Frequently Asked Questions
- Where is my refund?
The status of your income tax refund can be determined by going to irs.gov/Refund and following the instructions. You will need your Social Security Number, your filing status (single, married filing joint, etc.) and your exact refund amount. back to top
- Do I need to file a return?
While not everyone is legally required to file a return, the general answer is yes. If you have earnings that are reported to the IRS, then the IRS will attempt to match those earnings to a return. If you have not filed a return, then the IRS will likely issue a notice and assess penalties and interest.
Technically, however, a person is not required to file a return if earnings are less than the applicable personal exemption and standard deduction. These amounts change each year and are different for different individuals based on marital status and age. back to top
- Can I file an extension?
Yes. You can always file an extension, but it is important to remember that an extension only extends time for filing, not for payment. You must still pay on the original due date. Generally, to file an extension we need most of your tax information to estimate how much will be owed.
Individual returns are extended to October 15th, and corporate returns are extended to September 15th. back to top
- What are the differences of an Audit, Review & Compilation?
An audit involves performing procedures to obtain sufficient evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement on the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
In making our risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of its financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. However, we will communicate in writing any significant deficiencies or material weaknesses in internal control that we have identified during the audit.
As part of our audit process, we will request from management and, when appropriate, those charged with governance, written confirmations concerning representations made to us.
We will issue a written report upon completion of our audit expressing an opinion on the financial statements.
The objective of a Review is to obtain limited assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in conformity with the applicable basis of accounting. A review includes primarily applying analytical procedures to your financial data and making inquiries of the entity's management.
A review is substantially less in scope than an audit. A review does not contemplate obtaining an understanding of the entity's internal control; assessing fraud risk; testing accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, or the examination of source documents; or other procedures ordinarily performed in an audit. Accordingly, we will not express an opinion regarding the financial statements as a whole.
A Compilation differs significantly from a review or an audit. A Compilation does not contemplate performing inquiry, analytical procedures, or other procedures performed in a review. Additionally, a compilation does not contemplate obtaining an understanding of the entity's internal control; assessing fraud risk; testing accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, or the examination of source documents; or other procedures ordinarily performed in an audit. Accordingly, we will not express an opinion or provide any assurance regarding the financial statements being Compiled.
It is best to discuss with your CPA which level of service you need. Call or email us today to schedule your appointment. back to top
- Can I deduct alimony payments?
In divorce situations, one spouse may become legally obligated to make alimony payments to the other party. Before the new Tax Cuts and Jobs Act, payments that met the definition of alimony could always be deducted by the payer for federal income tax purposes. On the contrary, recipients of alimony payments always had to report the payments as taxable income. This old law treatment continues for alimony payments made under pre-2019 divorce agreements. However, for alimony payments required under divorce or separation instruments that are executed after December 31, 2018, the new law eliminates the deduction for these alimony payments. Additionally, those who receive alimony payments will no longer have to include them in taxable income. So what does this mean for tax planning? If you are in divorce proceedings and want deductible alimony treatment for some or all of the payments that will be made to the other party, the TCJA gives you an incentive to get your divorce agreement wrapped up and signed by 12/31/18. On the other hand, if you will be the recipient of payments, you have a big incentive to put off finalizing your agreement until next year, because the payments would be tax-free to you.
As always, child support payments have never been deductible. back to top
- What tax form do I use for a non-profit?
The IRS had previously announced its intentions to provide a simplified version of form 1023 -- application for recognition as a 501(c)(3) non-profit -- and it has now released a draft version of this new EZ form. The original application is a 26-page mess of complicated questions and additional attachments, while the new form is only 2 pages.
The new EZ form is intended for smaller charities with (expected) annual gross receipts of less than $200,000 and total assets under $500,000. This is great news for the non-profit sector as most grass-root and neighborhood or locally focused groups will fall well under these thresholds.
There is one major downside: non-profits formed as LLCs cannot use the form. back to top
- Can I draw on my inherited IRA?
There are no Early-Withdrawal Penalties for Inherited IRAs.
If a person inherits an IRA from a decedent, there is no early distribution penalty. Thus, the new recipient of the IRA does not have to worry about the 10% penalty for withdrawals if he or she takes the money out before reaching 59 ½.
In fact, the law states that the new beneficiary must begin distributions by the end of the year following the year the owner died, or withdraw all the money within five years. back to top
- What name do I use to file my taxes?
If you were married or divorced and changed your name last year, be sure to notify the Social Security Administration (SSA) before you file your taxes. If the name on your return does not match SSA records, the IRS will flag it and delay your refund.
These tips also apply if your dependent's name has changed.
1. If you got married and you are using your new spouse's last name or you hyphenated your last name, notify the SSA. That way, the IRS computers can match your new name with your Social Security number.
2. If you were divorced and are now using your former last name, notify the SSA of your name change.
3. Letting the SSA know about a name change is easy. File Form SS-5, Application for a Social Security Card, at your local SSA office or by mail with proof of your legal name change.
4. You can get Form SS-5 on the SSA's website at www.ssa.gov, by calling 800-772-1213, or at your local office. Your new social security card will have the same number but will show your new name.
5. If you adopted your new spouse's children and their names changed, you'll need to update their names with SSA too. For adopted children without SSNs, the parents can apply for an Adoption Taxpayer Identification Number by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS. The ATIN is a temporary number used in place of an SSN on the tax return. Form W-7A is available on the IRS.gov website or by calling 800-TAX-FORM (800-829-3676).
NOTE: If you live in Louisiana, there is no need to change your name (unless you already have done so). Louisiana law allows either spouse to use the other spouse's surname without legally changing your name. If you divorced your spouse, there is likewise no need to change your name as this rule applies to ex-spouses as well. back to top
- What are Estimated Tax Payments and do I have to make them?
Some taxpayers may need to make estimated tax payments during the year depending on the type of income you receive.
If you do not have taxes withheld from your income, you may need to make estimated tax payments.
a. This may apply if you have income such as self-employment, interest, dividends or capital gains (typical bank account interest is generally insufficient to require estimated payments).
b. It could also apply if you do not have enough taxes withheld from your wages.
2. If you are required to pay estimated taxes during the year, you should make these payments to avoid a penalty.
a. You may need to pay estimated taxes in 2013 if you expect to owe $1,000 or more in taxes when you file your federal tax return.
b. Other rules apply, and special rules apply to farmers and fishermen.
3. When figuring the amount of your estimated taxes, you should estimate the amount of income you expect to receive for the year.
a. Try to make your estimates as accurate as possible.
b. You should also include any tax deductions and credits that you will be eligible to claim.
c. Be aware that life changes, such as a change in marital status or a child born during the year can affect your taxes.
d. You should use Form 1040-ES, Estimated Tax for Individuals, to figure your estimated tax.
4. You normally make estimated tax payments four times a year.
a. The dates that apply to most people are:
i. April 15,
ii. June 17,
iii. Sept. 16, and
iv. Jan. 15.
5. You may pay online, by phone, by check, by money order, or by credit or debit card.
a. You'll find more information about your payment options in the Form 1040-ES instructions.
b. Also, check out the Electronic Payment Options Home Page at IRS.gov.
c. If you mail your payments to the IRS, you should use the payment vouchers that come with Form 1040-ES. back to top
- What is the difference between a CPA and an accountant?`
All CPAs are accountants, but not all accountants are CPAs. Anyone who performs an accounting function - bookkeeping, payroll, tax prep, etc. - can be considered an accountant. CPAs are licensed by the State Board of Accountancy after meeting stringent requirements and rigorous testing. Before being licensed, they are also required to have at least one year's experience working under an already licensed CPA. CPAs are also required to complete 120 hours of Continuing Professional Education (CPE) every 3 years. Finally, there are background requirements to ensure that the person is trustworthy and possesses the proper character. Because of these strict qualifications, becoming a CPA is a long and arduous process that often takes years to accomplish. As a result, you can be assured that your CPA is competent, knowledgeable, and reliable. back to top