|
FAQ - Q&A (Questions You May Have)
At Community Accounting & Tax, LLC, we've done our best to create a Web site that anticipates and satisfies our Clients' needs. With that goal in mind, we've compiled a list of frequently asked questions. If you do not find an answer to your question here, contact us at 804-768-2255
Q. I KNOW HOW TO DO TAX RETURNS AND I WANT YOU TO DO THE RETURNS AS I INSTRUCT YOU
A. Sorry, you need to go to another tax practitioner. The IRS requires us to show due diligence in and about the preparation of tax returns we sign. Clients who request us to prepare returns the way they want them prepared will be promptly shown the exit door.
Q. I KNOW PEOPLE DON’T REPORT ALL THEIR INCOME BECAUSE THE GOVERNMENT WASTES TAXES WE PAY IT ON THINGS I DON’T LIKE. SO I WANT YOU TO REPORT ONLY A CERTAIN AMOUNT OF WHAT I ACTUALLY MAKE.
A. You’re on your way to a short ride to United States District Court in handcuffs. Not only will we ask you to leave after being asked to do such, but we will request you not to come back again after you are arrested.
Q. THE IRS SENT ME A CERTIFIED LETTER THAT I AM BEING AUDITED, WHAT CAN I DO AND, CAN YOU HELP?
A. First of all, under no circumstances should you contact the IRS. You should immediately seek representation by a tax professional. What you can do is call us for an immediate appointment. Bring in all your paperwork (IRS Notices, tax returns and records for the year or years of the audit), and do so immediately! Don’t procrastinate, collection and levy letters have time limits. If the IRS is wrong, we will take appropriate action. If you are wrong, you will have to pay the tax, fines, penalty and interest. If there are mitigating circumstances, we can usually make a case that the IRS will reduce some of the additional costs.
Q. I HAVE NOT FILED MY TAXES FOR THE LAST SEVERAL YEARS, AND NOW I WANT TO BUY A HOUSE AND I NEED TAX RETURNS TO DO SO.
A. Well, you are not alone. We see several new clients every year who are in the same predicament. First of all, be aware that mortgage companies verify tax returns with the IRS. So, don’t think you can get a return done and just hand it into the mortgage company (without filing), and that’s the end of it. There are very severe civil and criminal sanctions for providing a lender with false and/or misleading information.
What you have to understand is the IRS (and the states) just want you to file your return, and pay your taxes - or get your refund, as the case may be. Both know that sometimes people get behind, for various reasons, and they will be fairly tolerant if you file - without the need of collection letters. If you continue not to file, then you will have a big problems.
Unfortunately, most people (especially those self employed or, Forms 1099 workers) don’t understand that not only does the IRS want you to file, but for you to also take what you are lawfully allowed as deductions. The sad fact is, 99 out of 100 people that fail to file have a refund coming ! What’s even sadder is, the IRS and most states will only honor refunds going back 3 years - so anything older than 3 years, you might as well have taken a cigarette lighter and burned the refund money.
We can do returns going back to 1989. And, we strongly suggest that if you haven’t filed, and you are required to, you don’t wait any longer and do so immediately. Don’t fall for the old tale that the IRS will come take your house as soon as you file the first tardy return. All they want is for you to comply with the Tax Code.
Q. I WENT TO A TAX & FINANCIAL PROFESSIONAL AND WAS TOLD THAT I COULD PUT MY MONEY IN A SPECIAL ACCOUNT IN CAYMAN ISLANDS, AND NOBODY WOULD EVER KNOW ABOUT IT.
A. There is an old saying; if it’s too good to be true, then it usually is. That being said, why would you want to put everything you have worked for all your life at risk by engaging in a clearly illegal tax evasion scheme? We are constantly amazed by the number of people that are taken-in on the patently illegal tax evasion schemes all over the internet, and also offered by shifty tax and financial advisory “professionals.” Fact is, more than likely the only people to make the money are the ones who sell these ludicrous programs and, when you get caught, the attorneys you hire to keep out of jail.
Q. ISN’T IT TRUE THAT THE U.S. GOVERNMENT IS ILLEGALLY COLLECTING INCOME TAX?
A. The Internal Revenue Code of the United States of America is lawful. The U.S. Government and, the many and several states have the legal authority to collect income and other taxes (including excise, sales tax, gasoline tax, etc.). Those that make the argument the government is doing so illegally also want to sell you a “procedure” by which you write some “magic words” on a letter, send it to the IRS, and - bedaubing, you don’t have to pay anymore taxes (including; income, medicare or social security). These same people charge you for the “magic words” or “procedure” which in reality are absolutely bogus. They get your money, and you get in big trouble, if you follow what they say.
From the Constitution of the United States of America: Section. 8.
“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;”
Fact is, if you don’t like how much federal, state and local tax you pay - you do have a remedy. That is, your constitutional right to vote out those who are taxing you for someone who will pass laws to lower the tax rates. However, if you file a tax return marked “I Refuse To File A Tax Returns Because The Tax Code Is Illegal,” or other such similar dribble, you may as well get ready for big legal fees to keep out of federal prison.
Most Federal Judges don’t have a sense of humor when it comes to tax protesters. By the way, despite faulty information being spread on the Internet that the recent California federal court case involving a former IRS Special Agent of the Criminal Investigation Division proved the tax code was illegal, that case did not say the tax code was illegal. It dealt with other issues, and the federal court did not say the U. S. Tax Code was unenforceable. Again, if its too good to be true, it generally is!
Think about this: the day the Supreme Court says the IRS Code is illegal or, the United States Government cannot collect income taxes, it will be on all the major television networks, front pages of newspapers, on every radio news program, and most certainly on cable. It will be the biggest story of the year in the U.S.. Until you see it in the news, don’t believe what you see on the Internet.
In the meantime, please don’t ask us to help you evade taxes, as we will show you promptly out the door.
Q. ONE OF THE PEOPLE I WORK WITH TOLD ME THAT I COULD GO EXEMPT ON MY WITHHOLDING, AND IT WOULDN’T HURT ME.
A. While it might be true that going exempt for a week or two may or may not hurt you strictly depends on your tax situation as far as marital status, mortgage interest, exemptions, and many other factors insofar as itemized deductions. You will get less of a refund if you consistently have refunds every year, by going exempt for a few payrolls. Going exempt for too long means you will most certainly owe at the end of the year! If you find you are getting too much money in refunds every year, it would be far better for you to increase your exemptions with your employer. But beware, those who go exempt who are not entitled to do so, could wind up with a bill from $500 (fine) for filing a false W-4.
Upon initial hire and, on or before February 15th of each year, employers are required to update their W-4 forms (don’t forget Virginia also). However, if your situation changes, you can amend your W-4 form. For instance, if you owed money on the prior tax return, you can request (via the W-4) that your employer withhold additional taxes from each paycheck. If you get married, or have a new child, you can also claim them at any time during the year. If you don’t want to “loan” the government additional money via withholding, interest free during the course of the year, and have large refunds, you can claim additional exemptions on your W-4. But beware, don’t go overboard and jump from 3 exemptions to 9, or worse, check the “exempt” box. Such drastic changes could result in a big tax bill at Taxtime, which you may not have the money to pay.
RULE OF THUMB:
Your refund last year was under $1,000 - make no changes
Your refund last year was over $2,000 - add one exemption
Your refund last year was over $3,000 - call us
The IRS wants you to pay only what you are obligated to pay in withholding. You can arrange to have no refund on April 15th, and the IRS won’t mind a bit. Under withholding can potentially earn you a fat penalty.
One of the biggest problems facing tax practitioners is the “advice from friends.” While some of the people you work with may be pretty smart, you wouldn’t want them removing a brain tumor from your skull. Same goes for taxes. What may work for your friend, may not work for you. No two people (or families) have the same tax conditions - so what your buddy is telling you may be what his tax practitioner told him (if he even has one), that doesn’t necessarily mean it will fit your particular circumstances. When you owe the IRS and State a large obligation at the end of the year, your “friend” who gave you the very bad advice isn’t going to give you his money to pay your tax bill!
Best practice, don’t listen to coworkers advice on taxes, or for that matter, brain surgery either. When in doubt, Give us a call!
|
