 15, 2013.
If you receive the missing W-2 after filing your tax return and the information on the W-2 is different from what you reported using Form 4852, then you must correct your tax return. File Form 1040X, Amended U.S. Individual Income Tax Return to amend your tax return.
Forms and instructions are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Yep, it's tax season. I will posting IRS tips all tax season.
Here is a word from the Goodfellas at the IRS:
IRS Tax Tip 2013-08
When you’re looking for tax information, you want to find it as quickly and easily as possible. That’s why the IRS redesigned its website. It’s now even more user friendly. Here are the top 10 reasons to visit IRS.gov:
1. Get 24/7 Access. Whether you do your taxes during the day or burn the midnight oil, IRS.gov has the tax forms and answers you need when you need them. It's accessible all day, every day. The Interactive Tax Assistant is a helpful tool that will answer many of your tax law questions. Several tax forms, publications and information are also available in Spanish.
2. Use Free File. Anyone can prepare and e-file their taxes for free with IRS Free File. Offered exclusively at IRS.gov, Free File’s brand name software or fillable forms do the work for you. If you made $57,000 or less, you qualify to use free tax software. If your income is more than $57,000 or you feel comfortable preparing your own tax return, use Free File Fillable Forms. This option provides the electronic versions of IRS paper forms.
3. Try IRS e-file. Whether you do your own taxes or hire a preparer, IRS e-file is the safest, easiest and most popular way to file a complete and accurate tax return. Since 1990, taxpayers have e-filed more than one billion returns. If you owe taxes, e-file gives you options to file early and pay by the tax deadline. If you are due a refund, you should receive it in less than 21 days.
4. Check Your Refund Status. You can track your refund using the enhanced “Where’s My Refund?” tool. It’s quick, easy and secure and has a new look this year. You can start checking on the status of your refund within 24 hours after the IRS has received your e-filed return. You can check your refund status four weeks after you mail a paper return. The tool includes a tracker that displays the progress of your return in three stages while it is processed. Once IRS approves your refund, “Where’s My Refund?” will give a date to expect your refund.
5. Make Payments Electronically. E-payment options are a convenient, safe and secure way to pay taxes. You can authorize an electronic funds withdrawal, use a credit or debit card or enroll in the U.S. Treasury’s Electronic Federal Tax Payment System.
6. Use the EITC Assistant. The Earned Income Tax Credit is a tax credit for working people who earned less than $50,270 in 2012. The credit can be worth as much as $5,891. Check your eligibility using the EITC Assistant tool. You may be among the millions of eligible workers who get the EITC this year.
7. Get Tax Forms and Publications. You can view and download tax forms and publications any time. It’s the easiest way to get IRS forms and publications.
8. Figure the Right Withholding. The IRS Withholding Calculator will help to ensure you don’t have too much or too little income tax withheld from your pay.
9. Request a Payment Agreement. Paying all your taxes on time avoids penalties and interest. However, if you cannot pay your taxes in full you may be eligible to use the Online Payment Agreement Application to request an installment agreement.
10. Get the Latest Tax Law Changes. Learn about tax law changes that may affect your tax return. Special sections of the website highlight changes that affect individual and business taxpayers.
The address of the official IRS website is www.irs.gov. Don’t be misled by sites that claim to be the IRS but end in .com, .net, .org. Some thieves use phony websites to gain your personal and financial information. They then use this information to commit identity theft or steal your money.
Expenses of traveling away fro
“home” overnight for job-related reasons are deductible. Your “home” is
generally considered to be the entire city or general area where your principal
place of employment is located. Out-of-town expenses include transportation,
meals, lodging, tips, and miscellaneous items like laundry, valet, etc.
Document your away-from-home
expenses by nothing the date, destination, and business purpose of your trip.
In addition, keep a detailed record of your expenses-lodging, public
transportation, meals, etc. Always list meals and lodging separately in your
record. Receipts must be retained for each lodging expense. However if any
other business expense is less than $75, a receipt is not necessary if you
record all the information in a timely diary. Keep track of the full amount of
meal and entertainment expenses even though only a portion of the amount may be
deductible.
B)OFFICE EXPENSES:
Use this section to record miscellaneous
expenses of supplies and services you are responsible for when you are on the
road. For example, you may be required to fax or mail an important document
back to your home office; such expensive is deductible if it is not reimbursed
by your employer.
C)SUPPLIES:
Generally to be deductible, items
must be ordinary and necessary to your job. If you are an employee, only
amounts not reimbursable by your employer are deductible. Record separately
from other supplies, items costing over $100 and having a useful life of more
than one year. These items must be recovered differently on you tax return than
recurring everyday business expenses like maps, etc.
If you are required to wear a
uniform, the cost and upkeep may be deductible. IRS rules specify that expense
for work clothing and its maintenance is deductible if: (1) the uniforms are
required by your employer (if you are an employee); and (2) the clothes are not
adaptable to ordinary street wear.
D)COMMUNICATION EQUIPMENT:
Since special rules apply to
deductions for cellular and similar items (called “listed property” in the tax
rules), it is important to track their business and personal use carefully.
Such property potentially qualifies for larger current deductions when it’s
used more than 50% for business. Keep your bills for cellular phone use and
mark all business calls.
E)FEES & DUES:
Union or other professional dues
are deductible. Amounts paid to a union which are mean to go toward defraying
your personal expenses are not deductible. However, any part of union payments
which go into a strike fund is deductible.
G)MISCELLANEOUS EXPENSES:
Use this section to record
expenses that don’t easily fit to other categories. For example, if you look
for a job in the same line of work, you may deduct the expenses. Such expenses
could include mileage to interviews, resume preparation, etc.
