TAX FAQ


Here are some of our most commonly asked questions regarding taxes and tax preparation. Of course, you may have a question that is not ansewred here. In that case, please give us a call at 985-370-4777 and one of our friendly ITL team members will be happy to assist you. You can also submit a question to our staff via email or our general contact form.

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What should I look for when choosing a tax preparer?

If you are paying someone to prepare your tax return, the IRS urges you to choose your preparer wisely. Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent service to their clients.

Here are a few points to keep in mind when someone else prepares your return:

  • Check the person's qualifications. Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics. New regulations effective in 2011 require all paid tax return preparers including attorneys, CPAs and Enrolled Agents (EA) to have a Preparer Tax Identification Number.
  • Check the preparer's history. Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Professional Responsibility for Enrolled Agents (EA).
  • Find out about their service fees. Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers.
  • Make sure the tax preparer is accessible. Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise.
  • Provide all records and receipts needed to prepare your return. Most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items.
  • Never sign a blank return. Avoid tax preparers that ask you to sign a blank tax form.
  • Review the entire return before signing it. Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.
  • Make sure the preparer signs the form and includes their PTIN. A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.

 

What do I need to bring to a tax return preparation appointment?

All year end reporting documents. Such as: W2’s, 1099’s for interest, dividends, rents, pensions and other income, 1098’s for mortgage interest paid and real estate taxes paid. If you itemize (long form), total out of pocket expenses such as medical, charitable and/or mileage. Any unreimbursed employee expenses including all receipts and detailed mileage logs.

 

Is the organization of my receipts really important?

YES! You definitely want to send us all of your receipts. You can help us in a huge way by organizing and totaling your receipts! For example, medical, dental, prescription and any other receipts that are multiple receipts for the same category. If not, we may have to charge a recordkeeping/bookkeeping fee for the time we spend organizing and adding them for you.

 

Do I need to keep all of my receipts that have already been turned in for a tax return? Why?

Save ALL receipts & documents pertaining to your tax return, as well as bank statements and of course the copy of your tax return for ten years. As your paid preparer, we are only required to maintain the records of our work for you for three years.

 

How "detailed" does my mileage log need to be?

Mileage deductions are great. But you cannot take the deduction if you don’t keep accurate records. You will need to keep all of these notations in one place, ask us for one of our free calendars to help make this process easy for you! We don’t want you to miss out, so here is exactly what you need to record in order to comply with the substantiation requirements:

1. Beginning odometer reading
2. Ending odometer reading
3. Destination
4. Purpose
5. Date
6. Total miles driven
7. two or three invoices of repairs, maintenance, oil change etc. for the year which will reflect the vehicle description and odometer reading.

 

Is there any limitation or time frame for the IRS to collect on assessed tax?

YES! The IRS has 10 years to collect assessed tax. Unless, the taxpayer agrees to extend this statute the balance due on this assessed tax will disappear 10 years from the date of assessment.

 

How do I classify my worker? Should they be classified as an employee or independent contractor?

In the past, the main issue in determining a worker’s tax status is whether or not the employer can control the worker. In recent years, the IRS’s “20 factor test” was the key tool to deciding whether a worker qualified as an independent contractor or an employee, but gave way to revise standards in a new training manual issued in July 1996. IRS Revenue Ruling 87-41 sets forth a checklist of 20 factors. 

If unsure about your classification or that an individual providing services to your business, please use this link for more detailed information provided directly from the Internal Revenue Service.
 

 

I am filing an extension this year, so I don't need to pay anything yet...right?

Actually, this is a very common myth in tax preparation. The fact is tax extensions only extend the time you have left to file, NOT the time you have to pay taxes owed. If you owe a certain amount and file an extension, you have until April 15 to pay regardless of the new filing deadline. Otherwise, interest and penalties begin to stack up. 

READ "Top 6 Common Misconceptions About Filing Taxes" in our blog section to learn about other common myths.
 
 

end faq

 

 General Information About Tax Rates


Do the taxes rates just totally confuse you? Let’s see if we can simplify it for you. Our country uses marginal tax rates not a flat tax or consumption tax. See the simple chart below (as simple as we could make it!) to see how our tax structure works.

federal-tax-rates-state-tax-rates-2014

The standard deduction for MFJ is $12,400 and the personal exemption amount is $3,950.

In reality, a family of four would have a ZERO tax liability on the first $28,200.