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It’s a New Year and with all the tax changes everyone is facing this year it’s a good idea to make sure you have everything you need before you visit your tax accountant. You can make your meeting with your tax accountant a seamless one by making sure you bring all the documents needed to prepare your tax return. Basically, you need to remember to bring identification, income documents (i.e. W-2 and 1099 forms), and all your expense documents.

The IRS and state tax agencies are cracking down on people; especially on those who claim the same dependent more than once, such as estranged parents both claiming the same child. Tax preparers increasingly will ask that you provide Social Security cards for yourself and for each dependent. So be sure to locate those in advance so you don’t forget to bring them with you to your appointment with your tax preparer. This helps eliminate electronic filing errors by making sure the name and Social Security Number match the IRS records for each person on the tax return.

You will also need to bring all documents that show all your income for the year; these types of documents include:

• W-2s from your employers,
• 1099-MISC forms for self-employment income,
• 1099-INT (interest) and 1099-DIV (dividends) forms,
• 1099-B forms showing brokerage trades in stocks and bonds,
• K-1 forms for income from a partnership, small business, or trust,
• 1099-SSA form showing Social Security received.

Be sure to bring written documents for any additional income that is not reported on a W-2 or 1099 form, such as any other self-employment income you made, any rental income you earned or alimony you received. This could be a bank statements or another piece of valid written evidence. What qualifies as valid evidence varies from state to state so if you’re not sure what qualifies as a valid document, be sure to contact your tax accountant prior to your meeting so you don’t have to schedule a 2^nd meeting.

You will also need to remember to bring canceled checks, receipts, or spreadsheets for any of your tax-related expenses. This may include gifts to charities and churches, moving expenses, college expenses, medical and dental expenses, real estate taxes and daycare/childcare costs. Some expenses are reported to you. Mortgage interest, for example, is reported to you on form 1098, and student loan interest is reported on form 1098-E.

If you paid estimated taxes, bring a summary of your federal and state estimated payments and canceled checks.

If you don’t have all your documents, your tax accountant will be able to help you track down the missing information, but again it’s best to call ahead of time to make sure you have everything you need before walking into your tax accountant’s office. This is an especially good idea to put into motion considering all of the tax changes taking place in 2013.

For more information on what you need to bring with you and what you can do now to get yourself ready for your 2013 tax filing with your tax accountant, speak with a Beaton Accounting tax representative for professional advice! Call today for a FREE consultation: 631-921-6894.

Have a question or certain topic you’d like to see addressed in our next blog post? Just leave a comment, or e-mail us at [email protected].

With Congress and the President still figuring out how to fend off the so-called “fiscal cliff” – the fact that government spending cuts are set to go into effect at the end of the year and Bush-era tax cuts will be expiring, the outcome is still uncertain as to what happens next with taxes. But tax experts can help you figure out how to handle these changes.

While major changes to the tax policy might be out of taxpayers’ hands, there are a few steps Americans can take to prepare for the potential changes. First, all taxpayers who deal with paid professionals should talk to them now and NOT wait! Ask questions like: Will my tax rate likely go up? Will deductions that I normally take no longer be available? If so, are there ways to mitigate, or at least prepare for, some of these effects?

Investors need to think about the possibility of different taxes on small businesses, dividends, and estate-tax changes. Lawmakers have even thought about limiting the deduction that homeowners can take for their mortgage interest, a change that would affect many homeowners, especially the ones with large mortgages.

For those who file their own taxes, there’s not much to do other than keep an eye on what’s going on. Once lawmakers come to an agreement, the IRS will release documents that help taxpayers figure out how the changes apply to them. But at this uncertain time, taxpayers need to be aware that whatever their circumstances in life, their taxes may go up and, and they’ll need to adjust their spending and saving because of it. However, people who file their own taxes may want to seriously consider seeking a tax professional to assist with all these changes and find deductions they never knew they had available to them to offset the tax hikes they potentially face.

The good news is that lawmakers on both sides of the aisle are motivated to reach an agreement and avert this “fiscal cliff” – the potential economic impact of allowing the tax increases and spending cuts to occur could have a potentially devastating effect on many taxpayers.

To find out what you can do now to get yourself ready for the 2013 Tax Season, speak with a Beaton Accounting tax representative for professional advice on your taxes! Call today for a FREE consultation: 631-921-6894.

Have a question or certain topic you’d like to see addressed in our next blog post? Just leave a comment, or e-mail us at [email protected].

Taxes are inevitable. The government must have money to provide for its operations, whether you agree with what it does with your money or not, you must pay what you legally owe, but no more than that.

We all want to take advantage of every loophole, every deduction available to reduce our tax liability. Some unscrupulous tax preparers lead their clients into a world of trouble by promising means of cutting tax liability through scams that may sound good but are only trouble for the taxpayer.

The IRS has a list of what it calls The Dirty Dozen tax scams. Here are a couple of these, so watch out if some fast talking sharp dealer gives you the idea you can save money by using them.

Hiding Income Offshore:  The IRS aggressively pursues taxpayers involved in abusive offshore transactions, as well as anyone promoting these schemes. Taxpayers have tried to avoid or evade taxes by hiding income in offshore banks, brokerage accounts, offshore debit and credit cards, wire transfers, foreign trusts, private annuities or insurance plans. Once the IRS detects such an attempt at getting out of tax liability, the penalties are severe. Consult a reputable advisor before falling for such a scheme.

Identity Theft and Phishing:  Identity theft occurs when someone uses an unsuspecting individual’s name, Social Security number, credit card number of other personal information without permission to commit fraud or other crimes. One can use someone else’s information to run up bills on that person’s credit card, empty that person’s bank account or take out a loan in that person’s name. A criminal with someone else’s personal information can file a fraudulent tax return and collect a refund.

Phishing is a scam artist tactic to trick unsuspecting victims into revealing personal or financial information online.  They use phony e-mail or websites, even social media. They may pose as an institution such as the IRS. During tax season these impersonators come out of the dark like roaches, and they proliferate like roaches.  Spyware can be loaded onto an unsuspecting taxpayer’s computer by opening an e-mail attachment or clicking on a link.

Identity theft is a major problem that affects thousands of taxpayers each year.  You must protect your personal information. Good people are shocked at the intentions of those scam artists who are willing to destroy another person just for some personal gain and stay hidden. The trouble to the individual whose identity has been stolen may take years to correct.  Anyone who believes personal information has been stolen and used for tax purposes should immediately contact the IRS Identify Protection Specialized Unit at 1-800-908-4490. A suspicious e-mail or an “IRS” Web address that does not begin with http://irs.gov, should be forwarded to the IRS at [email protected].

If you’d like to speak with a Beaton Accounting tax representative for professional advice on your taxes, call us today for a FREE consultation: 631-921-6894.

Have a question or certain topic you’d like to see addressed in our next blog post? Just leave a comment, or e-mail us at [email protected].

During tax season, the major focus is on correctly preparing your tax return. This requires different kinds of records, from receipts to log books and more. But once a return is filed correctly, some people get the urge to throw their records away and be done with it. Don’t give in to this temptation.

Even when your return is correctly prepared and filed, taxpayers should still retain their supporting records. Your accountant doesn’t necessarily have to review every supporting record in order to claim a deduction, but these records are important to keep on hand in case of an IRS examination.

This is especially important when it comes to the deduction of non-cash charitable gifts. Contribution values are of particular importance in charity values. In one case, a taxpayer claimed the correct tax deduction and correctly carried forward the disallowed amount due to income. However, he didn’t consult a tax professional, who should have been able to inform him of the restriction for charitable contributions are not to exceed 50 percent of adjusted gross income. In some cases, restrictions impose limits of 30 or even 20 percent of taxpayer income.

Because this particular taxpayer failed to meet these criteria, he was reviewed by the IRS and the entire charitable donation was disallowed, even though the amount claimed was accurate. In this case, the deduction on his 2003 return exceeded $4 million, which required an appraisal to substantiate the value of the property that was donated. This taxpayer was an appraiser of real estate who did the assessment of value himself. Unfortunately again, if he had consulted a tax specialist, he would have known that an independent appraisal is required for tax purposes.

As this case illustrates, even though a person may be a professional in a certain field, it’s best to retain a tax specialist who is an expert in tax preparation. In the end, it often saves time and money for the taxpayer trying to file a return without assistance. In this case, the taxpayer could have saved millions of dollars, simply by consulting a tax expert.

If you’d like to speak with a Beaton Accounting tax representative for professional advice on your taxes, call us today for a FREE consultation: 631-921-6894.

Have a question or certain topic you’d like to see addressed in our next blog post? Just leave a comment, or e-mail us at [email protected].

Probably the most common question accountants get from their clients when dealing with taxes is “Is it deductible?”

To answer accurately, accountants evaluate all the facts we have against the most recent tax codes.

Often our job becomes explaining why something doesn’t qualify as a tax deduction. Some items that qualify may seem very similar to others that unfortunately are not tax deductible.

Simply the fact of owning a business does not generate special tax breaks. Tax incentives and benefits only become available when businesses actively spend money on commercial activities. And of those activities and expenses, only those expenditures ordinary and necessary to the operation of the business are deductible.

Using the monies of a closely held corporation to pay personal expenses does not make those expenses tax deductible. Unfortunately, some business owners are not reminded of this until they meet with their accounts who are forced to remind shareholders of tax regulations for small businesses.

The key is being thorough. Take advantage of all business incentives that are available to you but also take care to stay within tax codes. And if you are unsure of whether or not something is deductible, just ask your accountant.

For more information on tax deductions, call Beaton Accounting today at 631-921-6894 for a free consultation with an accounting professional.

Have a question or a certain topic that you’d like to see addressed in our next blog post? Just leave a comment or email us at [email protected].