Posts Tagged ‘Tax preparation’

When Should You File Your Tax Return?

January 7, 2014

IRS ReturnThe IRS announced that it would begin accepting individual tax returns (Forms 1040 and 1041) on January 31, 2014.  Business returns (Forms 1120, 1120S and 1065 ) will start being accepted on Jan 13, 2014.  Unincorporated businesses that report their income on Form 1040 Schedule C, Schedule E or Schedule F are not included as business returns so the January 31 date applies.

When is the best time to file your tax return?  There is a simple answer.  That depends.

Many people want to file their returns early to get their refund back as soon as possible.  That is one consideration.  If you have a simple return and really need the money this is probably a good strategy for you.  And yet there are other considerations.

The earlier you file your return, the more months the IRS has to decide if there is something that needs further explanation.  More months of exposure to IRS examination.

And the later you file, the more returns are already in the audit pipeline when yours arrives.  This may reduce your audit exposure (but no guarantees).  Many of our clients pay their tax when they file their extension on April 15 but wait until October 15 to file the actual return for this very reason.

Look at all your personal factors and then decide what is best for you.  If you have a question, contact a tax professional.


Meet Your IRS Auditor – The Computer

July 12, 2013

IRS Audit SelectedWith all the news about the Government gathering information on us through the NSA, FBI, CIA, etc., is it any wonder that the IRS is using computers to audit your tax return.  In the past, IRS has “scored” your tax return based on a magical statistical formula to see what is the probability of getting money from you.  They still do that.

But now, in case you haven’t noticed, IRS forms are asking more questions that could be audit triggers.    When you claim vehicle expense for your business – “Do you have evidence to support your deduction?” “If “yes,” is the evidence written?”  What do think happens if you answer NO to these questions.   And how about “Did you make any payments in 2012 that would require you to file Form(s) 1099?” “If “Yes,” did you or will you file required Forms 1099?” Thanks for asking.

And then there is the program that matches W-2s and Forms 1099 to what is reported on your tax return.  And the more detailed reporting of security and stock sales.  And the list goes on.

In the last several years, we have seen a significant increase in the number of computer generated notices that our clients have received.  I have had clients bring in a stack of unopened IRS notices because they just didn’t want to know what was inside.  Not a good idea.  Even if you don’t open the envelopes, you are still responsible for the contents.  And there might be a time clock running which, if missed, could cost you a bundle.

Then Congress, in its infinite wisdom, has made your tax preparer responsible for YOUR tax return and could be penalized for deductions not properly documented.  Do you think that might that limit what you can deduct if you don’t have proper records.  (More on this later.)

If the IRS Computer sent you a notice today, how easy would it be to “send in” your documents to support the questioned deductions?  It could be extremely difficult and cumbersome.  Unless you have a good system.

Shameless plug – we recommend you take a look at for a simple, online system for people who hate accounting and taxes.  It could make your life much easier when you get the “Greetings” from the IRS.

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