Well, file this one under "Offbeat News" (or not). Filling out taxes is complicated, apparently.
And this is true even for many accountants, at least from what we sometimes see when people bring in returns prepared elsewhere (which we happily review for people).
But I saw this story in this month's issue of the Journal of Accountancy: http://www.journalofaccountancy.com/Issues/2013/Sep/20137345.htm -- and I'll spare you from having to read the whole scintillating thing, but essentially, if you have any kind of investments, then determining the "cost basis" (i.e. the original cost of property, adjusted for factors such as depreciation, etc.) has become even more complicated.
We're keeping track of the changes, however ... and if whomever will be preparing your taxes for this year is not us, then I hope for your sake that they are also tracking closely with the changes -- because 2014 is already shaping up to be a doozy, what with Obamacare coming down the pike as well.
Aren't you glad that you don't have to worry about all of this yourself, and can let us stay on top of it?
But there are still situations wherein our hands are tied. We can do a lot, but we can't make numbers on a page suddenly disappear, nor can we change the past.
But we CAN change your future.
How? Through simple tax planning. That's the process by which we take a look at where things stand with your income, your accounts, etc. right now and we help you to make adjustments so that your upcoming tax bill can be radically reduced.
Call us now: (347) 673-6360 or email us back to set up your tax planning session. It is almost always a net gain for our clients ... when you take advantage of it.
And this week, I'm continuing last week's Note about avoiding an audit. There's no guarantee with this kind of thing ... but especially for those that are filing their extension returns in about a month, understanding the red flags can make a big difference.
Tony Khait, CPA, PFS's
"Real World" Personal Strategy Note
Avoiding An Audit On Your Taxes (Part 2 of 2)
"No person will do a great thing who wants to do it all himself or get all the credit." - Andrew Carnegie
Last week, I gave you four significant factors which often lead to an audit from the good ol' Internal Revenue Service. They were ...
1. Making "indefensible" claims
2. When things don't add up
3. Leaving out a 1099 or other paperwork
4. Do not "over-report"
Well, that's only half of the story. Here are four more things to avoid, if you are interested in not having revenue agents inspecting every corner of your financial life...
5. Fighting what you don't need to fight
Here's where some clients have gotten in trouble in the past, despite our admonitions: If you take reasonable tax positions, and complete your return accurately, checking your math, why should you pay a bill if the IRS sends you one? Frankly, it's a matter of practicality (and wisdom) rather than principle. It just doesn't pay to fight with the IRS on small matters. So don't get into the bureaucratic system and risk bigger problems for a few dollars. Just pay it and move on.
6. Making very minor amendments
Here's the reverse situation of my previous point: amended returns are reviewed much more regularly than initial returns. So if you forgot a deduction or otherwise think you can get a small amount back by amending, think twice before adding them to your amended return (i.e. consult with a pro). Consider whether you might have bigger problems if other matters on your return, unrelated to the amendment, are reviewed. Yes, you can win a battle ... and lose a larger one.
7. Asking for cash
Perhaps you've received a notice that you are entitled to a refund. Well, you might consider applying it to your next year's tax payments, rather than asking for the refund in cash. If you're owed a big refund, you'll simply have a lower "profile" to the computers and to the bureaucrats if you file a return applying a whopping refund to estimated tax payments for the current or future years. This logic applies to both initial returns and to amended ones.
8. Trying to do it yourself
Yes, this is a bit self-serving -- but I'll also make a "damaging admission" here: some tax professionals argue that a return prepared by a professional is less likely to be audited. However the facts are that there's little reliable data to support it. That being said, having a professional prepare your return -- or at least advise on anything quirky -- is simply a wise investment.
So to absolutely ensure that whatever happens, you'll have someone at your side -- give us a call: (347) 673-6360.
And a last word: No matter how careful you are, there's no way to guarantee you'll never have a tax controversy. Sometimes your number just comes up. But when your number is called ... make sure you aren't alone.
I'm in your corner!
Tony Khait, CPA, PFS