Here are the answers to some of the most Frequently Asked Questions our firm receives.
REMEMBER: 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 513-489-4848. Thank you.
Q. Do I need to visit your office to have my taxes prepared?
A. It is not necessary to visit our office. Many clients utilize the mail or express services to send their information to us. For new clients, we encourage a meeting so that we can discuss your unique tax situation.
Q. Can I deduct student loan interest?
A. Since personal interest is generally non-deductible, you must meet several tests: You must be the person liable on the debt and the loan must be for education only. Your modified adjusted gross income can't exceed $150,000 on a joint return or $75,000 on a single return; married couple filing separately can't deduct. You can't deduct if you're claimed as a dependent. Furthermore, the deduction is limited to $2,500.
Q. Can I ever save taxes by filing a separate return instead of jointly with my spouse?
A. You sometimes may benefit from filing separately instead of jointly. Consider filing separately if you meet the following criteria: One spouse has large medical expenses, miscellaneous itemized deductions, or casualty losses. The spouses' incomes are about equal. Separate filing may benefit such couples because the adjusted gross income "floors" for taking the listed deductions will be computed separately. This is a comparison we always make for every client.
Q. Do we service clients outside of Ohio?
A. Our practice services clients in many states. We 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. We can give you a quotation of our expected costs. When providing our services, if we can help you reduce our time, we will tell you how. Our support, such as our tax organizer, is designed to offer professional, fast, and accurate services and to minimize our charges to you. 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.
Q. Do you work with Start-up Companies?
A. Yes! Many of our clients are just starting in business. We will lead you through the necessary governmental forms. Through our networking, we can also assist in finding you other necessary professionals to deal with (lawyers, mortgage brokers, etc.).
Q. I want to start a new business. Can you tell me which type of business I should form?
A. Yes. When setting up a new business, it is crucial to set up the right type of business, such as corporation, S corporation, limited liability company, partnership, sole proprietorship, etc. Our consulting services will help you form the right type of business based on your unique situation with consideration given to liability issues and tax advantages.
Q. How are Limited Liability Companies (LLCs) taxed?
A. A single-owner LLC defaults to being taxed as a Sole Proprietorship. Income/loss from the LLC is reported on the owners 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 owners personal tax return. Any LLC can elect to be taxed as a corporation. To do so, one must file an election within 75 days of creating the LLC.
Q. Are there any non-tax records 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. Should I keep my old tax returns? If so, for how long?
A. Yes, you should keep your old tax returns for at least 7 years. When a return contains information pertaining to the basis of property owned, it should be kept until that property is sold. One of the benefits of keeping your tax returns from year to year is that you can look at last years 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.
Q. What pieces of paper do I need to keep in order to do 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. How do I know when certain taxes are due?
A. Please give us a call and we can assist you with your specific filing requirements.
Q. What is the Social Security wage base and rate?
A. The wage base is $106,800 for 2010 and 2011. The FICA rate is 7.65% for employers and 5.65% for employees; thanks to a temporary 2% Social Security payroll tax cut. The Social Security portion is 6.2% for employers, and 4.2% for employees, of wages up to the wage base. The Medicare portion is 1.45% for employers and 1.45% for employees of wages with no ceiling. Furthermore, 13.3% is the combined rate for self-employed individuals.
Q. What is the standard mileage rate for business use of vehicle?
A. The standard rate is 51 cents/mile for the period 1/1/11 through 6/30/11 and 55.5 cents/mile for the period 7/1/11-12/31/11. The rate was previously 50 cents/mile for all of 2010.
Q. What is the taxable Estate threshold amount?
A. For estates of decedents dying during 2011, the first $5.000,000 is excluded from estate taxes for a single individual, or $10,000,000 for a married couple.
Q. What is the annual gift tax exclusion?
A. The annual exclusion is $13,000 for 2011, per donee, with an annual maximum of $26,000 per donee applicable to spouses who utilize gift splitting. Additionally, there is an unlimited exclusion for direct payments of tuition and medical expenses.
Q. When should I give you my tax information?
A. You should bring all your information in as soon as you have it all together. The sooner you bring it in to us the better chance we have at making sure we've done the best possible job for you.
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. Then we will continue to help you with payroll, tax returns, monthly accounting, 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 incorporations. Therefore, we suggest you see an accountant first to find out exactly which kind of incorporation you should pursue. Then have either your accountant or the lawyer finish the paperwork.
Q. Are QuickBooks or Peachtree good products?
A. QuickBooks and Peachtree can help you with your small business accounting, but they can not think for you. The software has to be set up properly from the beginning or you will have problems. 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, can I reduce my fees?
A. Our experience shows 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. How can I pay my taxes by credit card and which credit cards are accepted?
A. Credit card payments can be made in person or by phone using VISA 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. 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. Where can I get additional information about IRS e-file?
A. You can visit the IRS website at www.irs.gov - or feel free to call our offices to ask us questions as well (513-489-4848).
Q. What do I gain by using IRS e-file?
A. Accuracy! Security! Electronic Signatures! Proof of Acceptance! Fast refunds with direct deposit! Federal/State e-file! E-file is quickly becoming the required method of filing by the IRS and most States.
Q. What is an Authorized IRS e-file Provider?
A. An Authorized IRS e-file Provider is a tax professional or firm who is accepted into the IRS electronic filing program. One type of Authorized IRS e-file Provider is an Electronic Return Originator (ERO). An ERO is a person or firm that taxpayers entrust with tax information for the purpose of filing income tax returns electronically to the IRS. FRANZ CPAs, Inc. is an ERO.
Q. What is the Personal Identification Number (PIN)?
A. The PIN allows you to personally sign your electronic tax return using a five digit number. The PIN serves as your signature on your tax returns. Our firm will have this form all filled out for you when you come to pick up your returns or they are mailed to you. All we need you to do is sign the form for us to keep on file and then we are able to e-file your returns.
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. 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 to your bank account; as few as 10 days. We will be able to provide you an estimated date of receipt of refund. For more information about Direct Deposit, go to the Financial Management Service (FMS) web site, http://www.fms.treas.gov/index_indiv.html.
