FAQs - General
What do you need to get started on my return (or to give me an estimate)?
1. A copy of the last tax return filed, including the detailed depreciation schedule (in addition to form 4592), if any.
2. A brief explanation as to what has changed in your tax situation since you filed your last return.
3. Copy of the front of your driver's license.
How do I send you my tax documents and information?
Help us keep your sensitive information secure by not sending anything sensitive in an email (attached or written).
If we are just e-meeting, please wait until we request documents to send anything. You can share your previous tax return, or other requested documents on our Contact Us webpage by clicking the big teal New Client Document Upload button under the Contact us box; it will be sent directly to our Dropbox. Other options including sharing a Google Drive folder, dropping it off, or emailing it with password protection. We may need to get the password or other sensitive info on a quick call. Once you become a client, we will send you an invitation from SmartVault to our client portal to exchange documents moving forward.
If you are already our client, we would prefer you to use our client portal for all documents, if possible. Just click the Client Portal button in our webpage header to get to your login screen. We will still accept your physical documents by mail or drop-off and accept your non-sensitive tax documents via email or your preferred sharing method. They will still end up in your client portal.
How soon do I need to send you my tax documents and information?
The closer we get the to the tax deadline, the longer our turnaround is and the harder it will be to give detailed advice about extension payments by the deadline. So, if you do not want an extension, it is best to have everything to us a month or 2 before it’s due. As soon as you have everything together and notify us, we will put you in line.
We try to do first come first served, but it will depend on how many clients are ahead of you and how difficult your return is. Sometimes, easier returns get bumped up because we are waiting on other clients responses.
How much do you charge?
Our tax preparation and consultation rate is $100/hour, plus incidentals for filing and other fees, copies, envelopes, stamps, etc. You can keep your invoice lower by being more prepared, organized, and by providing timely responses to questions.
Please keep in mind if you take too long to respond, we may have to review all everything again to be sure we have done our due diligence to get your return right.
Your client portal is available all the time for you to upload your documents & information to the portal; we probably will not start your tax return until you tell us everything is there and ready for us prepare your return to avoid extra work and unnecessary questions. The portal also allows you to review previous years documents, so that you can be sure you do not miss anything for the new tax return.
Will I owe a penalty for late-filing?
Personal tax return penalties are based on a percentage of the tax due. There are penalties for not filing (if you owe) on time and for not paying on time. If you file an extension, you may have until October to file the return, but you still need to pay your taxes by the April deadline, or an underpayment or late payment fee will still apply. If you do not file an extension, or file after the extended due date, then late filing penalties will be applied based on the tax due.
For S Corp and Partnership tax returns, which are flow-through returns that usually do not owe taxes, the penalty is based on how late it is and how many shareholders or partners it has. For 2023, the penalty has increased again, from $210 to $220 per month (or part of a month) per shareholder/partner.
If I cannot pay my taxes, should I wait to file my return?
No. If you cannot pay, you should still file your return as soon as possible in order to reduce the potential penalties, as described above.
Can I extend my tax return more than once?
No, just once. You then have an additional 6 months to file without incurring the late-filing penalty (If you owe taxes, penalties on the tax due will apply anyway, but at least they will be less.)
FAQs - Extensions
Can I extend my tax return more than once?
No, just once. You then have an additional 6 months to file without incurring the late-filing penalty (If you owe taxes, penalties on the tax due will apply anyway, but at least they will be less than if you had not extended the tax return.)
Should I pay something with my extension?
It depends on several factors. If you typically owe money with your return (or send with an extension), you should probably send a payment. If your income went up significantly, you may need to make a payment. If you had a job or income where taxes were not withheld, you may need to send a payment. If you had less tax deductions or credits, you may need to send a payment.
How much should I pay with my extension?
You need to pay in at least what your total tax liability was for the previous year OR at least 90% of the current year estimated taxes to avoid certain penalties.
It can be a lot harder to use incomplete current year tax information than to use the previous years completed information to estimate a payment; that is especially true during tax season when we are incredibly busy and time limited. For those reasons, we prefer you to use your previous tax return (Line 24 of your form 1040) the amount of your previous tax liability and then subtract current federal income tax withholding (FWH) from tax forms (W-2 & 1099) and any estimated tax payments made for the year to determine your own extension payment.
If you typically owe taxes or have income not represented on a W-2 or tax form with FWH, you should consider making quarterly estimated tax payments to ease your burden when your extension or tax return is filed. We will provide you with quarterly estimated tax payment amounts for the next tax year calculated by our tax program with your completed return. These are pretty standard, but can modified to include additional information. They are guidelines for you in case your income and tax situation are basically unchanged, so actual payments can reflect your actual situation.
Overpaying typically results in a refund once your
tax return is approved, unless you are already in
arrears with the IRS or other state taxing agency.
See our Important Tax Dates for the link and information about making a payment through IRS Direct.
I thought an extension let me wait to pay. Why am I being penalized?
Extensions are only for filing the actual tax return. All taxes are required to be paid by April 15 of the following year, if they were not paid in full throughout the year. (Underpayment penalties for not paying enough throughout the year can be assessed if you owe too much on April 15th as well.) Payments after April 15th are subject to interest too.
FAQs - Independent Labor and Employees
What the difference between an Independent Laborer/contractor & an employee?
A good explanation of each and the requirements are at the following link:
https://www.thebalancemoney.com/employee-vs-independent-contractor-status-398626#:~:text=Employees%20also%20may%20receive%20benefits,total%20payments%20for%20the%20year.
Who do I issue 1099-NECs to?
That depends. The general rule is anyone that is not an employee, incorporated, or an attorney (they have special rules) that you pay a total $600 or more for services for your business. Employee payments are reported differently and require tax withholding and payments. Having the independent laborer give you a completed W-9 will help you/us determine if they require a 1099.
Do I have to have a W-9 from the independent contractors that do services for me?
Technically, no. HOWEVER, if you do not, you are technically required to withhold a percentage of their pay to remit to the government.
https://www.irsvideos.gov/CharitiesAndNonProfits/501(c)(3)Organizations/BackupWithholding
Best practice is to give anyone who provides your business services a W-9 for them to complete and give you for your file before they provide the services, so you have it in case you pay them $600 or more and they meet the requirement to receive a 1099 from you.
Can I deduct the expense for the independent labor if I do not send them a 1099?
Yes. However, as CPAs we must check a box on your tax return that states whether you issued or will issue all required 1099 forms by the time the tax return is filed. The IRS could penalize you for not meeting the requirement to issue them and for not filing them with the IRS. The penalties are separate and are per form not issued/filed.
Who do I issue 1099-MISC to?
File Form 1099-MISC for each person to whom you have paid during the year:
At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
At least $600 in:
Rents.
Prizes and awards.
Other income payments.
Medical and health care payments.
Crop insurance proceeds.
Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish.
Generally, the cash paid from a notional principal contract to an individual, partnership, or estate.
Payments to an attorney. *Gross proceeds paid to attorneys. Under section 6045(f), report in box 10 payments that: • Are made to an attorney in the course of your trade or business in connection with legal services, but not for the attorney’s services, for example, as in a settlement agreement; • Total $600 or more; and • Are not reportable by you in box 1 of Form 1099-NEC
Any fishing boat proceeds.
In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
Source: https://www.irs.gov/forms-pubs/about-form-1099-misc
When do you need the information for 1099s?
The first week or 2 of January to be sure we can get them out on time and to fix any that may have had incomplete/incorrect information. The closer we get the to the tax deadline, the longer our turnaround is and the harder it will be to finalize by the deadline.
How much do you charge to prepare, file, and send the 1099s?
Our tax preparation rate is the same (by the hour and for incidentals). The smallest we can charge due to filing fees for the 1099s, is $35 for the 1 or 2. The cost goes up from there, usually about $5-$10 for every 2 - 3 additional forms. The actual amount charged will depend on whether we have sent that recipient a form recently, if we have complete & correct information, and how much extra time we spend on correspondence.
