BlogClick here to go back
Posted in general
What should I be bringing to my CPA?
This is one of the most common questions asked when tax season rolls around. After processing over 250 returns this season we decided to put together this list of do’s & don’ts.
Whether I am your CPA, you’re working with someone else, or if you’re doing your taxes yourself, here are some helpful tips geared to making all of our lives a bit easier this year.
If you are a first-time client or a returning client with me, you will receive what we call a Client Tax Organizer. Inside of this green packet, I have attached a letter of instruction and a data organizer designed specifically to help both you and I make your tax return as accurate as possible. This checklist will help you gather the specific documents you need to mail in or bring to your appointment.
As you look through your organizer, try not to get overwhelmed with filling in the blanks. Instead, try focusing on inserting the documents into the Organizer according to each section.
- It is proformaed to “remind” you of things you had the prior year that you should have in the current year. Things do change, accounts get closed, opened, jobs change, etc., but seeing that Chase Interest from 2016 may remind you of that small savings account that is now larger because of a big deposit and now has some tax implication….
- If there is a government document for an item, W-2, 1099, 1098, Brokerage Statement, etc., you do not have to fill out the forms/boxes within the Organizer. For example, in the Wages and Salaries section, just insert your W-2 forms for the year.
- Please provide all pages of original government documents, especially all the pages of your composite 1099 from your brokerage account.
- If you are concerned about losing your originals in the mail, use certified mail or tracking. And of course you can always bring your documents into our Walnut Creek office.
- If making copies, please keep your copies and send us the originals; they are easier to read, won’t have missing parts, etc. In almost 30 years of practice we have NEVER lost anyone’s original documents.
- If your return happens to contain information from K-1s from partnerships, trusts, or other passive activities, which always arrive late, and you’re waiting to receive them, don’t cancel or reschedule your appointment with me or delay sending in your other information; just provide me with what you have and we can add those documents later when they come in.
- On your appointment day (or in your mailed in packet) we want you to come in with your Organizer and as much of your paperwork as possible in some semblance of the order that is in the workbook.
- PLEASE remove paperwork from the envelope it came in
As far as Supporting Documents, we want to make sure that there’s no confusion or extra work related to unnecessary paperwork. Besides the obvious W-2 forms, 1099s,
- We do need to see things like
- 1098 for your Mortgage,
- Property Tax Bills (remember CA straddles years so bring both bills that mention the current tax year i.e. 2015-2016 & 2016-2017),
- DMV Statements (only some of that payment is deductible),
- Receipts for ALL Non-Cash Charitable Donations (see our blog on Charitable Contributions) -- including a description of what was donated and either original cost or donation value,
- Closing Statements (Escrow) for any properties purchased or refinanced,
- We don’t audit, but we do have a responsibility as your preparer, to know you have the required support to prove your deductions.
- See the next section for what we don’t need to see/review
Having said you don’t need to fill in the various forms and boxes, there are a few exceptions;
- Please review the questions at the beginning of the organizer; things change from year to year and you may not remember in February 2017 an event that happened in January of 2016 that effects your taxes or worse you think it doesn’t and don’t mention it and then you get a letter from IRS because it wasn’t on your return!
The Itemized Deduction Section
- While these items may be less significant transactions, and we acknowledge that these are important expenses to you, we don’t necessarily need to see all of your receipts.
- For example, receipts for anything regarding your Medical Expenses; we don’t want to see and especially don’t want to spend your money paying for our time to add up a bunch of receipts for co-pays, etc. Please total them by category and provide a spreadsheet or complete the appropriate organizer page.
- Your completion of the organizer page confirms that you have your receipts for these deductions
- For Cash contributions, we will list the larger donations to your church or other significant contributions but if you do $25 - $100+ to a lot of organizations, please add them up as “Receipted Organized Charities”.
Rental Property Income and Expenses
- should be filled out by hand in your Organizer or if you have some sort of spreadsheet to keep track of your Rental Income, you can insert that into your Organizer instead of filling out the Rent and Royalty Property page.
- It is your responsibility to keep track of expenses and the appropriate backup
- Things like mileage should not be “same as last year” but need actual documentation.
- If you have questions as to what constitutes appropriate backup, whether you should invest in QuickBooks, etc., please call the office and we’ll discuss your individual situation.
Lastly, I do mention this in the letter in each Organizer, but to keep this process as efficient as possible (we do hundreds of returns in a small 8-10 week window), my staff and I ask that as you assemble your documents, keep in mind that paper clips are better friends to us than staples.
- We use scanners to save everything electronically and removing staples rip papers.
- If you need to make notes, white or traditional light yellow sticky notes can be read by scanners but hot pink and dark or vibrant colors, while eye catching, scan as a black blob.
- And finally and unfortunately, no scanners or copiers like highlighters! Anything highlighted regardless of color used, is unreadable (blacked out) so please take advantage of the use of arrows, margins, or even a separate page of notes.
- Consider saving yourself some time; we know what numbers to pick up, totals, account numbers, etc., and most highlighting is not necessary.
- If you feel you must bring something to our attention, circle in red but again be sure not to obliterate any numbers, words, etc.
I hope reading these tips helped clear any question marks floating around your head. Our Tax Organizer is a tried and true tool to help you “organize” your tax information. We want to make sure that we have all of your most necessary data to prepare your return in an efficient and cost effective manner. Thank you.
Last Updated by Admin on 2017-07-13 06:07:18 PM
Posted in general
All of the above, plus:
Note: These rules Apply) to individuals making qualified contributions to IRC §501(c)(3) organizations. Additional rules apply when gifting a partial or restricted interest, gifts via trusts, arid gifts with remainder interest.
Last Updated by Admin on 2017-07-13 06:07:22 PM
Posted in general
Right after April 15th there are always several people who ask me "What are you going to do with all your free time"? Rest assured CPAs, including yours truly, do more than income taxes! We do financial and retirement planning, prepare complex estate tax returns (my personal favorite), deal with the few extensions we filed for clients, take care of the monthly business accounting, and yes, go back to our regular work schedules.
For my office that means back to Monday through Thursday 9-5 and Fridays by appointment. Rachel gets to go back to school and her BS degree course work.
As for yours truly, I get to complete all the household projects that piled up from January 1 through April 15th, attend a few days of professional education to keep up on the ever changing tax laws, and most importantly, get some R&R and work on my favorite charity projects!
Below is a sample of some of my more interesting activities for the summer, if you are wondering "Where's Michelle"?
April 23-30, St. Maarten. I always take a week for a beach vacation after April 15th and some friends of ours bought a snorkel shop on the Dutch side of St Maarten vs. St Martin French side. My husband Dan went diving with his dive buddy while the wife & I basically hung out relaxing. I can’t imagine living on such a tiny island!
June 10-17, I’m tagging along with my Dive Master husband Dan and his “Live Bait Scuba Club” for a week long dive trip to Grand Cayman. While they are spending a week in the water if I’m not relaxing poolside (no scuba for me, tried it and did NOT like it!) I’ll be hanging out at the Cayman Turtle Farm; who needs scuba when you can snorkel in a pond with yearling sea turtles in Turtle Lagoon! Check out their website www.turtle.ky.
August 15-25, Iceland! Dan and I will make our third trip to this wonderful country. We have some close friends we travel with and the four of us will be touring the Iceland “Ring Road”. Stops along the way include viewing wild reindeer, touring lava tubes & ice caves, and diver Dan will scuba in a lake and dive between the North American and European continental shelves! Yes I will be on land!
And finally throughout baseball season you’ll find me enjoying my second favorite baseball team, (sorry guys, once a Cub fan always a Cub fan), the Oakland A’s in our season seats in the Plaza deck behind home plate at the Alameda County Coliseum.
Who says all work and no play? If you enjoy what you do work is fun, especially if you are working for a cause you believe in!
June 3 –9 th, you’ll find me working as a Roadie (volunteer crew) on the AIDS LifeCycle, a 545 mile bike ride from SF to LA! My 10 months younger sister Valerie, who comes all the way here from Naples Florida, and I make up Sweep Team “Irish Twins” and drive my minivan along the route “rescuing’ broken down or just plain pooped riders. For more information on AIDS LifeCycle please visit www.aidslifecycle.org; you can even make a donation to a participant!
July 8-9, I’ll be participating in my 14th annual Avon Walk to End Breast Cancer in memory of my dear friend Betty and in honor of my Aunt Darlene and many of my survivor Friends! Over the past 14 years I have been fortunate to raise over $52,000 for the Avon Foundation and over that time they have raised over $60 Million in the Bay Area (and it stays in the area!) for breast cancer efforts from funding research and a cancer treatment center at SF General to a mobile mammogram unit for underserved women to contributing to Project Open hand, an organization staffed by cancer survivors providing balanced meals to those undergoing treatment and unable to properly care for themselves.
This year I will again dress in pink, decorate my SUV with pink ribbons, signs, etc., and work with an Avon Staffer patroling the end of the 2 day 39.3 mile (that's a marathon and ½) route assuring all walkers and crew have sufficient food, water, care, and above all moral support to complete the 2 day event. If you'd like more information on the Avon Walk for Breast Cancer please visit www.Avonwalk.org; be sure to check out my participant page.
Rest assured, the above activities do not mean I'm not available to you should you need emergency accounting services J; you can always reach me on my cell phone (even out of the country) and by email! Thank you for being part of A GRERAT LIFE DOING WHAT I LOVE!
Last Updated by Michelle Matlin on 2017-05-30 08:59:59 PM
Posted in general
The IRS offered taxpayers the following tips to avoid becoming an identity theft victim:
Guard your personal information.
Identity thieves can get your personal information in many ways. This includes stealing your wallet or purse, posing as someone who needs information about you, looking through your trash, or stealing information you provide to an unsecured website or in an unencrypted email. BE AWARE WHO YOU ARE GIVING YOUR SSN TO; NEVER GIVE IT OUT OVER THE PHONE!
Watch out for IRS impersonators; YES PEOPLE IMPERSONATE IRS AGENTS!
Be aware that the IRS does not initiate contact with taxpayers by email or social media channels to request personal or financial information or notify people of an audit, refund or investigation. Scammers may also use phone calls, faxes, websites or even in-person contacts. If you're suspicious that it's not really the IRS contacting you, don't respond. Visit the IRS's Report Phishing page to see what to do OR BETTER YET, CALL YOUR CPA!
Protect information on your computer.
While preparing your tax return or data for your CPA, protect it with a strong password. Once you send the data or file a return, take it off your hard drive and store it on a CD or flash drive in a safe place, like a lock box or safe. WE STORE ALL OF YOUR PERSONAL INFORMATION ON REDUNDENT HARD DRIVES, WITH COMPLEX PASSWORDS AND NEVER SEND YOUR INFORMATION OUT OF THE OFFICE. Any information destroyed is shredded by a certified company into the smallest pieaces they become pulp and cannot be reconstructed. Our client portal is a secure mode to transmit data with sensitive information such as account and social security numbers. NEVER SEND THIS TYPE OF INFORMATION VIA REGULAR EMAIL!
The IRS noted that your identity may have been stolen if the IRS notifies you that:
*You filed more than one tax return or someone has already filed using your information;
*You owe taxes for a year when you were not legally required to file and did not file; or
*You were paid wages from an employer where you did not work.
The IRS advisestaxpayers to respond quickly using the contact information in the letter they received from the IRS so that it can begin to correct and secure the tax account.
ALWAYS CONTACT YOUR CPA BEFORE RESPONDING TO AN IRS LETTER.
If taxpayers think they may be at risk for identity theft due to a lost or stolen purse or wallet, questionable credit card activity, an unexpected bad credit report or any other way, they should contact the IRS Identity Protection Specialized Unit toll-free at 1-(800)-908-4490. The IRS will then take steps to secure your tax account. The Federal Trade Commission also has helpful information about reporting identity theft.
If you have information about the identity thief who used or tried to use your information, file a complaint with theInternet Crime Complaint Center.
For more information, including how to report identity theft, phishing and related fraudulent activity, visit theIdentity Protection home page on IRS.gov and click on the Identity Theft link at the bottom of the page.
Last Updated by Michelle Matlin on 2013-02-25 06:40:14 PM
Posted in general
Most living Americans think that an income tax has always been there... but no. In 1913, the U.S. Congress passed the first permanent income tax. Before 1913, federal taxes were enacted, when necessary, for wars or other national needs.
The first known taxes date back to ancient Egypt when grain, livestock or oils were used instead of money to pay what was owed to the government. Even then, the surviving hieroglyphic tablets record how people complained about high taxes. Some things never change.
February 3, 2013 is the 100th birthday of the 16th Amendment, which is the recognized birth of U.S. Federal Income Tax. The history of the 16th Amendment actually dates back to 1861 during the civil war, when Congress passed the Revenue act of 1861. This act included a 3 percent tax on personal incomes over $800 to help pay war expenses.
Ten years later, in 1872, this act was repealed. The idea stuck around though, and in 1894 Congress enacted a 4 percent tax on income over $4,000. The U.S. Supreme Court immediately struck this down in a 5-4 decision.
In 1909, Congress tried again with the idea of an income tax. This time, however, it stuck, and on February 3, 1913 the 16th Amendment was ratified stating, "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
In 1913 the first Form 1040 was documented; I have a copy of that first form in my office, it has 10 lines and is one page! Congress placed a 1 percent tax on net personal income over $3,000, with an additional tax on those who had net income in excess of $20,000 of between 1 and 6 percent, depending upon income. The first year no taxes were collected; the IRS only checked the forms for accuracy.
During World War I the income tax rose to its highest point at 77 percent to help finance the war. Improvements to the system were made during World War II when Congress introduced payroll withholding and quarterly tax payments. The Alternative Minimum Tax (AMT) was later enacted in 1969. Some of you know that has come to be our maximum tax!
When the 16th Amendment was first enacted, the deadline was March 1, but even that first tax day deadline was extended because it fell on a Sunday. In 1918 the official filing deadline was changed to March 15. In 1955, the date was change to the familiary April 15.
Today, the IRS collects more than $1.2 billion in taxes and processes more than 133 million returns annually. And of course, people still complain about high taxes.
Last Updated by Michelle Matlin on 2013-02-09 02:43:54 PM
Posted in general
The Affordable Care Act: How Does It Affect You?
An IRS Nationwide Tax Forum held in San Diego yielded valuable information on how the IRS intends to proceed with the Affordable Care Act (ACA). The following are some highlights of that forum.
During the meeting, the IRS representatives said implementing the ACA will require significant information reporting. For example:
- The IRS will be required to provide information to the state health insurance exchanges that will be established starting in 2014, with the first exchange expected to open in the fall of 2013. Exchanges will need information about household income and size, and since information about ?households? is not currently required, additional information may have to be reported on Form 1040.
- Employers will be responsible for reporting the insurance coverage they provide to employees so that the IRS can determine whether individuals are eligible for a premium tax credit.
- Beginning in March 2013, employers will send numerous notices to employees informing them about coverage options, the premium tax credit, etc., which may trigger questions for tax preparers.
Increased Medicare tax for high-earning workers and self-employed taxpayers: Right now the Medicare tax on salary and/or self-employment (SE) income is 2.9 percent. If you?re an employee, 1.45 percent is withheld from your paycheck, and the other 1.45 percent is paid by your employer. If you?re self-employed, you pay the whole 2.9 percent yourself.
Starting in 2013, an extra 0.9 percent Medicare tax will be charged on:
- Salary or SE income above $200,000 for an unmarried individual;
- Combined salary or SE income above $250,000 for a married joint-filing couple and
- Salary or SE income above $125,000 for those who use married filing separate status. For self-employed individuals, the additional 0.9 percent Medicare tax hit will come in the form of a higher SE bill.
Higher threshold for deducting medical expenses: Currently you can claim an itemized deduction for medical expenses paid for you, your spouse and your dependents to the extent the expenses exceed 7.5 of AGI. Starting in 2013, the hurdle is raised to 10 percent of AGI. However, if either you or your spouse is age 65 or older at year-end, the 10 percent-of-AGI threshold will not take effect until 2017.
Flexible spending account cap: The 24 million Americans who have flexible spending accounts will face a new federally imposed $2,500 annual cap for 2013. These pretax accounts, which currently have a $5,000 federal limit, are used to purchase everything from contact lenses to children?s braces.
New 3.8 percent Medicare tax on investment income: The maximum federal income tax rate on long-term capital gains and dividends is currently 15 percent. Starting in 2013, the maximum rate on long-term gains is scheduled to increase to 20 percent, and the maximum rate on dividends is scheduled to increase to 39.6 percent as tax cuts expire.
But that?s not all. Also starting in 2013, all or part of net investment income?including long-term capital gains and dividends?collected by higher-income individuals could get socked with an additional 3.8 percent tax, dubbed the ?Medicare contribution tax.? Therefore the maximum federal rate on long-term gains for 2013 and beyond will actually be 23.8 percent (vs. the current 15 percent), and the maximum rate on dividends will be a whopping 43.4 percent (vs. the current 15 percent). Yikes!
The additional 3.8 percent Medicare tax applies to: Single individuals with adjusted gross income (AGI) above $200,000 or couples filing a joint return with more than $250,000 AGI.
The additional 3.8 percent Medicare tax will apply to the lesser of net investment income or the amount of AGI in excess of the applicable threshold. Net investment income includes interest, dividends, royalties, annuities, rents, income from passive business activities, income from trading in financial instruments or commodities, and gains from assets held for investments such as stock and other securities. (Gains from assets held for business purposes are not subject to the extra tax.)
I will be posting more on this in the coming months!
Last Updated by Michelle Matlin on 2012-10-03 11:43:48 AM