How do find affordable Income Tax Preparation?

It depends on your definition of affordable. 

There are many generalizations in regards to taxes, but in reality, one answer does not fit all.  There is no cookie cutter to use, as each individual has a unique tax situation specific to them.  Therefore, you should make your decision on who will prepare your returns based on your needs. 

So how does one get the best results at an affordable price? 

Well, you could do them yourself.  However, you may need to take valuable time to research the mandatory forms necessary.  Of course, you may also want to research eligible elective forms.   Do you have that much extra time?  Yet, if you only worry about the mandatory forms required by the IRS, you may not receive the best value.  Mandatory forms usually result in the best case scenario for the IRS.  Thus, it is not so affordable when you pay extra in tax.

Of course, you can buy a tax preparation package to use, but until Artificial Intelligence becomes main-stream, this software is limited by the data you entered into it.  Even expert advice can lead to problems as misunderstandings and misinterpretations are possible.   The more complicated your return, the more you increase your chance of error.  A wrong yes or no may cost you lost deductions.  Just ask any of us who have accidentally deleted a document by choosing yes when we should have chosen no J

Which leads us to professional preparation.  In many traditional tax offices, you schedule an appointment or walk in.  You may have to wait, hopefully with well-behaved children.  Privacy might become an issue when only a small particle board separates you from the desk next to you.  Unfortunately, this might allow your paperwork to be seen or your conversation to be overheard by others.  It might not be very convenient either as you may have scheduling conflict because you need to take time off from work.  Maybe you can drop your private information off during your lunch hour if you don’t desire food.  Plus, if you work the 2nd or 3rd shift, finding an appointment time convenient for you is even more difficult.  Your preparation fees for expert help balance out in paying less tax, hopefully generating a bigger refund.  Unfortunately, you save time by not having to research, but lose it with the inconvenience of catering your schedule to the offices. 

So how do you get the ease of self-preparation with professional tax services at an affordable price?  By taking advantage of modern technology. 

This is the premise behind Easy Web Taxes.  It takes the convenience of doing them yourself, and combines it with the expertise of a professional.  IRS Registered Tax Return Preparers take the time to research tax code and apply it to your specific situation.  Plus, there is no office visits, so no sitting and waiting; no one to overhear your personal information; no loose paperwork for others to see; no need for return trips.  All work is done by telephone, email, or through the website itself.  There is no need to even leave your house! 

The benefit of accessibility with the knowledge of skilled professionals makes Easy Web Taxes an affordable source for income tax preparation.

Before you hire a Tax Professional

Check the person's qualifications. 

• ·         Do they have a Preparer Tax Identification Number (PTIN)?
• ·         Are they affiliated with a professional organization?
• ·         Do they attend continuing education classes?

Check the preparer's history. 

• ·         Are they accredited by the Better Business Bureau?
• ·         Are they in good standing with their professional organization?

Find out about their service fees. 

• ·         Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers.

Ask if they offer electronic filing. 

• ·         Any paid preparer who prepares and files more than 10 returns for clients must file the returns electronically, unless the client opts to file a paper return. 

Make sure the tax preparer is accessible. 

• ·         Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise.

Never sign a blank return. 

• ·         Avoid tax preparers that ask you to sign a blank tax form.

Review the entire return before signing it. 

• ·         Before you sign your tax return, review it and ask questions.
• ·         Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.

Submitted return should include preparer PTIN. 

• ·         A paid preparer must sign the return and include his or her PTIN as required by law.
• ·         Although the preparer signs the return, you are responsible for the accuracy of every item on your return.
• ·         The preparer must also give you a copy of the return.

from IRS FS-2012-5:

Making IRA Contributions

The IRS has 8 important tips for you about setting aside money for your retirement in an Individual Retirement Arrangement.

1. You must be under age 70 1/2 at the end of the tax year in order to contribute to a traditional IRA.

2. You must have taxable compensation to contribute to an IRA.

·         If you file a joint return, generally only one spouse needs to have taxable compensation.

3. You can contribute to your traditional IRA at any time during the year. 

4. For 2013, the most you can contribute to your IRA is the smaller of either your taxable compensation for the year or $5,500. If you were 50 or older at the end of 2013 the maximum amount increases to $6,500.

5. Generally, you will not pay income tax on the funds in your traditional IRA until you begin taking distributions from it.

6. You may be able to deduct some or all of your contributions to your traditional IRA.

7. You may also qualify for the Savers Credit, formally known as the Retirement Savings Contributions Credit. The credit can reduce your taxes up to $1,000 (up to $2,000 if filing jointly). Use Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the Saver’s Credit.

8. You must file either Form 1040A or Form 1040 to deduct your IRA contribution or to claim the Saver’s Credit.

from IRS Tax Tip 2013-50:

Small Business & Obamacare

1.  Businesses with Fewer than 25 Employees- Small Business Tax Credits

The Affordable Care Act does not require that businesses provide health insurance.

·         But it does offer tax credits for eligible small businesses that choose to provide insurance to their employees. 

·         To qualify for a small business tax credit of up to 35% (up to 25% for non-profits), you must have:

-           Fewer than 25 full-time equivalent employees

-           Pay average annual wages below $50,000

-           Contribute 50% or more toward employee health insurance premiums

-           Beginning in 2014, this tax credit goes up to 50% (35% for non-profits) and is available to qualified small businesses who participate in the Small Business Health Options Program (SHOP) Exchanges.

2. Businesses with 50 or Fewer Employees- Affordable Insurance Marketplaces

The Affordable Care Act does not require that businesses provide health insurance.

·         But beginning in 2014, small businesses with generally 50 or fewer employees will be able to purchase coverage through SHOP. 

·         Competitive marketplaces where small employers can go to find health coverage from a selection of providers. 

·         The SHOP Marketplaces and Individual Marketplaces for those who are self-employed open on January 1, 2014.

-           Open enrollment begins on October 1, 2013. 

-           SHOP will offer small businesses increased purchasing power similar to that of large businesses.

3.  Businesses with 50 or More Employees- Employer Shared Responsibility Provisions

Employers are not required to provide coverage to their employees under the Affordable Care Act.  

·         However, beginning in 2014, businesses with 50 or more full-time employees (or full-time equivalents)

·         that do not offer affordable health insurance that provides a minimum level of coverage to substantially all of their full-time employees (and their dependents)

·         may be subject to an employer shared responsibility payment

·         if at least one of their full-time employees receives a premium tax credit to purchase coverage in an insurance Marketplace. 

-           A full-time employee is generally one who is employed an average of 30 or more hours per week. 

from article by Meredith Olafson:

Medical & Dental Expenses

If you paid for medical or dental expenses in 2012, you may be able to get a tax deduction for costs not covered by insurance.

1. You must itemize. 

·         You can only claim medical and dental expenses for costs not covered by insurance if you itemize deductions on your tax return. 

2. Deduction is limited. 

·         You can deduct medical and dental expenses that are more than 7.5 percent of your adjusted gross income.

3. Expenses paid in 2012. 

·      You can include medical and dental costs that you paid in 2012, even if you received the services in a previous year. 

4. Qualifying expenses. 

·       You may include most medical or dental costs that you paid for yourself, your spouse and your dependents. Some exceptions and special rules apply. 

5. Costs to include. 

·       You can normally claim the costs of diagnosing, treating, easing or preventing disease. The costs of prescription drugs and insulin qualify. The cost of medical, dental and some long-term care insurance also qualify.

6. Travel is included. 

·       You may be able to claim the cost of travel to obtain medical care. That includes the cost of public transportation or an ambulance as well as tolls and parking fees. If you use your car for medical travel, you can deduct the actual costs, including gas and oil. Instead of deducting the actual costs, you can deduct the standard mileage rate for medical travel.

7. No double benefit. 

·    Funds from Health Savings Accounts or Flexible Spending Arrangements used to pay for medical or dental costs are usually tax-free. Therefore, you cannot deduct expenses paid with funds from those plans.

from IRS Tax Tip 2013-25:

Deducting Charitable Contributions

Giving to charity may make you feel good and help you lower your tax bill. The IRS offers these nine tips to help ensure your contributions pay off on your tax return.

1. If you want a tax deduction, you must donate to a qualified charitable organization, not an individual, a political organization or a political candidate

2. You must file Form 1040 and itemize your deductions on Schedule A.

·         If your total deduction for all noncash contributions for the year is more than $500, you must also file Form 8283, Noncash Charitable Contributions, with your tax return.

3. If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received.  

4. Donations of stock or other non-cash property are usually valued at fair market value. Used clothing and household items generally must be in good condition to be deductible. Special rules apply to vehicle donations.

5. Fair market value is generally the price at which someone can sell the property.

6. You must have a written record of your donation that includes the name of the organization, the date and amount of the contribution about in order to deduct any cash gift, regardless of the amount.

7. To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization, showing the amount of the cash or a description of any property given, and whether the organization provided any goods or services in exchange for the gift.

8. You may use the same document to meet the requirement for a written statement for cash gifts and the requirement for a written acknowledgement for contributions of $250 or more.

9. If you donate one item or a group of similar items that are valued at more than $5,000, you must also complete Section B of Form 8283. This section generally requires an appraisal by a qualified appraiser.

from IRS Tax Tip 2013-45:  

Home Office Deduction

If you use part of your home for your business, you may qualify to deduct expenses for the business use of your home. Here are six facts from the IRS to help you determine if you qualify for the home office deduction.

1. Generally, in order to claim a deduction for a home office, you must use a part of your home exclusively and regularly for business purposes. In addition, the part of your home that you use for business purposes must also be:

·         your principal place of business, or

·         a place where you meet with patients, clients or customers in the normal course of your business, or

·         a separate structure not attached to your home. Examples might include a studio, workshop, garage or barn. In this case, the structure does not have to be your principal place of business or a place where you meet patients, clients or customers.

2. You do not have to meet the exclusive use test if you use part of your home to store inventory or product samples. The exclusive use test also does not apply if you use part of your home as a daycare facility.

3. The home office deduction may include part of certain costs that you paid for having a home. For example, a part of the rent or allowable mortgage interest, real estate taxes and utilities could qualify. The amount you can deduct usually depends on the percentage of the home used for business.

4. The deduction for some expenses is limited if your gross income from the business use of your home is less than your total business expenses.

5. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home, to figure the amount you can deduct. Report your deduction on Schedule C, Profit or Loss From Business.

6. If you are an employee, you must meet additional rules to claim the deduction. For example, in addition to the above tests, your business use must also be for your employer’s convenience.



from IRS Tax Tip 2013-36: