7 THINGS TO DO BEFORE YOU FILE YOUR TAXES

7 THINGS TO DO BEFORE YOU FILE YOUR TAXES

By Andres Fragoso, Jr. Alta Business and Tax Services

702-877-0870 www.danthetaxmanlv.com

Established

Alta Business and Tax Services

in 1980

Copyright © 2016 by Andres Fragoso, Jr. All rights reserved

This publication may be reproduced, distributed, and transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the author. It is actually encouraged that you give a copy of this eBook to everyone you know. Helping other prepare their taxes is a great feeling. By giving them this eBook you are helping them get their taxes done more efficient.

If you live in the Las Vegas area, feel free to contact: Dan “The Tax Man” Boles Alta Business and Tax Services 4525 S Sandhill Rd Suite #105 Las Vegas, NV 89121 (702) 877-0870 www.danthetaxmanlv.com [email protected]

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BE PREPARED FOR TAX SEASON

The IRS will begin accepting individual electronic returns January 19, 2016. The IRS expects to receive more than 150 million individual returns in 2016, with more than four out of five being prepared using tax return preparation software and efiled. The IRS will begin processing paper tax returns at the same time. There is no advantage to people filing tax returns on paper in early January instead of waiting for e-file to begin. It’s your money. You need to be careful with who you choose to do your taxes. You want them done right the first time to avoid being audited and penalized for something you did not do. Take the time to find the right Tax Preparer and you will feel confident that you did the right thing. 3

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The filing deadline to submit 2015 tax returns is Monday, April 18, 2016, rather than the traditional April 15 date. Washington, D.C., will celebrate Emancipation Day on that Friday, which pushes the deadline to the following Monday for most of the nation. (Due to Patriots Day, the deadline will be Tuesday, April 19, in Maine and Massachusetts.)

Legal Disclaimer The content on this e-book is offered only as a public service to the community and does not constitute solicitation or provision of legal advice. This e-book should not be used as a substitute for obtaining legal or professional advice from an attorney or tax preparer to practice in your state. You should always consult a suitably qualified attorney and or a tax preparer regarding any specific legal problem or tax matter. The comments and opinions expressed on this site are of the individual author and may not reflect the opinions of the individual company.

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Contents BE PREPARED FOR TAX SEASON .........................................................................................3 1)

FINDING THE RIGHT TAX PREPARER ..........................................................................6 5 Things to look for when looking for a Tax Preparer ..............................................................6 5 Signs that your tax preparer is not looking out for your best interest .....................................7 Compare Cost and Services .....................................................................................................7

2)

WHAT TO BRING TO YOUR TAX PREPARER? .............................................................9 Your Basic Personal Information .............................................................................................9 All Forms of Income: ............................................................................................................ 10 Expense Documentation: ....................................................................................................... 10

3)

THINGS TO KNOW ABOUT WAGE AND INCOME TAXES ........................................ 12

4)

CERTAIN EXPENSES ...................................................................................................... 13

5)

PAY YOUR TAXES BY THE DEADLINE ...................................................................... 16

6)

AVOID FUTURE TAX PROBLEMS ................................................................................ 18

7)

DON’T OVERLOOK YOUR DEDUCTIONS ................................................................... 20

GLOSSARY ............................................................................................................................. 22

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Established


in 1980

1) FINDING THE RIGHT TAX PREPARER

Seek out a good and reliable tax preparer. Find a company that has over several years of tax preparation experience and who takes the time to talk to you about your tax needs. Tax professionals will ask you questions about your life as they are trying to find ways to save you money and give you a higher tax return. 5 Things to look for when looking for a Tax Preparer

1. 2. 3. 4. 5.

Experience Licensed and Have Advanced Educational Credits Have a website and social media presence and can provide testimonials Offer FREE Consultation Take the time to talk to you

Look through your local community; ask your peers and co-workers. There’s a tax preparer on every corner. Take your time and look for one that is reliable. It’s your money. Don’t spend more than you need too. If you live in Las Vegas, Nevada, you can always stop by and visit Dan “The Tax Man” at Alta Business and Tax Services. You can also book your appointment online.

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5 Signs that your tax preparer is not looking out for your best interest

1. 2. 3. 4. 5.

Asks you to drop your paperwork Does not take the time to talk to you Does your taxes in 15 minutes or less Gives you tax deductions that you don’t qualify for Offers unrealistic expectations and incentives.

There are some companies that will take your money and run with it. If your taxes are not done correctly you could face a fine and the IRS may audit you. If you are unable to pay your taxes they may garnish your wages or put a lien on your home. Checklist to finding the right tax preparer. Compare Cost and Services

          

Name of Company Their Address. Are they close to your home? Phone Experience or Years in Service Are they Licensed? Do they have a Website? Do they offer a FREE Consultation What is the time frame to do your taxes What other services do they offer? Do they do past year taxes? What do they guarantee?

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ADVERTISEMENT

Dan “The Tax Man” Has all 5 things that you’re looking for in a Tax Preparer 1. Over 30 years’ experience preparing taxes 2. Licensed and has Advanced Education Credits 3. Has a website www.danthetaxmanlv.com, Facebook, twitter, and testimonials 4. He offers FREE consultations 5. Takes as much time as you need to get you the best deductions and returns

Alta Business and Tax Services 4525 S Sandhill Rd #105 Las Vegas, NV 89121 702-877-0870 [email protected] www.danthetaxmanlv.com All prices are at base rate. If there is an additional charge or a change of type of filing we will inform you before we prepare your taxes. We want to give you the most affordable rates in the Valley. Personal Tax Preparation $100 - Individual filing single with 1099 or W2 and standard deductions $200 - Filing with dependents and itemized deductions $200 $320 - EIC or Head of Household

Small Businesses Sole Proprietor $300+ Corporation or Partnership $600+

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2) WHAT TO BRING TO YOUR TAX PREPARER?

You found a tax preparer that you’re comfortable with. Great. Now it’s time to bring in your paperwork. Be prepared when you go to the consultation you will fill out a couple of forms. The more accurate you are the easier it will be for the Tax Preparer to get your tax refund faster. Be prepared with the following paperwork before going to see your tax preparer. If you don’t have one or two items, it’s okay. However, it will take longer to prepare, process, file, and get your refund. Your Basic Personal Information

You, your spouse, and each family member that is a dependent and is to be included on your tax return:    

Name and date of birth Social Security Number Valid Driver’s License if applicable A copy of last year’s tax return 9

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All Forms of Income:

               

W-2s – Wages from your employer 1099- G forms - State Income Tax Refund - Unemployment 1099-B forms - Stocks 1099-C forms – Canceled debts 1099-DIV forms - Dividends 1099-INT forms – Interest 1099-MISC forms – Miscellaneous sources of income 1099-R forms - Pension Income, Retirement, IRA or 401 (k) Distributions Alimony received Commissions Estimated taxes paid during the year Lottery or gambling winnings Sale of business assets Sale of real estate Self-employment income Social Security or Railroad Retirement (SSA-1099 or RRB-1099)

Expense Documentation:

             

Alimony paid Charitable contributions Child care information Educator Employee business Adoption Gambling losses Higher education Medical and dental Mortgage interest Moving costs Personal property taxes Real estate taxes Student loan interest Traditional Retirement (IRA) contributions

When you arrive at your consultation with your tax paperwork already prepared, it will save you time, money, and unnecessary frustrations! 10

7 THINGS TO DO BEFORE YOU FILE YOUR TAXES Call or go Online to set up your appointment Bring this form filled out and get $25 off (1st time customers only)

E-Mail Filer First

Last

DOB

SS#

First

Last

DOB

SS#

Joint

Address

Apt #

City

St, Zip

Tel.

Alt Tel.

Dependents First

Last

DOB

SS

Relation

Direct Deposit Please Provide Voided Check Bank

Routing #

Account #

Note: To process return a Picture Id & Social Security Number must be furnished by Filer, Joint Filer, and dependents. By Signing below, Tax Payer acknowledges that all information given is true and correct. The Tax Payer is entitled to any credits and refunds.

Signature

Date

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in 1980

3) THINGS TO KNOW ABOUT WAGE AND INCOME TAXES

If you’re an employee of a company Every employer that has employees should send its employees a W-2 form by the beginning of February. Each form gives the employee information about his or her earnings and how much was withheld for income tax, taxes for Medicare and Social Security. Remember, they have reported your wage information to the IRS. When you file your taxes the information that was sent to you must match what was sent to the IRS by the employer. If you’re an independent contractor (not an employee) You should have received a 1099-MISC form from each individual or company that you worked for and received the full amount of income. Because you’re an independent contractor that income has no taxes withheld. It’s up to you to figure out and pay what income taxes and selfemployment taxes are due. The reason you want to sit with your tax preparer is to determine if you qualify for other deductions. Here is a list of the most popular deductions that people don’t know they might qualify for:

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4) CERTAIN EXPENSES

Automobile Expenses Do you use your car for business? You may deduct the mileage expense by using either the standard mileage rate or the actual expenses of maintaining the vehicle. Computer and Cellular Phone Related To Business Did your employer require you to have a phone or a computer as a condition of your employment? You may be able to claim a depreciation deduction. You must keep a record of the personal and business use of the computer or phone to determine the percentage of business use. Casualty and Theft Losses Were you involved in an automobile accident? The loss was not due to your negligence? The damage to your car may be considered a casualty loss if you itemize all your deductions. Address Change Did you move? Did you pay moving expenses? Was it for work or for other reasons? Talk to your tax preparer and see what you may qualify for.

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Charity Benefit or Event Contributions Did you attend a charity event? You may be able to deduct the dollar amount that you are paid to the event. Child Tax Credit - Refundable Credit You may be entitled to receive all or part of your remaining Child Tax Credit as a refundable Additional Child Tax Credit, if you receive less than the maximum $1,000 per qualifying child for the Child Tax Credit because it is limited to your tax liability. Combat Pay Even though your combat pay is not included in income when calculating your federal income tax, you do have the option of including it as earned income when calculating the Earned Income Credit (EIC). Estate and Gift Taxes Did you give money or property that did not exceed $14,000 per year, to another person without any tax consequences? It doesn’t have to be reported. Electronic Filing Most of the time is FREE. When you E-file, it reduces the time it takes to get your tax refund Deducting Cost of Lottery Tickets If you won money in a lottery, you can deduct the cost of your losing tickets for the year as an itemized deduction. The amount of the deduction is limited to your lottery winnings. Medical and Health You may pay a penalty for not having health insurance coverage. Under the Affordable Care Act, you must have health insurance coverage for yourself and your family members. Miscellaneous Expenses Job-hunting, job travel, union dues, tax preparation, and safety deposit box fees are all examples of miscellaneous deductions.

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Real Estate Property - Gains and Losses Did you purchase property? The basis is usually its cost. It also includes amounts you pay for sales tax paid on the purchase, commissions, and freight charges. Education Credits and Deductions The education of your children, or even of yourself and your spouse, can be a major investment. Knowing which tax credits and deductions are available can be confusing.

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5) PAY YOUR TAXES BY THE DEADLINE

APRIL 2016

18 You Have to Pay Your Taxes by April 18, 2016 If you can’t file by the due date, you can request an extension for filing your tax forms. However, you still have to pay the taxes you owe by the deadline. You are subject to penalties and interests charges for paying late.

Choosing E-File and Direct Deposit for Refunds … remains the fastest and safest way to file an accurate income tax return and receive a refund. The IRS anticipates issuing more than nine out of 10 refunds in less than 21 days. Find free options to get tax help, and to prepare and file your return on IRS.gov or in your community if you qualify. Go to IRS.gov and click on the Filing tab to see your options. What is an Extension If taxes are owed, a delay in filing may result in a penalty and interest charges that could increase your tax bill by 25 percent or more. There is no penalty for the late filing of a return on which a refund is given except for the delay of your refund. October 15, 2016, is the last day to E-file a 2015 Federal Income Tax Return for Tax Extension filers.

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Requesting an Extension Most people forget to file, or they have misplaced paperwork, sometimes the paperwork needed has been requested and has not arrived in time to do the taxes. You can file for an extension to help you gather the information and file. You must complete form 4868. Fill out the paper application and mail to the IRS. Or you can complete it electronically. The form 4868 must be sent in before April 15 th, 2016 Additional 6 Months With your extension request, you receive an additional 6 months. Your new due date will be October 15, 2016. You have to file by this date. You cannot request another extension. Filling and Extension If you can’t fill one out, you can request your tax preparer to file it for you. Some do charge. Dan “The Tax Man” does it for free. Do You Need to File a Tax Extension? You expect a refund but forgot to file your taxes on time. You have up to three years to do your taxes and receive the refund. However, if you file and expect a refund for four years or more, you will not receive the refund. Full Disclaimer: We recommended that you seek the assistance of a professional tax preparer if you want to or intend to file an extension or to forego filing your taxes because you are getting a refund or don’t owe any taxes.

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in 1980

6) AVOID FUTURE TAX PROBLEMS

To avoid the possibility of a tax audit, penalties, and interest charges, be careful and be consistent with your paperwork. It’s easier and less stressful to take your time gathering information, calculating your numbers and having the correct information on hand. Note: If your taxes are incomplete or information is wrong you might get a letter notifying you of a tax audit. Avoid Future Tax Problems  By the end of the year try to compile all of your income and expenses information.  Make sure that all of your W-2 Forms and 1099 Forms are accurate. If something is wrong or missing, contact the appropriate persons to fix it.  Double check that all Social Security Numbers (SSNs) are correct on your tax return. If an SSN is incorrect it will raise a red flag and your taxes will be rejected.

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 If someone else claiming you as a dependent, don’t claim yourself on your tax return.  Your tax preparer is human and errors may occur. Review your tax returns before they are submitted it to the IRS.  Keep copies of all the forms you filled out, the backup paperwork and documentation you used and/or gave your tax preparer.  Check to see if you qualify for head of household or the earned income credit.  If you or your spouse are over 65 or blind and (when applicable) meet the definition be sure to claim the additional deductions.  Any deductions or credits that you have from the previous year may carry over from the previous year.

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7) DON’T OVERLOOK YOUR DEDUCTIONS

When you talk to your tax preparer ask about deductions that you might qualify for. These are some of the most popular ones that are overlooked. Do not assume you qualify for these deductions. You have to meet certain criteria to qualify and have the deduction. It never hurts to ask. Always talk to your tax preparer.  Work-related expenses for a handicapped individual  Adjustment on Form 1040 of health insurance premiums  Alimony paid or received  Business expenses not reimbursed by your employer  Business gifts up to $25  Cash contributions to a recognized charity  Casualty and theft losses  Laundering services for business  Commission for sale of property or property management  Cost of safe deposit box  Dues to professional organizations  Education expenses  Employment-related moving expenses 20


 Equipment for handicapped individuals  Fees for tax preparation  Gambling losses  Hearing aids and eyeglasses  Home office expenses  Hospital fees for services  Legal fees  Mandatory contributions to state disability funds  Medical aids  Medical transportation  New business start-up costs  Nursing home expenses  One-half of self-employment tax paid  Penalty on early withdrawals  Personal property taxes  Points paid on mortgage or refinancing  Professional journals, magazines, and newspapers that are job-related  Required uniforms and work clothes  Seeing eye dog  Special school costs for mentally or physically handicapped individuals  State income taxes owed from a prior year and paid in the current tax year  Student loan interest  The cost of alcohol, drug abuse, and certain stop-smoking treatments  Union dues  Worthless stock or securities

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GLOSSARY Adopted Child– An adopted child is always treated as your own child. This includes a child who was lawfully placed with you for legal adoption. AGI or Adjusted Gross Income – AGI includes all your income minus certain deductions. You use your AGI to find out if you qualify for EITC and for finding the amount of EITC you receive. Find the amount of your AGI on line 36 on Form 1040, line 21 on Form 1040A, and line 4 on Form 1040EZ. ATIN, Adoption Taxpayer Identification Number – IRS issues an ATIN as a temporary taxpayer identification number for a child when the adopting parents do not have and cannot get an SSN, Social Security number, until the adoption is final. Authorized Placement Agency – An authorized placement agency includes:  An agency of a state or local government agency  A tax-exempt organization licensed by a state  An Indian tribal government  An organization authorized by an Indian tribal government  A court Child Who Was Kidnapped – You may be able to claim EITC for a child who was kidnapped by a non-family member. IRS treats a kidnapped child as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping. CTC – Child Tax Credit – Many people who have a qualifying child for EITC also qualify for CTC. If your child is younger than age 17, find out if you qualify for CTC. For more information, see Publication. Child with Disabilities – You may be able to claim a relative who is any age and permanently and totally disabled if the relative meets all other qualifications to be your qualifying child for EITC. IRS considers a child permanently and totally disabled if both of the following are true: 1. The child cannot engage in any substantial gainful activity because of a physical or mental condition. 2. A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. For more information, see our page, Disability and Earned Income Tax Credit. e-file – For faster and accurate processing of your tax return, you can file electronically by yourself or through your return preparer using the IRS e-file program. Earned Income EIC – See EITC below.

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7 THINGS TO DO BEFORE YOU FILE YOUR TAXES EITC – The Earned Income Tax Credit which is sometimes called EIC or Earned Income credit is a refundable tax credit for eligible people who work and have income less than specified amounts. The amount of the credit is based on your income, filing status, if you do or don’t have a qualifying child and the number of qualifying children. EITC Assistant – Find out if you are eligible for EITC by answering questions and providing basic income information. The EITC Assistant also estimates the amount of your EITC. The Assistant is also available in Spanish. Eligible Foster Child – To be a qualifying child for EITC, the foster child must be placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. See "Authorized Placement Agency" above. Free File – If you prepare your own return, try Free File to prepare and e-file your tax return for free using commercially available tax preparation software. You can also use the free fillable forms option to complete your return. ITIN, Individual Taxpayer Identification Number– IRS issues an ITIN, Individual Taxpayer Identification Number, to someone who is not eligible for a SSN, Social Security number, but needs a tax identifying number for banking, filing a tax return, or other tax reporting needs. LITC, Low Income Taxpayer Clinics – An LITC serves those who have a problem with the IRS and have low income. LITCs are independent from the IRS. Most provide representation before the IRS or in court on audits, tax collection disputes, or other issues for free or for a small fee. If an individual’s native language is not English, some clinics provide multilingual information about taxpayer rights and responsibilities. Publication 596, Earned Income Credit – This IRS tax booklet has detailed information on everything you need to know about EITC: requirements, definitions of terms, dollar limits, credit amounts, examples and worksheets to calculate the EITC. This booklet is also available in Spanish. Qualifying Child – A child must pass four tests to be a qualifying child for EITC: age, relationship, residency and joint return. Schedule EIC – To claim EITC with a qualifying child, you must complete and attach this form to your tax return. SSN, Social Security Number - You need a Social Security number to get a job, collect Social Security benefits and receive some other government services. You, your spouse if married filing a joint return, and any qualifying child listed on your Schedule EIC need a Social Security number that is valid for employment. Statutory Employee– IRS treats certain workers who meet the independent contractor rules as employees for employment tax purposes by statute. These workers are called statutory employees. You are a statutory employee if you receive a Form W-2 on which the “Statutory 23

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employee” box (box 13) is checked. You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040). TANF, Temporary Assistance for Needy Families – A social program that provides assistance and work opportunities to needy families by granting states the federal funds to develop and implement their own welfare programs. For more information on TANF and receiving TANF benefits, check the TANF site and then look at the state you live in. TCE, Tax Counseling for the Elderly – The TCE Program offers free tax help for all with priority assistance to people who are 60 years of age and older. TCE sites specialize in questions about pensions and retirement issues unique to seniors. IRS-certified volunteers who provide tax counseling are often retired individuals associated with non-profit organizations that receive grants from the IRS. For more information on the program or to find sites, see our Free Tax Return Preparation page. TY, Tax Year – For most people, the tax year runs from January 1 to December 31 of the same year. A “tax year” is your period for keeping records of income and expenses, for determining your filing status, etc. If your tax year is the calendar year, January 1, to December 31, you can file your tax return any time after December 31 of the tax year and it’s due April 15 (unless the 15th is a holiday or week-end) of the following year. For example, for most people, tax year 2012, runs from January 1, 2012 to December 31, 2012 and the tax return is due April 15, 2013. VITA, Volunteer Income Tax Assistance – The VITA Program offers free tax help to people with incomes less than $50,000. IRS-certified volunteers prepare returns for free and help answer your tax return filing questions. For more information on the program or to find sites, see our Free Tax Return Preparation page.

Copied directly from: https://www.irs.gov/Credits-&Deductions/Individuals/Earned-Income-Tax-Credit/Helpful-Definitions-andAcronyms

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