Need someone to prepare your tax return?

There are various types of tax return preparers, including certified public accountants, enrolled agents, attorneys, and many others who don’t have a professional credential. You expect your preparer to be skilled in tax preparation and to accurately file your income tax return. You trust him or her with your most personal information. They know about your marriage, your income, your children and your social security numbers – the details of your financial life.

Most tax return preparers provide outstanding and professional tax service. However, each year, some taxpayers are hurt financially because they choose the wrong tax return preparer. 

Things to Remember When Choosing a Blue Springs Income Tax Preparer

Taxpayers should choose their tax return preparer wisely – with good reason. Taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return. Here are ten tax tips to keep in mind:

1. Check the Preparer’s Qualifications. Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with the qualifications that they prefer. The Directory is a searchable and sortable listing of preparers with a credentials or filing season qualifications. It includes the name, city, state and zip code of:
    
   • Attorneys.
   • Certified Public Accountants.
   • Enrolled Agents.
   • Enrolled Retirement Plan Agents.
   • Enrolled Actuaries.
   • Annual Filing Season Program participants.
      
   Attorneys, CPAs and enrolled agents can represent any client before the IRS in any situation. Annual Filing Season Program participants may represent clients in more limited situations. Non-credentialed preparers who do not participate in the Annual Filing Season Program may only represent clients before the IRS on returns they prepared and signed on or before December 31, 2015.
   
   For more information, check the Understanding Tax Return Preparer Credentials and Qualifications page.
    
2. Check the Preparer’s History. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to IRS.gov and search for “verify enrolled agent status” or check the Directory.
    
3. Ask about Service Fees. Avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition. When inquiring about a preparer’s services and fees, don’t give them tax documents, Social Security numbers and other information. Some preparers have improperly used this information to file returns without the taxpayer’s permission.
    
4. Ask to e-file. Taxpayers should make sure their preparer offers IRS e-file. Paid preparers who do taxes for more than 10 clients generally must file electronically. The IRS has safely processed billions of e-filed tax returns
    
5. Make Sure the Preparer is Available. Taxpayers may want to contact their preparer after this year’s April 18 due date. Avoid fly-by-night preparers.
    
6. Provide Records and Receipts. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure the total income, tax deductions, credits, etc. Taxpayers should not use a preparer who will e-file their return using their last pay stub instead of a Form W-2. This is against IRS e-file rules.
    
7. Never Sign a Blank Return. Don’t use a tax preparer who asks a taxpayer to sign a blank tax form.
    
8. Review Before Signing. Before signing a tax return, review it. Ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it. They should also make sure that their refund goes directly to them – not to the preparer’s bank account. Review the routing and bank account number on the completed return.
    
9. Ensure the Preparer Signs and Includes Their PTIN. All paid tax preparers must have a Preparer Tax Identification Number (PTIN). By law, paid preparers must sign returns and include their PTIN.
    
10. Report Abusive Tax Preparers to the IRS. Most tax return preparers are honest and provide great service to their clients. However, some preparers are dishonest. Report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their return without the taxpayer’s consent, they should file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. Taxpayers can get these forms on IRS.gov any time.

Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

Additional IRS Resources:

• Tax Topic 254 - How to Choose a Tax Return Preparer
• Choosing a Tax Professional
• How to Make a Complaint About a Tax Return Preparer
• How to Report Suspected Tax Fraud Activity
• IRS Tax Pro Association Partners

IRS YouTube Videos:

• Choose a Tax Preparer Wisely – English | Spanish | ASL

Getting the W-4 Right Is Important

Article Highlights: 

• W-4 Complications 
• Working Spouse 
• Adjusting Refund 
• Other Income and Tax Issues 

As they do at the beginning of every year, employers will be requesting employees to complete the IRS Form W-4. Its purpose is to provide employers with the information they need to determine the amount of federal income taxes to withhold from an employee’s paycheck. So, it is very important that the form be completed correctly. 

The problem is that as simple as the form looks, getting those entries on the form to produce the desired withholding amount can be tricky. The passage of the tax reform added additional complications, and the IRS has delayed a major revision of the W-4 until the 2020 tax year. In the meantime, taxpayers must get along as best they can using the old version of the W-4. 

Even though the W-4 form itself appears to be simple, the instructions come with an extensive worksheet, which may or may not produce the desired results. In addition, there are other issues to consider, such as: 

• Perhaps you desire to have a substantial refund when your taxes are completed next year. This generally requires custom W-4 adjustments, to produce excessive withholding. Keep in mind: when you have a large refund, you have provided Uncle Sam with an interest-free loan.
  
• Your spouse may also work, and your combined incomes may put you in a higher tax bracket. Although the IRS provides a special worksheet for married taxpayers if both spouses work, it may not always provide the desired results.
  
• In addition to payroll income, you may also have self-employment income, which is subject to both income tax and self-employment, and so you may require a combination of payroll withholding and estimated tax payments, adding additional complications to the W-4.
  
• These are just the tip of the iceberg, as there may be investment income or losses, business losses, tax credits, special deductions and loss carryovers, just to name a few more situations that could impact your tax prepayments and withholding for the year. 

If you are concerned about getting your withholding correct, please contact the Blue Springs income tax and financial services firm of Alliance Financial & Income Tax. We can project your 2019 tax liability and complete your W-4 after taking into account multiple employments, a working spouse, self-employment income and other tax issues unique to your specific tax situation.

When You Buy Local

It is that time of year again, Tax Time.  Every tax payer has a multitude of options when it comes to how to file their tax returns each year.  They have the DIY software, they have the family member or friend, the BIG corporations or they may elect to file with a local family owned business.  For those that choose to hire a professional to handle filing their taxes this year, may I suggest using the local family owned business method.  Blue Springs has several experienced and affordable family owned business to choose from.  T&T Tax and Accounting, Norma’s Tax Service, Fullerton CPAs, PCA Services and Alliance Financial & Income Tax.

Local business owners know that you have chose to where you do business.  Speaking for myself, thank you for choosing local. 

Turbo Tax and the DIY Tax Software

I had a new client come in with an insurmountable problem. His off-the-shelf tax software would not and could not handle the problem. 

The new client thought that I probably also would find it an insurmountable problem. 

I just chuckled and said "No, this is an easy problem to fix when you know how."

I suppose the greatest part about being a Grain Valley tax professional is getting to be a hero to people who have been banging their heads on the wall. 

Hire an Enrolled Agent, the antidote for your headache. No problem too big.

7 Ways Small Business Owners Can Save On Taxes

Everybody wants to lower the amount they pay in taxes, but it is an especially important goal for small business owners. Every penny in taxes avoided are a double victory: you avoid overpaying and add to your bottom line. Here are seven tips to use to spot potential savings provided by the Grain Valley Income Tax Preparation firm of Alliance Financial & Income Tax

Big Tax Changes for Divorce Decrees after 2018

Article Highlights: 

• Pre-2019 Alimony 
• Post-2018 Alimony 
• Definition of Alimony 
• Alimony and IRA Contributions 
• State Treatment of Alimony

Welcome to 2019 and a delayed provision of the tax reform, also known as the Tax Cuts and Jobs Act (TCJA). For divorce agreements entered into after December 31, 2018, or pre-existing agreements that are modified after that date to expressly provide that alimony received is not included in the recipient’s income, alimony will no longer be deductible by the payer and won’t be income to the recipient. 

This is in stark contrast to the treatment of alimony payments under decrees entered into and finalized before the end of 2018, for which alimony will continue to be deductible by the payer and income to the recipient. 

Having the alimony treated one way for one segment of the population and the exact opposite for another group of individuals seems unfair and may ultimately make its way into the court system. But in the meantime, parties to a divorce action need to be aware of the change and compensate for it in their divorce negotiations, for a decree entered into after 2018. 

This is not the first time Congress has tinkered with alimony. Way back in the mid-1980s, the definition of alimony was altered to prevent property settlements and child support from being deducted as alimony. Under the definition of alimony since then, payments: 

(1) Must be in cash, paid to the spouse, the ex-spouse, or a third party on behalf of a spouse or ex-spouse, and the payments must be made after the divorce decree. If made under a separation agreement, the payment must be made after execution of that agreement. 

(2) Must be required by a decree or instrument incident to divorce, a written separation agreement, or a support decree that does not designate payments as non-deductible by the payer or excludable by the payee. Voluntary payments to an ex-spouse do not count as alimony payments. 

(3) Cannot be designated as child support. Child support is not alimony. 

(4) Are valid alimony only if the taxpayers live apart after the decree. Spouses who share the same household can’t qualify for alimony deductions. This is true even if the spouses live separately within a dwelling unit. 

(5) Must end on the death of the payee (recipient) spouse. If the divorce decree is silent, courts will generally consider state law, and where state law is vague, judges may make their own decision based on the facts and circumstances of the case. 

(6) Cannot be contingent on the status of a child. That is, any amount that is discontinued when a child reaches 18, moves away, etc., is not alimony. 

Taxable alimony payments under pre-2019 decrees and agreements are treated as earned income for IRA contribution purposes, allowing the spouse receiving the alimony to make IRA contributions based upon the alimony. The ability to make IRA contributions under pre-2019 decrees and agreements remains unchanged. However, for alimony received as a result of a post-2018 decree or agreement, the alimony can no longer be used as a basis for making an IRA contribution. 

To summarize: 

Pre-2019 Decrees – For decrees entered into before 2019 and unmodified after 2018: 

• Alimony continues to be deductible by the payer spouse/ex-spouse. 
• Alimony is includable in the income of the recipient spouse/ex-spouse. 
• The recipient spouse/ex-spouse can make IRA contributions based upon the alimony received. 

Post-2018 Decrees– For decrees entered into after 2018 (and pre-2019 decrees that are modified and include the TCJA alimony rules): Alimony is not deductible by the payer-spouse/ex-spouse. 

• Alimony is not includable in the income of the recipient spouse/ex-spouse. 
• The recipient spouse/ex-spouse cannot make IRA contributions based upon the alimony received. 

One additional complication is if state tax treatment is different than that at the federal level. Some states, such as California, have not conformed to the TCJA; as a result, the state treatment of alimony paid under both pre-2019 and post-2018 decrees in these states will continue to follow pre-2019 law, with alimony payments continuing to be deductible and alimony received being taxable. 

If you have questions related to alimony or about how your state will tax alimony beginning in 2019, please give the office a call.

How Tax Reform Effects Business Entertainment

If you entertain for your business, change is here. With the new tax law, your ability to deduct 50% of the cost of recreation, entertainment or amusement expenses disappeared. Watch the video to learn more.


  If you have questions please contact your Grain Valley Income Tax Preparation firm of Alliance Financial & Income Tax.