FAQ
Here are the answers to some of the most Frequently Asked Questions our firm receives.
Questions about Us:
Q. REMEMBER:
A. The information found on this website is general in nature and may not apply to the reader's situation. Therefore, the reader should not rely on the information on this website alone. For specific advise, please call us at Goldsmith & Associates 517-784-4600. Thank you.
Q. What services do you provide?
A. We prepare all tax returns including individual, corporation, LLC and LLP, non-profit, estate and trust, partnership, payroll, sales tax, property tax, and other taxes. We offer bookkeeping, financial statements, accounts payable, and accounts receivable processing—in fact, any office function, including setting up an office, as part of our services.
Q. What are your hours and are you a seasonal company?
A. We are open from 8 am to 5 pm Monday through Friday January through May. with Saturday appointment available. June through December we are open 8 am to 4 pm Monday through Thursday. Fridays we are open until 1 p.m. We have extended hours by appointment and during tax season, which reflects our commitment to offer our services at a time most convenient for our clients.
Q. What size clients do you serve?
A. We provide services to home based businesses, professionals, and small convenience stores, as well as small businesses to larger businesses. They are from start up to $10 million in sales with 0 to 150 employees. Typical clients are professionals, small machine shops, construction, and retail stores.
Q. What size clients do you accept?
A. We accept any clients within our service range. If the engagement is very large, we will accept it if we feel we have the staff to handle it. If we don't have the appropriate staff, we may form an alliance with another CPA firm and perform a joint engagement. There is no account too small to not be considered important at our office.
Q. Do we service clients outside of the Jackson area?
A. Yes. Due to available technology, our practice services clients in many other areas. We also serve clients all over the United States and have tax software to prepare returns in all states.
Q. How do you charge for your services and how does your cost compare to other tax preparation firms?
A. We charge by the hour and complexity of issues. We can give you a quote of our expected costs. When providing our services, if we can help you reduce our time, we will tell you how. Our overhead is kept low to allow us to pass our cost savings onto our clients. Our charges are normally less than other quality firms.
Electronic Filing Questions:
Q. What do I gain by using IRS e-file?
A. Accuracy! Security! Electronic Signatures! Proof of Acceptance! Fast refunds with direct deposit! Electronic Payment Options! Federal/State e-file! Only IRS e-file offers these advantages.
Q. Do I really get my refund faster?
A. With IRS e-file you get it back in half the usual time. It's even faster and safer if you have your refund deposited directly into your bank account, generally in as few as 10 days. Ask your Authorized IRS e-file Provider for the estimated date of deposit. For more information about Direct Deposit, go to the Financial Management Service (FMS) web site, www.fins.treas.gov/eft/.
Q. Do I have a greater chance of getting audited by the IRS if I use IRS e-file?
A. No. The chance of an audit of an e-filed return is no greater than with a paper return.
Q. How do I know that the IRS really has my return?
A. The IRS notifies your Authorized IRS e-file Provider within 48 hours of transmission that your return information was received. If the IRS detects any errors, it sends a message back to our firm indicating the error. Our firm will correct the error and notify you to let you know what the error was. We will then re transmit your returns to the IRS.
Q. Can my state tax return be e-filed with my Federal return at the same time?
A. There are 37 states and the District of Columbia currently participating in the IRS e-file program. Some of these states have returns that can't be filed electronically unless it is with the Federal return. Other states will be filed as independent states - meaning that they can be filed without the Federal return attached to it. The Michigan return needs to be filed with the Federal return.
Q. Should I wait until April 15 to file electronically if I owe taxes?
A. No. You can e-file your return as soon as it is completed. Then send your payment in on or before April 15. Goldsmith & Associates will give you a payment voucher and addressed envelope to make sure it goes to the correct IRS center.
Q. If I owe, how do I pay my taxes electronically?
A. You can e-pay by credit card. If you e-pay by credit card, you delay out-of-pocket expenses and may earn miles, points, rewards or money back from you credit card issuer. There is a fee charged by the service provider. Fees are based on the amount of the payment and may vary by service provider. Visit IRS.gov for more information. Payment by check or money order is acceptable. If you do owe money, we will provide you with a voucher and addressed enveloped to mail your check into the IRS. Your return can be e-filed at any time before April 15, and then you can mail your payment in later - as long as it is postmarked on or by April 15.
Q. What happens if my return is filed electronically, I am receiving a refund, and I owe taxes from previous years?
A. The amount owed on back taxes is automatically deducted from your refund just as if you filed a paper return.
Questions about Businesses:
Q. What do I need to do to start a new business?
A. Typically, most people will go to their lawyer first, get the business set up and then contact an accountant. We would rather that you contact us at the beginning. There are many different kinds of companies and we can help you select the best one for the kind of company that you will be setting up. We will continue to help you with payroll, tax returns, monthly accounting, and financial statements to whatever degree you need.
Q. Should I use a lawyer or an accountant to incorporate my business?
A. Although lawyers can get the paperwork together to make your incorporation happen, they might not know all the different tax laws that can apply to the different kinds of incorporation's. Therefore, we suggest you see an accountant first to find out exactly which kind of incorporation you should pursue. You may then have your lawyer finish the paperwork.
Q. How are Limited Liability Companies (LLC) Taxed?
A. A single-owner LLC defaults to being taxed as Sole Proprietorship. Income/loss from the LLC is reported on the owner's personal income tax return. A multi-member LLC defaults to being taxed as a Partnership. A Partnership tax return must be filed. The profit or loss is then reported on the owner's personal tax return. Any LLC can elect to be taxes as a corporation. To do so, one must file an election within 75 days of creating the LLC.
Q. Are Quick Books or Peach tree good products?
A. Quick Books and Peach tree can help you with your small business accounting, but they cannot think for you. The software needs to be set up properly from the beginning or you will have problems. We find that by setting it up yourself, it can cost you more in accounting fees because it takes longer for us to resolve those errors. We advise that if you are going to use one of these products you have your accountant help you set it up. We can help you with this process.
Q. By using QuickBooks Pro, can I reduce my fees?
A. Our experience shows us that if you know something about accounting AND your computer software is set up properly from the beginning, it is possible that we don't need to spend as much time on your accounting. But in some cases, the initial set up was not done properly and we end up spending more time 'cleaning up' the errors than if we had just entered the detail from the beginning.
Q. Do I need a Certified Public Accountant or is an accountant okay?
A. Generally yes, although some people do not need the expertise of a Certified Public Accountant. The best way to find out is to call our firm and ask that question, as each situation is different.
Questions about Paying Taxes:
Q. How can I pay my taxes by credit card and which credit cards are accepted?
A. Credit card payments can be made by phone (1-8002PAY-TAX or 1-888-ALLTAXX, toll free) or Internet (www.officialpayments.com or www.1888ALLTAXX.com) using Discover, American Express, or MasterCard. You will be provided a confirmation number at the end of the payment transaction and your credit card statement will provide confirmation of your electronic payment. The payment and return are reconciled based on the social security number entered and type of tax selected during the transaction.
Q. Is the IRS storing credit card information?
A. No. The IRS does not have access to credit card numbers or directly participate in the credit card transactions. The IRS relies on private credit card processors to verify the validity of the card and line of credit. The processors forward the appropriate tax payment information to the IRS.
Q. Is there a fee charged for using my credit card to pay my taxes?
A. The company that processes your credit card payment charges a convenience fee. You are informed of the convenience fee amount before you authorize the payment. The fee is in addition to any charges, such as interest, that may be assessed by your credit card issuer. This company has no affiliation or ties to the processing company.
Q. Can I pay my balance due by phone or Internet with a credit card if I'm a 'married filing joint' filer?
A. Yes. Just be sure to enter the Social Security number of the first taxpayer listed on the return's pre-printed mailing label or postcard. This is usually the taxpayer listed on the return.
Q. What if I owe and cannot pay the full balance due on my taxes? The tax preparation software used by our firm can allow you to make partial payments. In this case, you can make a payment for less than the balance due amount on your return. If you cannot pay in full by April 15, you can file Form 9465, Installment Agreement Request. You should still file your return by the deadline and pay as much as you can to avoid penalties and interest.
Q. What is a Form 9465, Installment Agreement Request?
A. An approved Installment Agreement allows you to make a predetermined series of partial payments after April 15. Regardless of how you pay, you are responsible for paying the amount of tax due by April 15 of each year or you will be subject to late payment penalties and interest. To be eligible for an installment agreement, you must first file all returns that are required and be current with estimated tax payments. If an agreement is approved, a one-time user fee will be charged. The user fee is $149.00 or $52.00 for agreements where payments are deducted directly from your bank account. For eligible individuals with incomes at or below certain levers, a reduced fee pf $43.00 will be charged and is automatically figured based on your income. If you can pay the full amount you owe within 120 days, call 1-800-829-1040 to establish your request to pay in full. No set up fee will be charged. For more information visit the IRS website at www.irs.gov.
Miscellaneous Tax Questions:
Q. Can I deduct child support payments?
A. No. Child support payments are not deductible, because they represent a pre-existing legal obligation to support your children.
Q. In a divorce who is entitled to the child dependency exemption?
A. The parent who had custody of the child for the greater part of the year is generally treated as the parent who provided over one-half of the child's support and will claim the exemption if other tests are met. Custody is usually determined by the divorce, separate maintenance or custody decree or agreement. If no decree or agreement establishes custody, then the parent who had physical custody for the greater part of the year is entitled to the exemption.
Q. Can I save taxes by filing a separate return?
A. It depends. For example, if both parties' income is approximately the same, but one has extraordinarily large itemized deductions subject to income limitations (medical expenses, casualty losses, miscellaneous deductions, etc.) it is possible to save taxes by filing separately. We at Goldsmith & Associates always compute the tax result both ways, as jointly and married filing separately, to ascertain which filing status is more beneficial to our client.
Q. What is the most tax efficient way to save for my children's education?
A. The educational savings area is very complicated. We at Goldsmith & Associates recommend that taxpayers seek professional assistance. Although a Section 529 plan, under the 2001 Tax Act, is an extremely flexible and tax effective plan, there are other plans to be considered. Also, when considering any educational savings plan, consideration should be given to the impact on financial aid qualification requirements.
Q. How do colleges calculate student financial aid?
A. Colleges calculate student financial aid awards by calculating the college's cost of attendance (COA) and then subtracting the expected family contribution (EFC). Any remaining amount may be funded with financial aid. Other considerations are, how early the financial aid application is filed and the particular school's available financial aid resources.
Q. What is the best way to borrow for consumer purchases?
A. We at Goldsmith & Associates generally discourage borrowing for consumer purchases unless absolutely necessary. However, we recognize that often there is no alternative. When it is necessary to borrow for large consumer purchases, we recommend a home equity loan. Interest on home equity loans are tax deductible, while interest on consumer loans, such as car loans and credit cards, are not tax deductible.
Q. What is the Social Security wage base and rate?
A. The new wage base for 2020 is $142,800.00 The Social Security portion is 7.65% of wages up to the wage base. The Medicare portion is 1.45% (2.9% for self-employed) of wages with no ceiling.
Q. What is the standard mileage rate?
A. The standard rate is .575 cents/mile for business travel .17 for medical and moving and .14 for charitable work.
Q. What is the annual gift tax exclusion?
A. The annual exclusion for gifts remains at $15,000 for 2020. An annual maximum of $30,000 per donee applicable to spouses who utilize gift splitting in 2020. Additionally, there is an unlimited exclusion for payments of tuition and medical expenses. 2020 exclusion is $15,000.
Q. What is the maximum Earned Income Credit Amount?
A. The maximum credit amount is $6,557 for taxpayers filing jointly who have 3 or more qualifying children. $5,828.00 with two qualifying children. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
Questions regarding Preparing and Keeping Documents:
Q. What pieces of paper do I need to keep in order to prepare my taxes?
A. Keep detailed records of your income, expenses, and any other information you report on your tax return. A good set of records can help you save money when you do your taxes and will be a trusty ally in case you are audited.
Q. What records do I need for a CPA to file my tax return?
A. We at Goldsmith & Associates will provide a data collection form for your convenience, which contains most of the items you will need. However, a detailed record of your income and expense items will be required to support our entries and in addition, a record of any other items reported on your tax return. Since totals of each category of income and expense will help us save time and cost, it is the preferred method of information submission.
Q. Should I keep my old tax returns? If so, for how long?
A. Yes, the IRS recommends you keep your old tax returns for at least 7 years. One of the benefits of keeping your tax returns from year to year is that you can look at last year's return while preparing this years. If you do throw out an old return you may fill out form 4506, Request for Copy or Transcript of Tax Form, and send it to the IRS service center where you filed your return.
A. We at Goldsmith & Associates recommend keeping your tax records for ten years. This is longer than recommended by the IRS, but we feel this is the safest length of time. When a return contains information pertaining to the basis of property owned, it should be kept until that property is sold, also documents in support of loans and mortgages should be kept until the loan or mortgage is liquidated.
Q. Is there any non-tax record that I should keep?
A. There are other records you should keep, even though they don't appear to have any use for your tax returns. Family documents, certain medical records, insurance policies, records of major purchases, are just a few examples. These documents will be needed in the case of any emergency that may arise.
Q. How can I obtain a copy of my tax return?
A. Of course, we at Goldsmith & Associates will supply you with a copy. If you lose it, we will furnish you with another copy. If we did not prepare the return, and for some reason you do not have a copy in your possession, you need to file form 4506, Request for Copy or Transcript of Tax Forms, with the IRS service center where you filed your original return.