OK, so you have decided that doing your own taxes is worse than going to the dentist and you are looking for help. Choosing a CPA to do your tax work is a great choice. In my Practice, a potential client usually calls me and asks the standard questions, can you do it, when can you do it and how much will it cost. Before those questions can be answered, if it is feasible, I request a meeting with the potential client. I get referrals for tax work from all over the country, so occasionally meeting face to face is not an option. But assuming you are local, I ask the potential client to review my web site before our meeting. I believe people should have an idea of what they are buying before they go to the store. I may be more than what they need, and is makes no sense to spend my time and their money if they don't need someone with my expertise.
When they do decide to come in, I generally ask them to bring their prior two years tax returns and any tax notices they may have received in that time. I also ask them to bring in their W-2's,last pay stub for the year, all 1099's for interest, dividends, other income, any year end brokerage statements, investment K-1's, Social Security year end statements and any pension income 1099's. As to expenses, my office is not the size of Gillette Stadium, so I do not want boxes of receipts for items they believe are tax deductions. Bring the basic information: mortgage interest paid, real estate taxes paid, excise tax on your car, but summarize as much as possible medical expenses such as prescriptions, doctor and dentist bills, etc., as well as any charitable donations. We can talk about what support you will need to have for me take these deductions once you are here. There is generally no need to rent a U Haul before you come to see me. Remember, it costs you more if I summarize your data instead of you. If there are rental properties, or the individual is self- employed, summarize the income and expenses related to these activities, or bring along the computer files on disc or thumb drive.
Unfortunately, it is very rare that someone has everything they need at this initial visit. Either the client hasn't received it, didn't know they needed it, or had no idea it was deductible or taxable. After the taxpayer has left, I like to go over the data and list what is missing. Once I have a better idea of what I need to finish the tax return I will call the individual with questions or tax saving ideas that arise in the preparation. Once we have both gotten over the pain of that first year return, most of my clients fill out tax organizers, custom designed with their prior year data. This generally eliminates the need for an office visit the following year, unless the client really misses me.
Although I have been thinking about it for years, I officially decided to formalize my tax practice by incorporating as a Professional Corporation on January 1, 2012. However, I began preparing client's individual and business tax returns under my own name in 1980's. Because my practice has grown substantially over the past few years, I decided it was time to fully concentrate all my efforts to this endeavor. I realized that it is more rewarding to help people that I could make a personal connection with, rather than doing it for someone else�s clients. The recommendations and encouragement I received from my existing clients and friends once I had announced my decision convinced me that I had made the right move.
I began my career working for Price Waterhouse Coopers, before moving on to a small CPA Firm in Concord, Ma. Although I loved working at a public accounting firm, I was presented an opportunity to get in at the ground floor of a developing real estate syndicator, The Krupp Company. My task was to head a newly created in house tax department with a staff of one, me. It was a small regional company with maybe 50 employees and about 2,000 investors. These investors owned shares in about 15 limited real estate partnerships that the company operated as general partners. In my 14 years of working there, the company grew rapidly into a national real estate syndicator, property manager, and loan originator. I ultimately managed a staff of 12, and held the position of Senior Vice President of Tax. I was responsible for timely preparing and filing 200,000 partner information returns (K-1's) along with 100,000 1099's for 200 real estate partnerships, REITS, and trusts for property located all over the country. Along the way, the company changed its name to The Berkshire Group, and for several years held the reputation of being the largest syndicator of partnerships in the world. When the Company decided to manage their holdings, and not pursue further expansion or acquisitions, the challenge of the job was gone. I was bored overseeing the empire that had been built and decided to get back into a more challenging field. Although the transition was daunting, and one that not many people pursue, I decided to go back into Public Accounting. After re-establishing my credentials in this field, I took a position as Tax Manager for Samet and Co, a mid-sized CPA Firm located in Chestnut Hill. I spent 10 years there working on very high profile individuals, and some well-known Companies. My duties included preparing/reviewing tax returns for individuals, corporations, trusts, partnerships, limited liability companies, tax exempt organizations and non-profit organizations. I also supervised a staff of accountants and handled all the tax notices received by the Firm's clients. In addition, I represented the Firm on behalf of any individual or entity under audit before the Internal Revenue Service or state taxing authorities. During this time, I authored over 40 articles which were published in The New England Real Estate Journal.
I grew up on Perham Street in a family orientated neighborhood teeming with kids. West Roxbury Center offered many different shops; people would meet their neighbors and chat on just about every corner. St Theresa's and Holy Name had teams in the CYO, and everybody was involved. People were proud to be known as coming from West Roxbury. Billings field always had something going on, and there were many different athletic organizations for kids to participate in. After many changes in Boston over the years, it seems to me that the children and young families have moved back into the area. It is impossible to go into Roche Bros Supermarket and not run into someone you know. People take pride in their neighborhoods. Opportunities for kids exist in many locations including the Roche Center, the Parkway Little League and Youth Hockey programs. I think it is a great community and I welcome the opportunity to have my practice here.
I am a Certified Public Accountant with a Masters in Taxation, so my core business is tax and accounting. Although I specialize in high net worth individuals, many of my clients are considered middle class. I also do both tax and accounting work for small businesses with gross receipts of $10 million or less. Included in the mix are partnerships, LLC's, S and C Corporations, all types of trusts and several non-profits. I am currently filing tax returns for both individuals and businesses in 26 states, so I have extensive multi state experience. In addition to my core business, I have several associates that I share and refer work to. I like to think of this service as one stop shopping. Clients can get everything they need to satisfy all their financial situations from one source. What I think is great about this approach, is that every professional that works on a client knows what the other professional is doing. As a result, there is frequent communication to make sure that nothing is overlooked or duplicated. The objective is to insure that the tax, as well as financial implications, of any action is considered before being recommended to a client. These associates include financial planners with Merrill Lynch, Ameriprise and Wells Fargo, an Estate and Elder Care attorney, a business attorney, a retirement/pension organization, a bookkeeping service and several different insurance agents. I am also affiliated with four other Accounting Firms that share information and provide advice and second opinions on some of the more difficult tax issues that may arise.
Generally, individuals who have related business ventures like to keep everything in one place. Individuals who have family members needing tax work tend to follow the same path. Throughout the year I generally receive an equal number of calls for advice on issues from my individual and business clients. I also do a lot of tax consulting work for a Public Accounting Firm in Georgia.
I think the general image of an accountant is someone who is a bit out of shape, wears a sports coat over a white shirt with suspenders and a bow tie and has a personality like cardboard with no sense of humor. The typical accountant's casual attire is a pair of old suit pants, a short sleeve shirt with a pocket protector, a green eye shade, and glasses attached to a rope around his neck and wingtips. In fact, there is currently a TV ad being run by a tax preparation firm depicting a balding man with glasses and a bow tie talking about the lady who brought in seven boxes of receipts for the past several years. He relishes the thought of working through these receipts to solve the mathematical puzzle. That is so not me! I love to laugh, joke around and may never grow up. People usually see me in jeans and a leather jacket. I don't even own a white shirt! I have never taken myself seriously, and never try to impress people with my knowledge about taxes. I am not a Math whiz. What I am is a highly trained tax professional that has experienced just about every tax situation that exists. I have been tested under fire and shown that I can stand the heat and pressure of any situation. I do not believe in exposing my clients to questionable tax positions. I am honest and always look to get the most favorable tax treatment for my clients in every situation. But I will not be pressured into doing something which I do not think is legitimate. I have worked for brilliant business men and have earned their respect as well as that of my peers from my knowledge and never give up attitude. I care about people and really want to help them. When people call me for an answer, I get back to them within a day. I cannot begin to tell you how many clients I now have because their accountants ignored them once tax season was over and they got paid for their services. I like to treat my clients as friends and take an interest in their lives, just the way I would like to be treated. I may only see someone once a year, but I want them to think of me as someone who is always with them.
I do nothing outside of the United States. The tax laws in the United States are hard enough to keep track of, never mind the tax treaties we have with other countries. Although I do not do any returns for other countries, I do work on returns for US citizens living abroad. As far as taxes for other states, at the business return level, each state wants to think that the Company's income and related tax belongs to them. Whether to file or not depends a number of factors, generally called nexus. For a multi-state business this can be a very tricky area with dire consequences if not treated properly. At the individual level, the major problem in filing multi-state is the tax rates. Ideally, you receive a credit in your home state for taxes paid to other jurisdictions. Although it appears that the same income is being taxed twice, (if you are filing in your home state and one other) you receive a credit for the tax paid to the non-resident state, so you only pay taxes once. The same theory would apply if you are filing in multiple states. This would occur if you had an investment in perhaps real estate that operated properties that generated income in several states. The income would flow to you from an investment K-1 and you would be required to file a tax return, unless the entity filed a composite return in the state on your behalf. However, because each state has different tax rates, and allows different deductions, the tax is never the same. You are allowed a tax offset up to the rate in your state. This means that if you have identical income in two states, but your non-resident state has a higher tax rate than your home state, you only get a tax credit up to the amount of your state's tax. The silver lining to this dark cloud is that the balance of the tax that exceeds your home state's tax can be used as an itemized deduction on your federal tax return.
The most common thought that occurs to people on April 14th when they owe tax is I will just extend my return for six months and pay what I owe later in the year. Unfortunately, an extension of time to file, is not an extension of time to pay. In fact, Massachusetts will not honor an extension of time to file if the tax is not paid by the due date. When the return is filed Massachusetts will assess a failure to file penalty. The IRS is a little more lenient. Failure to pay will not void the extension and thus no failure to file penalty will be imposed. However, both Mass and the IRS will charge interest and usually penalties from the time the payment is due until the liability is paid in full. Generally, my clients know well in advance of April 14th that they have an obligation. Although many of my clients enjoy surprises, none of them enjoy paying taxes and finding out about it at the last possible minute. If someone cannot pay the entire amount, I tell them to pay what they can and we will request an installment agreement for paying the balance. Non-deductible personal interest will continue to accrue on the unpaid balance, but you will avoid the nasty letters. Although paying by credit card to build up frequent flyer mileage is an option, there is a fee charged based on the amount due which far outweighs the mileage benefit. To avoid putting people in a situation where they have to mortgage their homes to pay the taxes due, I provide quarterly estimates of tax. The idea is that although the total tax may be the same it is easier to pay if it can be budgeted. It is the same advice I give my clients on how to eat an elephant... one bite at a time.
There are really not any new deductions that were recently passed into law. What basically happened is the President extended, renewed or slightly increased many of the old deductions that were introduced in the Bush era. However, there are two items which are worth mentioning. Individuals who operate their own businesses, may be allowed a home office deduction. They may be eligible as long as there is not another office located outside of their residence which they could use. Assuming the space is used exclusively for business purposes, the individual can deduct a portion of the costs of operating the house, as well as depreciation. This deduction can raise numerous issues as to what qualifies and what doesn't; so many people just don't bother with it. In fact, I have had new clients who would otherwise qualify for the deduction, decline to take it out of fear of being audited. This belief is similar to the belief that lawn Gnomes really exist. To make this deduction easier to use, beginning with expenses incurred in 2013, the IRS is allowing a standard deduction of $5 per square foot of space used for business, maxing out at $1,500. The basic rules to qualify for the deduction remain, and people who take the standard amount are not allowed to take depreciation for the allocated space. The other item of interest has to do with dividend income and capital gains. For 2012, individuals whose taxable income is in the 15% or 10% tax bracket do not have to pay any taxes on their capital gains and qualified dividends. OK, so maybe if you are in one of those brackets you wouldn't be in a position to generate capital gains. However, what most people don't realize is that the 1099's they get from their small stock portfolio or mutual fund holdings may contain capital gains and qualified dividends. The qualified portion of a dividend received, not the non-qualified piece, is also included in the calculation resulting in no tax. The 15% tax bracket ends when your taxable income exceeds $70,700 Married filing Joint, $47,350 Head of Household and $35,350 Single or Married filing Separate. So before you file your return, if you fall into this 15% or 10% bracket, review your 1099's and brokerage statements for these items. Properly reporting them may save you some cash.
I think I have over shared with this. Rigor mortis is starting to settle in.