FREQUENTLY ASKED QUESTIONS
- How much is your fee?
This is by far the most frequently asked question by new or potential clients. I like to dispense with this issue at the outset so there are no misunderstandings or surprises later on. Existing tax return clients generally pay the same fee as the prior year (subject to minor inflationary increases). Fees for new clients are set before work begins. Click here for more information about fees.
- Am I going to jail?
Stop! This is not very funny! Especially since I hear this same question 10 times a day, year after year.
Seriously: Of course not! None of my clients have ever been charged with criminal tax crimes. One reason is because it is extremely difficult to get a jury to convict someone of crimes against IRS. Also, IRS recognizes it is difficult to pay off a tax lien from a jail cell. Prison time is generally reserved for high profile cases where the guilty party can set an example for the rest of us (such as Wesley Snipes and Leona Helmsley).
- Are you busy?
This question is even more annoying than question number 2. It's tax season! WTF do you think?
- How long do I have to save copies of my income tax returns?
Forever and ever! You never know when you will be called upon to prove something.
- What about the rest of my records, when can I throw them away?
I know I'm compulsive because I hate to throw anything away. Most other accountants will tell you 7 years as a general rule. This might be a safe bet for most old records, but records dealing with the cost of your assets should be kept longer. For example, if you sold your home last year you may need to prove your cost basis. So even if you purchased your home 20 years ago you should still retain records of your cost for at least 4 years after the year of sale.
- What are my chances of getting audited?
If you are not in the uppermost tax brackets, don't have any large or unusual loss deductions, and don't operate a cash business your odds of getting audited by IRS are very slim. I would guess less than 1 in 100.
- Do I increase my chances of audit by filing an extension?
I don't think so. It is usually what's on the return that causes the audit as opposed to when it is filed.
To the contrary, I once had a client who was audited because she filed her return early. She was anzious for her refund so she filed her return in January. It just so happened that IRS was conducting a training program at that same time. IRS needed a few current year returns for instructional purposes. By the time the students finished learning about her deductions there was no more refund. In fact, she owed a few hundred dollars after the audit. This return probably would not have been audited if it were filed a couple of months later. If you fear an audit, don't give IRS extra time to snag your return. It is better to file when everyone else does, certainly not before April 1.
- What if I can't pay my taxes on time?
It is relatively easy to set up a payment agreement online with IRS. You can do it online at the IRS web site for a small fee. It is important to file your returns even if you can't pay because there are separate penalties for failure to pay and failure to file.
- Why do I have to efile my tax returns?
Actually, you don't. You can choose to file on paper if you want. But I advise you to "get with the program." Efiling is now the norm. Tax return preparers like me are mandated to file electronically by both IRS and NYS. IRS likes it that way. So why would you want to be the oddball and attract attention to your return by going against the grain and filing on paper?
- When do I have to pay gift taxes?
For 2015 the gift tax exemption was $14,000 per person per year. You do not have to file a gift tax return if your gifts of "current property" were less than this amount. If you are married you can join with your spouse for a total gift of up to $28,000 per person per year. There are also exemptions for payments of certain medical and education costs.
- Did they really charge you with IRS abuse?
Yes, that is a true story. But I was able to clear my record of those bogus charges on appeal. These days, I am more laid back in my dealings with Goliath. We have come to know and respect each other's strengths and weaknesses.