Posts Tagged ‘tax return’

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The Good Side of Taxes:

In Accounting & Finances,Business,Taxes on September 11, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900407228Become a Tax Volunteer for VITA and TCE

Got some free time on your hands? Turn it into time well spent by becoming a tax volunteer for Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE). These community-based programs provide free tax return preparation for people who need tax help but can’t afford it, such as seniors and people with disabilities.

No experience in preparing taxes – no problem. As a volunteer, you’ll get special training and can choose to work in a variety of roles. For example, if you’re bilingual (or beyond!) you could be a big help to people who don’t speak English.

MH900295311If you’re a veteran – and even if you’re not a veteran – being a VITA or TCE volunteer is one way you can help out military personnel and their families. They’re already occupied with risking their lives for the country, so let’s give them a hand with their tax preparation, okay?

In other words, it’s basically a win-win situation all around. Not only will you assist others, you’ll also learn a thing or two about taxes in the process. Yup, this is your chance to learn all the insider tips about deductions and credits like the Earned Income Tax Credit, Child Tax Credit, and Credit for the Elderly. How could you say no?

MH900200391Here’s another reason why you shouldn’t decline. Volunteer hours are flexible and minimal – about three to five hours per week. That’s like only thirty minutes a day! If only work could be so short and sweet…

Volunteering doesn’t sound too bad, does it? And getting there should be a breeze. Volunteer sites are located in neighborhood centers, libraries, schools, shopping malls, and other convenient locations all over the U.S. Think about it: you could take a nice walk to the site, help out some folks with their taxes for an hour, and then head home for dinner glowing from knowing you did your good deed for the day.

And you’ll be making history. As a VITA or TCE volunteer, you’ll become part of a program that’s helped people file tax returns at no charge for more than forty years. “It’s people helping people.”

MH900056116Ready to sign-up? Volunteer programs are open from mid-January through the tax filing deadline (April 15, 2014). Right now you should head over to IRS.gov and type “tax volunteer” in the search box for more info. The final step is to submit Form 14310, VITA/TCE Volunteer Sign Up, by email through the IRS website. Then you’ll be on your way to making the world a better place.

Sufen Wang, M.S. Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

Articles

Casual Merchants: Expect Underreporting Notices in the Mail

In Accounting & Finances,Business,Taxes on April 2, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900104746The IRS Didn’t Forget about Casual Merchants: Expect Underreporting Notices in the Mail

Casual merchants might have some official ‘splainin’ to do. The IRS is taking a good, hard look at the gross receipts of food cart operators, mom-and-pop shops, swap meet participants, and sellers on online auction sites such as Ebay. If there appear to be any discrepancies, the agency will likely send out “soft letters” requesting additional information from those small business taxpayers.

$10 billsSpecifically, the IRS will be checking whether gross receipts – as reported by credit card companies and third-party networks – match up with income stated on tax returns. Since 2011, certain taxpayers have had credit, debit, and certain electronic transactions reported on Form(s) 1099-K, Merchant Card and Third Party Network Payments. A high amount of receipts that appears on this form, but not in income levels on the tax return, is obviously going to raise eyebrows.

MH900401126Thus, a soft letter means the taxpayer isn’t in trouble (yet), but the IRS wants answers. After all, the IRS knows there are legitimate reasons why a merchant’s numbers might not add up with the third parties’. For example, there could be a difference between parties’ calendar year versus fiscal year accounting systems. Or it could arise from the fact that Form 1099-K does not take into account on sales returns and refunds processed by the merchant, or a merchant’s cost of goods, or other legitimate deductions from gross income.

These valid excuses are exactly why the IRS plans to begin with soft letters of inquiry. If the taxpayer agrees with the assessment of underreporting, the IRS will request that they amend their returns. The goal is not punish taxpayers, but to increase voluntary compliance.

Sufen Wang, M.S.Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793

Articles

Taxable or Nontaxable?

In Accounting & Finances,Business,Education,Family,Taxes on March 11, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900442285Question Needs to be Answered: Income Tax Basics

You know (hopefully) that federal income tax returns are due April 15. But do you really know what income is – let alone if it’s taxable or non-taxable? Here’s income by the numbers to help you do the math correctly on your returns.

Income can include money, property, or services that you receive. All income is taxable unless the law specifically excludes it – and those “tips” you pocketed are not excluded. You should notice that income doesn’t just mean money: non-cash income received through bartering is as taxable as wages, and both parties must report the fair market value of goods/services received as income on their tax returns. 

MH900361224Although most income is taxable, there are exceptions to this rule. Gifts, bequests, and inheritances are usually nontaxable, so don’t worry about that luxury car given to you for your birthday. If you buy something and get a cash rebate from the dealer/manufacturer, that rebate is also not taxable. Welfare benefits, child support payments, and reimbursements for qualified adoption expenses are all not taxable. Finally, if you collected damage awards for a physical injury or sickness, those are yours to keep, tax-free – nobody wants to kick you while you’re down.

TMH900234599hings get a little tricky with income that’s not taxable except under certain conditions. For example, life insurance proceeds paid to you because of an insured person’s death are usually not taxable. However, if you redeem a life insurance policy for cash, any amount more than the cost of the policy is taxable. Similarly, any scholarship income used for certain costs like tuition and required course books is not taxable, but amounts used for room and board are taxable. And classifying your frat house as  “textbook” college living won’t work.

Don’t forget to report any taxable refund, credit, or offset of state or local income taxes you received, even if you weren’t mailed Form 1099-G. You’ll have to contact the government agency that issued the payment to obtain that form. And don’t miss out on IRS Publication 525, Taxable and Nontaxable Income – it explains everything you ever wanted to know about income.

Wang Solutions, Sufen Wang, M.S. Accountancy, (562) 856-0793

Articles

Is an IRS Notice Your Worst Nightmare?

In Accounting & Finances,Business,Taxes on May 11, 2012 by Sufen Wang Tagged: , , , , , , ,

It Shouldn’t Be…

You head out to your mailbox expecting to find this week’s issue of Forbes. Instead, you open the mailbox and see a notice from the IRS sitting on top. Don’t assume it’s going to be a hassle – most of these letters can be handled without having to call or visit an IRS office.The notice might order you to pay up, but often it will simply notify you of account changes. Whatever the problem, the letter will provide specific instructions about what you need to do.

Please read carefully. If you received a correction notice, compare it with the information on your tax return. If everything looks A-okay, there’s no need to reply – unless the notice tells you otherwise. If the correction looks incorrect, you’ll need to let the IRS know with a written explanation.

Just because you don’t need to contact the IRS, doesn’t mean you can’t. If you have a question, just call the telephone number in the upper right corner of the notice. Have your tax return handy when you call.

See, you’ll be relaxing and reading your magazine in no time – until the next IRS notice arrives in the mail.

On the Money,

Sufen Wang

Wang Solutions

 

Articles

Managing Your Tax Records After Filing…

In Accounting & Finances,Business,Human Resources,Taxes on April 23, 2012 by Sufen Wang Tagged: , , , , , , ,

You’re Not Done Yet!

Now that you’ve filed your tax returns, you might be tempted to push your tax documents out of sight, out of mind. That’s not a good idea. Keeping good records after you filed is a good idea, just in case the IRS selects your returns for an audit.
 
In general, any documents relating to your federal tax returns should be saved for at least three years. This includes bills, credit card receipts, invoices, and any other records that support deductions or credits you claim on your return.
 
Don’t pull out the shredder for your whole filing cabinet just yet. To be on the safe side, you should keep any and all real estate refinancing loan docs, exchange calculation, escrow closing statements, inheritance or funds gifted to children, trust-related issues, stocks and bond trades, etc. for more than 3 years. Let’s try 5 to 7 years.
 
Finally, any and all payroll related records should be kept for about 10 years. Yes, you read that right: one whole decade. A few years ago I encountered a case where the State of California Employment Office (EDD) could not reconcile data on an employee, dating back to 1999 and decided to seek out my assistance via an audit. Fortunately, I was able to complete the audit, clean as a whistle, because I had all of the original records on the subject employee. 
 
That just goes to show that employers should make room for keeping records. If you want to save space, go digital and scan all of the employees’ records – but always ensure that their signatures are clear and legible in the scanned images. However you do it, save your records now so you can save yourself some trouble in the future.
 
 
On the Record,
Sufen Wang
Wang Solutions
 

 

Articles

FILE, FILE, FILE….

In Accounting & Finances,Business,Taxes on April 16, 2012 by Sufen Wang Tagged: , , , , , , ,

 
Can’t Pay? It’s Okay! Don’t Delay, File Your Returns Today
 
 
Tax returns will be due in less than 48 hours. Don’t have a panic attack if you can’t pay all the taxes you owe when you file. There are always solutions to problems…..  But File, File, File – on time. It’s better to file right now and pay as much as you can, than to not file at all. If you don’t, you’ll be looking at a late filing penalty, in addition to a late payment penalty, and accrued interest charges.  Or make sure you file an extension by April 17 with some estimated tax along with it. 
 

This extension will give you an extra 6 months, until October 15.  But remember this extension will only give you extra time, but not to reduce your tax liabilities.  Interest and penalty will continue to accrue during this 6 months extended period on your tax responsibilities.    Folks, DO NOT wait until October 15 to seek another extension, because there is NO extension on your extension… 

Business Extension Form 7004.

Personal Extension Form 4868.

 
If you are not able to pay your taxes right now, still file your returns on time, and then request for an installment payment agreement from the IRS (for a fee, of course). You can also use this option when your bill arrives from the IRS.  Remember the IRS also accept credit cards…  In any case, File, File, File… 
 
 
On the Money
Sufen Wang
Wang Solutions
 
 

Articles

A Perfect Match:

In Accounting & Finances,Business,Taxes on January 16, 2012 by Sufen Wang Tagged: , , , , , ,

What to Look for in a Tax Return Preparer

It’s already that special time of the year, folks: people are getting ready for tax returns. You might be tempted to forget about filing because you plan on having a professional do it for you. But how do you know that you’ll find the right person for the job? After all, as the taxpayer, you are legally responsible for everything written on your tax return – even if you don’t prepare it. Here are some tips to keep in mind so that you can ensure your paperwork ends up in good hands. 
 
First and foremost, the preparer MUST have a Preparer Tax Identification Number (PTIN) – otherwise he won’t be able to sign your return and enter this number, which is now required for all paid preparers. Once you have his official digits, you’ll want to dig a little deeper. Steer clear of any individual who has had a particularly unpleasant relationship with the Better Business Bureau or a bad record with the State Boards of Accountancy for certified public accountants, State Bar Associations for attorneys, etc.  You get the drift?!
 
You’re obviously going to be charged for the preparer’s services, but how you pay is crucial. Avoid anyone who bases their fee on a percentage of your refund.  Or take your business elsewhere if the preparer tells you that your refund will go into his bank account first, and he will then write you a check, after deducting his fees. Your tax refund is your money and should be deposited directly into an account in your name.  You should pay your tax preparer separately for his services. 
 
How you file is also important. The IRS is pushing for e-file because it’s faster and safer, and your preparer should at least make this option available to you.  And if you choose not to e-file, then be sure to read my last week’s blog, Hello E-File!, as a reference to understand your responsibility in this process.
 
The tax preparer needs to be easily accessible to you, both by telephone and in-person. You don’t want to show up a few days before your returns are due and find a “Gone Fishing” sign on the door. You also don’t want your preparer to mysteriously leave town (with all of your personal information) after the return has been filed, so make sure you will be able to contact him for future questions.
 
Once you chose a preparer, you still need to keep your eyes open for any signs of bad business practices. A good preparer will ask you tons of questions to double-check your financial information, and should also request all of the necessary records and receipts. Think about it: how can someone accurately file your return if they don’t have the required documents, or a full understanding of your financial detail? 
 
Returns are like checks – never sign a blank one. That means you need to review the completed return in its entirety before signing it. Ask your preparer any questions you may have, because if something is incorrect, you’re the one who will have to deal with it later. So, ask questions, and do no stop until you get satisfactory answers from your preparer.  Finally, once the preparer has signed your return and included his PTIN, don’t walk out of the office until you have a hard copy in hand. Tax preparers are supposed to make things easier for taxpayers. Don’t let one get off easy if he tries to swindle you: report abusive tax preparers with Form 14157, available on www.irs.gov.
 
On the Money
Sufen Wang
Wang Solutions