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Answers to a few frequently asked questions
DOES HARMON & ASSOCIATES SERVE COMPANIES IN MY INDUSTRY?YES! WE HAVE A DIVERSE CLIENTELE OF INDIVIDUALS & FAMILIES, AND OUR BUSINESS CLIENTS REPRESENT A WIDE RANGE OF INDUSTRIES, INCLUDING CONSTRUCTION, MEDICAL, VETERINARY, DENTAL, LEGAL, TRANSPORT, MUNICIPAL, FAITH / CHURCH, NONPROFIT, MANUFACTURING, REALTY, SALES & DISTRIBUTION, FRANCHISE, RESTAURANT, GAS STATION, GROCERY, RETAIL, ESTATES & TRUSTS, FARMING, AUTOMOTIVE SALES, AUTOMOTIVE SERVICE, ELECTRICIANS, PLUMBING, AC/HVAC, ENGINEERING,AUDIO-VISUAL, & VARIOUS OTHER SPECIFIC PROFESSIONAL SERVICES.
DO I NEED A CPA.... OR CAN I USE A 'DIY' PROGRAM TO DO MY OWN TAXES AT HOME?THAT DEPENDS... IF YOUR FINANCIAL SITUATION IS SIMPLE ENOUGH AND YOUR INCOME IS MODERATE, YOU MIGHT BE FINE USING A HIGH QUALITY DIY PROGRAM. BE AWARE THAT MANY PROGRAMS INCUR COSTS TO THE INDIVIDUAL FAR BEYOND WHAT WAS ADVERTISED OR EXPECTED. IT IS HIGHLY RECOMENDED TO START WITH IRS FREE FILE TO FIND A PROGRAM. ANOTHER THING TO BE AWARE OF ARE THE SMALL TAX PREPARATION BUSINESSES (SUCH AS THOSE THAT "POP-UP" IN SUPERMARKETS DURING FILING SEASON). THE PREPARERS ARE OFTEN LACKING IN IMPORTANT KNOWLEDGE AND THEY USE THE SAME, OR NEARLY THE SAME, SOFTWARE PROGRAMS THAT YOU CAN PURCHASE FOR DIY FILING. THERE ARE MANY SITUATIONS AND INDICATIONS WHICH ARE BETTER HANDLED BY AN APPROPRIATELY EDUCATED, TRAINED, AND EXPERIENCED HUMAN PROFESSIONAL WHO CAN WORK WITH YOU TO CONSIDER OPTIONS, FACTOR IN YOUR PLANS & PREFERENCES, & STRATEGIZE THE BEST COURSE OF ACTION FOR YOU ON A PERSONAL LEVEL. IT IS ADVISABLE TO CONSULT WITH A TAX PROFESSIONAL IF....... ~You have (or are starting) a business, or are self-employed ~You are a partner in a business or are buying into a partnership ~You have, or are buying, rental property ~You’d like to begin planning for future generations (estate planning) ~You have foreign income ~You are (or in the past have been) subject to the alternative minimum tax (AMT) ~You are preparing to retire ~You’re unsure whether to accelerate or postpone income ~You have restricted stock or employee stock options ~You’re not sure how much to withhold from your paycheck or you pay in quarterly estimates ~You have had major life changes (such as marriage, divorce, new child, substantial income changes, etc...) ~You need to file returns for multiple years or are interested in potential amendments to past returns ~The IRS has contacted you
WILL USING A CPA PROTECT ME FROM BEING TARGETED FOR AUDIT BY THE IRS?NOT NECESSARILY, BUT IT CAN HELP THERE ARE MANY FACTORS TO CONSIDER WHEN DETERMINING THE LIKELIHOOD THAT A HOUSEHOLD, OR BUSINESS WILL BE TARGETED FOR IRS AUDIT. THERE ARE ALSO SEVERAL WAYS TO REDUCE THAT LIKELIHOOD, SUCH AS THE USE OF A CPA. (MOST RECENT) IRS AUDIT STATISTICS (see IRS.gov) : ~The IRS audits approximately 1 out of every 167 individual tax returns & 1 of every 113 corporate returns. ~Individuals & Households reporting $0 adjusted gross income (AGI) have approximately a 1 in 49 chance ~Individuals & Households with AGI < $50,000 have approximately a 1 in 205 chance* ~Individuals & Households with AGI $50,000 - $100,000 have approximately a 1 in 202 chance* ~Individuals & Households with AGI $100,000 - $200,000 have approximately a 1 in 165 chance* ~For Individuals & Households with AGI < $200,000, odds increase drastically from approx. 1 in 188 to 1 in 15 as income increases* ~Partnerships: approx 1 in 450; S-Corps: approx 1 in 457; Estates & Trusts: approx 1 in 2,044* *odds are greater or lesser depending on the complexity of the return and the make-up of the income WHILE IT IS NOT POSSIBLE TO ELIMINATE THE ODDS OF BEING TARGETED FOR AUDIT COMPLETELY, THERE ARE WAYS TO MINIMIZE UNNECESSARY IRS ATTENTION (see KIPLINGER) : ~Avoid mistakes & never forget to include an income source. The IRS will receive a separate copy & their computer systems will identify the discrepancy automatically, red-flagging your return. ~Understand deductions. If your deductions are atypical in relation to other factors on your return, it may be flagged for review. If you are taking unusual, but legitimate, deductions, be sure you have your source documents available in the event the IRS contacts you. There are certain deductions that the IRS is especially interested in and which, in sufficient dollar amounts, will trigger a flag. Be careful with donations, report your health tax credit properly, disclose foreign accounts, & take care with early IRA/401K payouts. ~If you are self-employed or own a small business, be aware that the IRS is on the hunt for people who abuse the system by claiming illegitimate deductions & failing to report all income; cash-based operations might also be at risk for heavier scrutiny. Again, some types of deductions are more likely to get attention than others. Be extra careful with vehicles, meals, & expenses related to businesses which could resemble or be re-classified as a hobby. ~Avoid incongruous claims. As an example, claiming a rental real estate loss through the landlord/real estate professionals exception to the passive activities loss limitations rule while also reporting meaningful income from other sources (particularly W-2's) will likely trigger a further inquiries. ~When in doubt, turn to a professional.
IT'S MY 1ST TIME USING A CPA FOR MY TAXES; WHAT SHOULD I BRING TO MY APPOINTMENT?INDIVIDUALS & FAMILIES WILL NEED TO BRING: -Complete names and Social Security #s for every member of your household -All income related forms (W-2 forms, 1099 forms, & K-1s) and information for any income from rental, investment, or sole-proprietorship work -All expense related documentation (1097 & 1098 forms, tax payment reciepts or bills, proof of medical expenditures, childcare expense records from provider/s, gambling loss reciepts, charitable gift/donation reciepts, proof of moving expenditures, proof/records for rental property expenses, proof/records for expenses related to sole proprietorship -Reports & statements for all stocks, bonds, mutual funds and other capital investments -Last year's tax return BUSINESS OWNERS WILL NEED TO BRING THE ABOVE, AND ALSO: -
WILL I BE ABLE TO TALK TO YOU AS OFTEN AS I NEED OR WANT TO?UNFORTUNATELY, NO. IT IS VERY IMPORTANT TO US THAT YOUR WORK IS HANDLED WITH CARE AND ATTENTION TO DETAIL. OUR PROFESSIONALS MUST HAVE SIGNIFICANT AMOUNTS OF TIME, OFTEN WORKING OVERTIME, TO GIVE THEIR UNDIVIDED ATTENTION TO EACH CLIENT'S WORK. IT IS ALWAYS A DIFFICULT BALANCING ACT FOR THEM TO DEVOTE THE NECESSARY TIME TO MEET WITH CLIENTS IN OFFICE, ON LOCATION, AND VIA PHONE WHILE HAVING ADEQUATE TIME TO APPLY TOWARDS DOING THE WORK WITH CARE, PRECISION, AND EFFICIENCY IN ORDER TO MEET DEADLINES EACH MONTH. AFTER YOU HAVE DISCUSSED ALL OF THE DETAILS WITH YOUR ACCOUNTANT AND LEFT THEM TO THE ENGAGEMENT, YOU MIGHT FIND THAT IT IS NECESSARY TO MAKE AN APPOINMENT TO TALK WITH THEM LATER.
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