The following material was printed from the John Masters, CPA, P.C. web site: http://www.jmasters.com
If this is the first time that you have had John Masters, CPA, P.C. prepare your return, please review this material even though some of it will not apply to you. Gather your materials in any manner that seems appropriate and bring them for your appointment.
When a new client comes to us for tax return preparation we need to learn about our new client. We can learn the fastest by reviewing the last tax return that was filed. For this reason we ask that you bring a copy of your last year’s state and federal tax returns for our review. In addition, there are often carryover items from the prior year’s return that effect the current year’s return.
There are several effective ways to prepare for your initial interview in our office. Every year we prepare, and send to each of our clients, a booklet for assembling their tax data. Your prior accountant may have sent you a booklet of his own for preparing this year’s return. You can use that booklet if you like. Finally, you may simply use last year’s tax return as a guide for preparing this year’s tax data.
The main reason for a data gathering system is to prevent omission of relevant tax data. If we notice that relevant data is missing we will call you. However, your diligence in providing us with the information reduces our preparation time and, therefore, causes your bill for our services to be less than it will be if we must assemble the data or make calls to obtain the information.
In preparing your information, if you are unsure of what to include or how to present it, just write down what you know. If we need additional information, or do not understand your data, you can explain it at our interview, or we will call you for additional clarification. Our objective is to get your return prepared completely, accurately, and as quickly as possible. We may estimate or omit minor items in the interest of time if we believe that is appropriate and in your best interest. Remember though, that we cannot "create" data for you.
Organize Your Data
When organizing your data, it is best to write down any important and/or confusing issues. Writing it down will help you to clearly organize the points that you want to make, and it will provide a written reference in your file for the tax preparer. Don't forget to write down any questions that you have so that we can discuss them at your appointment. Another point to remember is, it is useful to write down each number only in one place. If an item can be divided and part put in more than one place, indicate that fact where you put the number. Writing the same number in multiple places makes it more likely that errors will be made.
If you have several receipts for one kind of expense, use an adding machine with a paper tape to add up the tickets and staple the tape to the top of the stack of tickets. This provides a written record of what goes on your return and keeps the tickets in the order for future use in the event that you are audited.
It is not necessary to provide us with your actual receipts if you provide us the same information in summary or detail form. We do not have a duty to audit you. If you want to avoid writing it down, you can just give us the receipts and tickets and we can work from those. It is less confusing for us if you do not provide receipts and tickets for the same things for which you are also providing your summary form. We do not want to leave anything out, but we also do not want to count anything twice.
Penalties are rampant in the Internal Revenue Code. We attempt to avoid penalties being applied to our clients, as well as penalties applied to us. Professional judgment is required in making many decisions that arise in the preparation of tax return as a result of penalty considerations. In the event you incur a penalty as a result of our error, it is our duty to reimburse you for that penalty. However, we are entitled to an opportunity to dispute the penalty. As long as you give us this opportunity before you pay the penalty, we will gladly reimburse you for any penalty we cause.
Extensions are filed en masse on April 15th each year. There is no way that all returns can be filed by the original due date. Extensions are automatically granted upon filing the application. Clients are occasionally concerned that there may be an increased possibility of being audited if they file an extension. This is not the case. Our actual experience is that we have very few returns audited annually. I have filed extensions for my personal return each year from 1974 and forward. I simply could not file on time after I started my own business. I have not been audited in any of these years.
There are several reasons why extensions are actually filed. Frequently, all of the data needed to accurately complete the tax return has not been received in time to complete the return by the due date. On other occasions, we do not receive the client’s data in time to complete the return by the due date. Sometimes we simply have more work than our staff can complete by the due date. In the last few days before the due date, we concentrate on completing returns in process, in preference to starting yet another return that we might not complete by the due date. Also in those last few days before the due date, we prepare estimates for our clients so they can pay any amounts owed by the due date.
Remember that the Extension to File the return later is not an Extension to Pay later. We notify our clients so they can pay the estimated amount by the due date with the Extension to File the return later. If they cannot or do not wish to pay the amount we estimate to be due, there is no need for our client to come to our office, because we can sign and mail the extension on their behalf. If large refunds are due, we try to get those returns filed sooner rather than later. Since the first payment of the estimated taxes is also due on April 15th, we do the estimates for amounts due with the returns to aid in preparing estimates of taxes due for the current year.
The first extension is for 4 months, and an additional extension is available for 2 months. (In some circumstances other due dates apply and extensions may be automatic, but that is beyond the scope of this essay.)
If you are due a refund, it usually does not matter whether or not you have obtained an extension. Penalties and interest are based on how much you owe. However, if you owe the IRS and file late, the penalty and interest are substantial. If you file for an extension and expect to owe money, but can not pay it with the extension, penalties (a much smaller one than for filing late) and interest accrue until the actual amount owed is paid. Therefore, we recommend that you always file an extension if your return will not be prepared by the due date.
If we receive your return too late for completion before the due date, even if it is at the last minute, we will file an extension for you and include any payment that you provide.
Even if you have a payment plan with the IRS, you are still in compliance as long as an extension is timely and properly filed.
When we have your tax returns prepared, reviewed, signed, copied, collated, and the bill prepared for our services, we will contact you to determine the best and most convenient delivery method.
Fees for tax return preparation are based on the time required to prepare them. The time is effected by the complexity of the return. Common factors causing a return to be more complex and taking more time to complete are, whether there are multiple state tax returns to complete, whether the client has moved from one state to another which often entails the sale and purchase of a residence and moving expenses and the possible expenses of hunting a job. Many investments have additional complexities and require greater detail to be reported. Stock options, real estate transactions, and many other factors effect the time required to prepare the return and the experience and training the preparer must possess. Occasionally, research is required to solve tax problems.
Follow up with us if you have not heard from us within a reasonable time. We do not usually forget about a job, but errors can occur in any office. We are busy trying to do a good job for all of our clients, and probably have just not completed your work due to other business pressures. We attempt to do our work in the order it comes into the office. However, we frequently must change that order to address an emergency. Employee illness, a client’s college grant and loan applications, a client’s home purchase or refinancing are some of the most frequent reasons we must adjust our work schedule. However, if in doubt, check it out.
DO be prepared. It will save you money. We do not want to charge you for wasted time. If your are prepared, it makes our job easier, and just like everyone else, we like it better when it is easier.
DO ask us questions if your are unclear or unsure about anything. We prefer positive knowledge to passive assumptions. Ask us about anything even if you are not sure about its propriety.
However, please DON'T ask us to break any rules or do anything illegal. Occasionally, a client or prospective client will actually ask us to do something we definitely should not do. My answer is this: If I were to do that it would jeopardize not only me, but all of my clients. Avoidance is OK. Evasion is not OK. Lets look at possibilities of Avoidance and see what we can do.
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John Masters 10 Lenox Pointe, N.E. Atlanta, GA 30324