accountants http://www.wisebread.com/taxonomy/term/12946/all en-US 6 Financial Gifts Mom Will Love for Mother's Day http://www.wisebread.com/6-financial-gifts-mom-will-love-for-mothers-day <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-financial-gifts-mom-will-love-for-mothers-day" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-537871137.jpg" alt="Finding financial gifts mom will love for Mother&#039;s Day" title="" class="imagecache imagecache-250w" width="250" height="142" /></a> </div> </div> </div> <p>Mother's Day is an opportunity to let Mom know just how much she means to you, but it can be hard to find the perfect gift. You know that a World's Best Mom mug and some fancy bubble bath just won't cut it &mdash; so what should you do instead?</p> <p>This year, why not give Mom the gift of money? That doesn't mean handing over a wad of cash in lieu of a present, but instead finding a gift that will help her bottom line. Here are six gift ideas for Mom that will keep on giving financially.</p> <h2>1. Start a dream fund</h2> <p>Maybe Mom has always dreamed about a trip to a certain destination, or planting the perfect garden straight out of a magazine. These things cost money, and if there's little room in the budget, it can be hard and time-consuming to save up for them. This is where you come in: Give Mom a &quot;dream fund&quot; for Mother's Day with seed money to realize her goals.</p> <p>If Mom is a crafty or creative type, you could present the fund to her with a &quot;dream board,&quot; including relevant pictures to inspire her to keep saving. She'll love adding to the board herself. You could even add a complementary gift card (such as to a home and garden store) as a finishing touch.</p> <p>You might also consider saving up for something to do together. My mother and I have always talked about traveling to Greece, so our mother-daughter dream board would include photos of the Greek Isles, illustrations from Greek mythology (which I fondly remember her teaching me when I was a child), and photos of delicious Greek food. I would then also include a gift card to an airline or cruise line as the first step in reaching our goal together.</p> <h2>2. Buy her a share of a company she loves</h2> <p>Buying shares of a company can be a lovely way to honor your mother and give her a gift she will appreciate. You can buy her a gift-ready stock with a framed certificate, or buy shares directly from the company.</p> <p>While a gift-ready stock with certificate included will set you back more money, it does provide you with something to wrap up for Mother's Day and gives her something to display. Consider buying shares of a company whose products you know Mom absolutely loves, like Starbucks, Target, Tiffany's, Hershey, or Netflix.</p> <h2>3. Give her a subscription to a financial magazine</h2> <p>If Mom has remarked that she'd like to know more about how to handle her money, then get her a magazine subscription that can help improve her financial knowledge. Buy a copy of the current issue to wrap up for her on Mother's Day.</p> <p>As for which magazine to choose, both Kiplinger's and Money are considered excellent resources for the personal finance newbie.</p> <h2>4. Donate to her favorite charity</h2> <p>What causes are close to Mom's heart? Pick a charity that you know she supports, and make a donation in her name. Not only will Mom be touched by such a thoughtful gift, but an organization in need will benefit, too. It's a win-win. (See also: <a href="http://www.wisebread.com/improve-your-giving-with-5-smart-charity-tricks?ref=seealso" target="_blank">Improve Your Giving With 5 Smart Charity Tricks</a>)</p> <h2>5. Pay a few of her bills for the month</h2> <p>Help Mom get ahead financially by offering to pay one (or a few!) of her bills for Mother's Day. This could be a mortgage payment, utility bill, medical bill, or credit card payment &mdash; anything she could use a hand with. This will take some of the budgeting burden off her shoulders, and maybe even leave her with wiggle room to treat herself.</p> <h2>6. Pay for Mom to visit a financial professional</h2> <p>Depending on what type of financial needs your mom has, you could pay for her to consult with a certified financial planner. A CFP can be an invaluable resource in helping Mom plan out her saving, investing, and retirement strategies. So how do you go about finding, vetting, and paying for such a gift? You can start by asking around your inner circle for any recommendations. If that doesn't yield any leads, you can locate a fee-only CFP (which means the planner will not be working on commission) near you via <a href="https://www.napfa.org/" target="_blank">NAPFA</a>. The fees that planners charge vary greatly, but once you have found a CFP that you like, you can ask them how much it will cost to make Mom an appointment.</p> <h2>Show mom you love her with the gift of better finances</h2> <p>Flowers fade, brunch is over all too soon, and Mom does not need yet another canister of fancy tea. For Mother's Day this year, give your mother a gift that will keep giving for years to come.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/6-financial-gifts-mom-will-love-for-mothers-day">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/30-meaningful-mothers-day-gifts-for-every-budget">30 Meaningful Mother&#039;s Day Gifts for Every Budget</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-stocks-to-buy-if-you-love-moms">4 Stocks to Buy If You Love Moms</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-top-money-lessons-to-learn-from-ruth-soukups-unstuffed">4 Top Money Lessons to Learn From Ruth Soukup&#039;s &quot;Unstuffed&quot;</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-season-give-your-child-the-gift-of-fiscal-responsibility">This Season, Give Your Child the Gift of Fiscal Responsibility</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/mama-mia-mothers-day-gifts-that-show-you-really-care">Mama Mia! Mother&#039;s Day Gifts that Show You Really Care</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Family accountants dream boards financial magazines gifts Mom money coaches Mother's day presents professionals shares stocks Mon, 01 May 2017 08:00:08 +0000 Emily Guy Birken 1934997 at http://www.wisebread.com What to Do When Your Tax Preparer Makes a Mistake http://www.wisebread.com/what-to-do-when-your-tax-preparer-makes-a-mistake <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-when-your-tax-preparer-makes-a-mistake" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-501391448.jpg" alt="Man learning what to do when a tax preparer makes a mistake" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You might think that hiring a tax preparer to file your income taxes will guarantee a mistake-free return. Unfortunately, you'd be wrong.</p> <p>In 2015, the National Consumer Law Center used mystery shoppers to test the work of 29 tax preparers. The results were surprising: Only two of the returns compiled by these preparers came in error-free. That's bad news for a lot of people. USA Today reported in February that almost <a href="https://www.usatoday.com/story/money/personalfinance/2017/02/06/should-you-do-your-taxes-yourself-hire-tax-preparer/97198816/" target="_blank">79 million e-filed tax returns</a> were completed last year by professional tax preparers.</p> <p>And here's even more bad news: The IRS says that if your tax preparer makes a mistake resulting in you having to pay additional taxes, interest, or penalties, <em>you</em> are responsible for paying these fees &mdash; not your tax preparer.</p> <p>If your tax preparer does make a mistake on your return, what can you do? Here are five suggestions.</p> <h2>1. Contact your preparer</h2> <p>If the IRS sends you a letter claiming that there are mistakes on your taxes, call your tax preparer for an explanation. Tax preparers who do make mistakes might offer to pay any fees, penalties, or interest charges for you. This might not restore your confidence in their abilities, but it will help save your budget.</p> <h2>2. Pay the penalties</h2> <p>If the IRS is charging you a penalty for a tax mistake, even if that mistake was made by your preparer, pay it. You might be battling it out with your tax preparer in the hope of getting this professional to pay the penalty on your behalf, but the IRS doesn't care. If it doesn't receive its payment, you are the one who will face additional financial penalties.</p> <p>If your tax preparer refuses to pay for its mistake, send a check to the IRS. Then continue your fight against the preparer.</p> <h2>3. Know your rights</h2> <p>Check any contract you signed with your tax preparer. There might be language in the contract stating what your tax preparer will do in the event of a mistake. Some tax preparers will pay the interest and penalties that result from a mistake, but not any extra taxes you might owe.</p> <p>Some tax preparation firms, especially the big ones, might offer insurance that you can purchase for an extra fee. If you've bought this insurance, your tax preparer might be obligated to pay any interest, fees, or extra taxes you owe because of their mistakes.</p> <p>Be aware that tax preparers won't pay any penalties on your behalf, even if you've purchased extra insurance, if the mistakes they've made are because you provided them with inaccurate information.</p> <h2>4. Check the statute of limitations</h2> <p>If your tax preparer made a mistake that caused you to overpay on your taxes, you have three years to request a refund from the IRS. You must provide documentation to back up your claim that you overpaid.</p> <p>This statute of limitations works in reverse, too. If you underpaid your taxes because of a preparer mistake, the IRS has three years in which they can come after you for the money you owe. If your tax preparer made a substantial error, however (such as omitting 25 percent or more of your gross income), the IRS can go back up to six years. It's recommended to keep your records for at least this long. Be aware there is no statute of limitations for those who knowingly file fraudulent returns, evade taxes, or fail to file altogether.</p> <h2>5. File a complaint</h2> <p>If you discover that your preparer made an intentional mistake, perhaps to boost your return, make an official complaint with the Office of Responsibility at the IRS. If your preparer is a member of the American Institute of Certified Public Accountants, National Association of Enrolled Agents, or a state law association, you can also file a complaint with these organizations. Such complaints could cause tax preparers to face fines or lose their licenses.</p> <h2>Reduce the odds of a mistake by hiring the right professional</h2> <p>Sometimes you can prevent a future mistake by hiring the right tax professional upfront. The truth is, anyone can work as a tax preparer. Preparers must apply for a Preparer Tax Identification Number from the IRS. But getting this number is easy: It costs $50, and the IRS says that applying takes just 15 minutes.</p> <p>If you're searching for a tax professional, it's best to work with either a certified public accountant with experience completing tax returns, or what is known as an Enrolled Agent. To become an Enrolled Agent, tax preparers must first pass a three-part test given by the IRS that covers the ins and outs of individual and business tax returns. Some certified public accountants will also be Enrolled Agents.</p> <p>Ask any tax preparer for the phone numbers of past clients. Then call these clients to ask about the work the tax preparer turned in. The IRS also recommends that consumers only work with tax preparers who charge a flat fee. Preparers who charge a percentage of your tax refund might be tempted to fudge the numbers to boost your return.</p> <p>Finally, make sure that you provide all the proper documents and numbers. The tax preparer may or may not double check your numbers. Maybe you forgot about the antique you sold on eBay. Maybe you transposed a number when adding up your home office deductions. You can't depend on the tax preparer to notice that something is off or verify your numbers. The best professionals will ask you a lot of questions to ensure you've provided all the information. But others may just take your documents and enter the numbers.</p> <p>The bottom line is if the IRS audits you and discovers that the preparer made mistakes &mdash; intentional or accidental &mdash; you'll have to pay any penalties and fees.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/what-to-do-when-your-tax-preparer-makes-a-mistake">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-what-happens-if-you-dont-pay-your-taxes">Here&#039;s What Happens If You Don&#039;t Pay Your Taxes</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cant-pay-your-taxes-heres-what-to-do">Can&#039;t Pay Your Taxes? Here&#039;s What to Do</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-tax-return-mistakes-even-smart-people-make">8 Tax Return Mistakes Even Smart People Make</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-signs-you-probably-need-an-accountant">5 Signs You Probably Need an Accountant</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes accountants complaints cpa enrollment agents errors fees IRS Mistakes penalties statute of limitations tax filing tax returns Thu, 13 Apr 2017 08:00:10 +0000 Dan Rafter 1925856 at http://www.wisebread.com What Freelancers and Side Giggers Need to Know About Income Taxes http://www.wisebread.com/what-freelancers-and-side-giggers-need-to-know-about-income-taxes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-freelancers-and-side-giggers-need-to-know-about-income-taxes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/desk_hands_paperwork_623498764.jpg" alt="Freelancers learning what they need to know about income taxes" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The freelance lifestyle has numerous advantages &mdash; among them, freedom and flexibility. Even so, you can't escape your tax obligation to Uncle Sam, and being a freelancer poses its own challenges at tax time. Consider these factors that might impact your income taxes: (See also: <a href="http://www.wisebread.com/8-tax-return-mistakes-even-smart-people-make?ref=seealso" target="_blank">8 Tax Return Mistakes Even Smart People Make</a>)</p> <h2>1. Track All Forms 1099-MISC</h2> <p>Every client from whom you earn $600 or more in payments for services performed must file <a href="https://www.irs.gov/pub/irs-pdf/i1099msc.pdf" target="_blank">Form 1099-MISC, Miscellaneous Income</a> with the IRS. Like employer-issued W-2s, every time that a client issues you a 1099-MISC, the IRS receives a notification. They're essential in order to prove your income, so make sure to keep track of all of them. Generally, form 1099-MISC needs to be issued by January 31st. If you haven't received your form by February 15, request a duplicate from your client for your own records.</p> <h2>2. Include Income From All Sources</h2> <p>While a client isn't obligated to file a 1099-MISC when their total payments in the same year to you are under $600, you're still responsible to report those payments as taxable income in your return. The IRS charges a 25% inaccuracy penalty on top of applicable taxes and interest for late payments, including income from all sources, even when not reported on a 1099-MISC.</p> <p>(As a side note, we keep on specifically referring to a 1099-MISC by its full name because there are several types of 1099s, including 1099-DIV, 1099-G, 1099-H, and 1099-INT.)</p> <h2>3. Separate Individual and Business Finances</h2> <p>To help you track cash flows directly related to your business, open a separate business bank account and credit card. (See also: <a href="http://www.wisebread.com/the-5-best-credit-cards-for-small-businesses?ref=seealso" target="_blank">The 5 Best Credit Cards for Small Businesses</a>)</p> <p>The monthly statements of those business bank accounts and credit cards will allow you to reconcile your monthly income statement and will be very handy in case of an IRS audit. When shopping around for a business checking account, consider one that keeps copies of used checks. The reason is that bank statements and canceled checks are acceptable documents in case you receive a <a href="https://www.irsvideos.gov/audit/docs/Form%204564,%20IDR1%20-%20Howard.pdf" target="_blank">Form 4564, Information Document Request</a> from the IRS.</p> <h2>4. Hire an Accountant if Using Schedule C</h2> <p><a href="https://www.irs.gov/pub/irs-pdf/f1040sc.pdf" target="_blank">Schedule C</a> from Form 1040 is one the most useful tax forms for freelancers and side giggers because it allows them to deduct all applicable business expenses, ranging from cost of promotion in local media to use of home space for business purposes. (See also: <a href="http://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers?ref=seealso" target="_blank">101 Tax Deductions for Bloggers and Freelancers</a>)</p> <p>However, individuals using Schedule C often make mistakes on this form. Whether those errors are intentional or unintentional, the IRS has noticed the higher number of mistakes and has set the policy of auditing individuals using Schedule C <a href="http://www.reuters.com/article/us-yourmoney-freelancing-irsaudit-idUSTRE81R1QR20120228" target="_blank">three times more often</a> than it does corporations. Hire an accountant to file your taxes and they will make sure to cross your t's and dot your i's throughout your return, including the pesky Schedule C. Not to mention, their fee is an eligible expense on your Schedule C, too!</p> <h2>5. Calculate Your Withholding</h2> <p>Unless you're a full-time freelancer, keeping track of your estimated tax liability can be hard. When you're receiving income from both an employer and portfolio clients, you'll have more sources of income. In that case, the <a href="https://www.irs.gov/individuals/irs-withholding-calculator" target="_blank">IRS Withholding Calculator</a> is a useful tool to avoid having too much or too little federal income tax withheld throughout the year.</p> <p>Analyzing data from your most recent pay stubs, invoices from your clients, and copies of past tax returns (they will help you estimate applicable deductions), this calculator will provide you suggestions on how to update your Form W-4 with your employer. Adjusting your W-4 throughout the year is a smart way to increase the take-home portion of paychecks from your employer when you're withholding more than you really need to.</p> <h2>6. Make Estimated Tax Payments</h2> <p>Due to the nature of freelancing, you may receive some last minute assignments that will make your bank account happy in the short term. Prevent those lucky breaks from turning into an unexpected large tax liability by the time you file your return next year. Whenever you expect a very large payment or an end-of-year assignment, use the IRS Withholding Calculator to estimate your necessary withholding.</p> <p>An alternative to adjusting your W-4 is to make a lump-sum payment using <a href="https://www.irs.gov/uac/form-1040-es-estimated-tax-for-individuals-1" target="_blank">Form 1040-ES, Estimated Tax for Individuals</a>, which allows you to pay estimated tax payments on April, June, and September of the current year and January of the next year. Form 1040-ES can be a lifesaver to compensate for extreme low withholding throughout the year. For example, you can submit a payment for tax year 2016 on January 17, 2017.</p> <h2>7. Don't Forget About State Income Tax</h2> <p>On top of federal income taxes, you're also liable for applicable state and local income taxes. Depending on the legal structure of your business, you may file business income taxes on a separate form. Sole proprietors report their personal and business income taxes on the same form.</p> <p>Spreading out your state tax liability is a better idea than trying to come up with a large lump sum in very few days. If you have an employer, you can also adjust your withholding of state taxes throughout the year. Most states allow freelancers and side giggers to submit estimated state tax payments on a quarterly basis. To learn more about your applicable state tax obligations, find the <a href="https://www.sba.gov/starting-business/filing-paying-taxes/determine-your-state-tax-obligations" target="_blank">appropriate office in your state or territory</a>.</p> <h2>8. Get Health Coverage</h2> <p>Under the Affordable Care Act (ACA), better known as Obamacare, you're subject to a penalty when you go more than two months without health coverage. In 2016 and 2017, the penalty fee is 1/12 per month of <a href="https://www.healthcare.gov/fees/fee-for-not-being-covered/" target="_blank">2.5% of your household income</a> or $695 per adult, whichever is higher. If you didn't meet the minimum essential coverage during 2016, use the IRS tool to estimate your <a href="https://taxpayeradvocate.irs.gov/estimator/isrp/" target="_blank">individual responsibility payment</a>.</p> <p>When you're a full-time freelancer, you're responsible for getting qualifying coverage on your own. January 31, 2017 is the last day to enroll or change a 2017 health plan. After that date, you can enroll or change plans only if you qualify for a special enrollment period. To learn more about available plans in your ZIP code, visit the health insurance marketplace at <a href="http://www.healthcare.gov" target="_blank">HealthCare.gov</a>.</p> <h2>9. Save for Retirement</h2> <p>Freelancers and side giggers with no employees can open a solo 401K to build or give their nest eggs a major boost. With a solo or Roth 401K, an independent contractor could save up to <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits" target="_blank">$53,000 ($59,000 if age 50 or over)</a> in 2016 and $54,000 ($69,000 if age 50 or over) in 2017. By the way, married couples and legal partners receiving income from the same business practice can double those contribution limits. This means a couple under age 50 could potentially contribute up to $108,000 to a solo 401K in 2017!</p> <p>If you're one of the estimated 54 million of U.S. independent workers or freelancers, consider a solo 401K to lower your taxable income and get closer to the target amount of your retirement fund.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/what-freelancers-and-side-giggers-need-to-know-about-income-taxes">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-common-tax-mistakes-we-need-to-stop-making">5 Common Tax Mistakes We Need to Stop Making</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-your-taxes-will-change-after-you-start-a-small-business">Here&#039;s How Your Taxes Will Change After You Start a Small Business</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-signs-you-probably-need-an-accountant">5 Signs You Probably Need an Accountant</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/35-bizarre-things-you-can-be-taxed-on">35 Bizarre Things You Can Be Taxed On</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes 1040 1099 accountants audits income taxes IRS miscellaneous income schedule c self employment side jobs Fri, 20 Jan 2017 11:00:08 +0000 Damian Davila 1871080 at http://www.wisebread.com 5 Common Tax Mistakes We Need to Stop Making http://www.wisebread.com/5-common-tax-mistakes-we-need-to-stop-making <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-common-tax-mistakes-we-need-to-stop-making" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/magnifying_glass_paper_533045204.jpg" alt="Man making tax mistakes he needs to stop making" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>In an ongoing effort to prevent tax fraud and collect the right amount of money, the IRS audits close to <a href="http://time.com/money/3820009/irs-tax-audit-chances/" target="_blank">1% of all returns</a>. If being audited by the IRS isn't nerve racking enough, about 30% of audits are made in person, adding extra pressure. So, let's start 2017 on the right foot and review five ways to protect yourself from an audit.</p> <h2>1. Declare at Least $1 in Gross Income</h2> <p>Depending on your unique financial situation, you may not have gained any money throughout the year. However, declaring no adjusted gross income increases your probability of getting audited by more than fivefold! In 2014, the IRS audited 5.26% of all returns with no adjusted gross income. On the other hand, the IRS only audited 0.93% of returns declaring $1 to $24,999 in the same year.</p> <p>So, find a way to get some income and dramatically lower your chances of an audit!</p> <h2>2. Use an Accountant When Making Over $200,000</h2> <p>According to 2014 and 2015 IRS audit data, returns with gross incomes between $25,000 and $199,999 have the lowest range of probability of an audit.</p> <p>Like a Las Vegas casino, the IRS is currently chasing the &quot;whales&quot; &mdash; individuals with a high net worth. In 2014, 1.75% of returns with an unadjusted gross income of $200,000 to $499,999, and, get this &mdash; a whopping 10.53% of those with an adjusted gross income of $5 to $10 million, were audited. It seems that there's some truth to &quot;more money, more problems.&quot; So, if you're making a gross income of $200,000 or higher, hedge against the higher chances of potential IRS audit by using the services of an accountant. (See also: <a href="http://www.wisebread.com/4-times-you-should-splurge-and-hire-a-pro?ref=seealso" target="_blank">4 Times You Should Splurge and Hire a Pro</a>)</p> <h2>3. Include Income From All W-2s and 1099s</h2> <p>The IRS gets a copy of every single W-2 and 1099 form that you receive. So, forgetting to include the income reported on those forms to calculate your tax obligation or refund may result in an audit.</p> <p>While it's generally easy to trace back your W-2s, keep in mind that there are different types of 1099 forms, including:</p> <ul> <li>1099-C: Cancellation of Debt, which is sometimes a taxable event;<br /> &nbsp;</li> <li>1099-DIV: Dividend and Distribution Income;<br /> &nbsp;</li> <li>1099-H: Health Coverage Tax Credit (HCTC) advance payments;<br /> &nbsp;</li> <li>1099-INT: Interest Income;<br /> &nbsp;</li> <li>1099-MISC: Miscellaneous Income, which are payments to independent contractors; and<br /> &nbsp;</li> <li>SSA-1099: Social Security Benefit Statement.</li> </ul> <p>You will receive an applicable 1099 form after reaching certain thresholds. For example, you will receive a 1099-MISC when you received at least $600 in payment for your services as a freelancer or independent contractor. On the other hand, you only need to make at least $10 in interest income to receive a 1099-INT. Regardless of whether or not an organization issues you a 1099, include the taxable income in your return.</p> <p>If you haven't received a 1099 by January 31st, the IRS recommends contacting the issuing organization or the IRS directly at 1-800-829-1040 to request a substitute form.</p> <h2>4. Use Schedule C Correctly</h2> <p>The <a href="https://www.irs.gov/pub/irs-pdf/f1040sc.pdf" target="_blank">Schedule C</a> is a form in which sole proprietorships provide details on their calculations of net profit or loss. When used properly, Schedule C allows freelancers, independent contractors, and small business owners to effectively deduct businesses expenses, including expenses for business use of a home (<a href="https://www.irs.gov/pub/irs-pdf/f8829.pdf" target="_blank">Form 8829</a>).</p> <p>Taxpayers using Schedule C frequently make intentional or unintentional errors on this form. And the IRS has noted that it can get a better bang for its auditing buck in inspecting the returns of sole proprietorships. The result: Roughly <a href="http://www.reuters.com/article/us-yourmoney-freelancing-irsaudit-idUSTRE81R1QR20120228" target="_blank">3% of small businesses</a> under Schedule C get audited, compared to just 1% of corporations. The IRS pays close attention to businesses with large net losses and cash-intensive activities, such as car washes and food vendors.</p> <p>Make sure that you have supporting documentation, such as receipts, statements of personal and business bank accounts, and inventory count sheets for all the numbers that you include in Schedule C. For example, if you have an advertising expense, keep the bill or receipt as proof of that expense. If the IRS were to have reasonable doubt that your numbers are accurate, the agency would send you a Form 4564, Information Document Request. Be proactive, review this <a href="https://www.irsvideos.gov/audit/docs/Form%204564,%20IDR1%20-%20Howard.pdf" target="_blank">sample Form 4564</a> from the IRS, and make sure to keep the type of records that the IRS would ask from you in case of an audit due to a Schedule C.</p> <p>In the end, a taxpayer using Schedule C could benefit from using a professional tax preparer. They can also deduct that expense in their Schedule C, after all.</p> <h2>5. Automate Calculations</h2> <p>Completing your tax return by hand increases your odds of making math errors, miscalculating work sheets, and misreading tables. Just in 2015, the IRS sent out <a href="https://www.irs.gov/pub/irs-soi/15databk.pdf" target="_blank">1,679,367 math error notices</a> to taxpayers for a total of 2,177,802 math errors!</p> <p>To decrease your chance of computational errors, incorrectly transcribed values, and omitted entries, consider hiring a pro that will double check all the work for you or using a tax preparation software that will do all the calculations for you.</p> <h2>The Bottom Line: Prevent That Audit!</h2> <p>Better safe than sorry. If the IRS notifies you of an audit by phone or mail (no emails!), you are most likely to either have to pay extra or experience no change. In 2015, only 3.33% of examined individual income tax returns resulted in additional refunds to the taxpayer. Take action and use these five ways to prevent common tax mistakes that increase your chances of an IRS audit.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/5-common-tax-mistakes-we-need-to-stop-making">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-freelancers-and-side-giggers-need-to-know-about-income-taxes">What Freelancers and Side Giggers Need to Know About Income Taxes</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-lessons-from-tax-day-to-remember-for-next-year">7 Lessons From Tax Day to Remember for Next Year</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-signs-you-probably-need-an-accountant">5 Signs You Probably Need an Accountant</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-the-tax-season-rush-with-these-early-prep-steps">Avoid the Tax Season Rush With These Early Prep Steps</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-avoid-a-tax-audit">The Easiest Way to Avoid a Tax Audit</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes 1099 accountants audits declaring income deductions gross income IRS schedule c tax mistakes w-2 Wed, 18 Jan 2017 10:00:14 +0000 Damian Davila 1870060 at http://www.wisebread.com 14 Reasons Why an Accountant Is Worth the Money http://www.wisebread.com/14-reasons-why-an-accountant-is-worth-the-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/14-reasons-why-an-accountant-is-worth-the-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/group_of_accountants_000009923502.jpg" alt="Learning why an accountant is worth the money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Anyone who is at all familiar with me knows that my yearly earnings put me squarely in the economic category commonly referred to as the Working Poor. So when I mention that I pay $550 a year for an accountant to help me with my finances, people typically give me that sad look that they reserve for mediocre subway violinists and ugly babies.</p> <p>And then there's the thick pause in the conversation when the other person decides against asking this question out loud: Um, don't you write about personal finance?</p> <p>In answer to the silent, questioning looks, and in defense of my financial decisions, there are so many reasons why my accountant is worth the money.</p> <p>See also:&nbsp;<a href="http://www.wisebread.com/how-to-find-the-right-accountant-for-you" target="_blank">How to Find the Right Accountant for You</a></p> <h2>1. An Accountant Is Cheaper Than Therapy</h2> <p>Oh my God. What if I forget something?</p> <p>I would rather get oral surgery than do my own taxes. My financial life is complicated. I own a rental property. I run two separate businesses out of my home. I got 1099 forms from five different companies last year. I have a grant. I go to school part time. There are so many moving pieces in my life that just organizing my paperwork in preparation for my tax meeting with my accountant stresses me out.</p> <p>As a reasonably organized person who spends a lot of time thinking about personal finance, I'm in that dicey position of knowing enough to get myself into trouble, but not enough to get myself out. I would rather pay and be sure that my finances are in order than spend hours filing my own taxes and still feel dread.</p> <p>Additionally, my accountant is available to answer my financial questions all year long. While some accountants bill by the hour, my accountant rolls my calls about health care costs and asset depreciation into that yearly $550 flat fee.</p> <h2>2. They Can Save You Time (and Time Is Money)</h2> <p>I do my taxes once a year. My accountant does taxes all year long and all the livelong day. Guess who's better at doing taxes?</p> <p>My accountant is a virtuoso with a calculator. She can hit the keys with the speed and precision of a concert pianist. Doing your own taxes isn't rocket science. That said, my father-in-law is actually a rocket scientist and even he uses an accountant! Why? Because it's cheaper for him to outsource his tax chores to a professional, so he can use the time he saves to make money doing something he enjoys.</p> <p>My accountant also enjoys reading up on the latest changes in the tax code. Reading changes to the tax code is something I am sure that I don't want to do even once, never mind making it a yearly tradition. Because she stays on top of her game, she is able to help me make the best choices about how and when to spend and save money.</p> <h2>3. They Can Recommend Legal Loopholes to Save You Money</h2> <p>Every year I guest lecture at a university in London. My accountant helps me figure out how to arrange my lecture schedule so I can write off 10 days in London as a legitimate business expense, even if I don't work all 10 days. While I get paid a small stipend per class by the university, that amount usually only covers what I have to pay for the round-trip airfare from Los Angeles to London. While I wish the university paid for my travel expenses, and I didn't have to wait months to get my &quot;reimbursement&quot; via my tax return, just the fact that I can have a cheap trip to London every year is a huge perk that I wouldn't enjoy if my accountant hadn't stepped in.</p> <h2>4. They Know What Is Not Deductible</h2> <p>It's very common for people who work from home to write off part of their home as a deduction. However, since there are so many screenwriters typing away in their guest bedrooms and so many software designers banging out apps in their garages, the IRS and the state of California got wise to this loophole. Despite denials by the IRS that the home office deduction won't immediately raise a red flag in Audit Land, my accountant has seen first-hand how the IRS doesn't like it if you mix your business workspace with your personal space.</p> <p>If the IRS audits you, they will look for evidence that your home office is not a pure workspace. This means that if you've got a copy of Dam Beavers downloaded onto your office computer or your kid's English paper is sitting in your office printer that the IRS can call your computer and printer &quot;multi-use equipment&quot; and you will not be able to write them off.</p> <p>Since the upper threshold for the home office deduction is $1500, it's safer and sometimes more lucrative to write off every single business item in the home office from the computer to the tape dispenser, instead of going for the floor space deduction.</p> <p>Even people who have the tricked out garage-turned-office can get into trouble with home office deductions when they try and sell their homes. Home offices are categorized as business property by the IRS, which means that depreciating your home office can negatively impact your capital gains, and subject you to Section 1250 costs.</p> <p>Oh. You don't know what Section 1250 costs are? Neither did I until my accountant told me.</p> <h2>5. They Know What Is Deductible</h2> <p>I have Dam Beavers downloaded on the home office computer. Luckily my husband is an environmental designer for video games so this, and every other game subscription, controller, and console IS a work-related tax deduction for us.</p> <p>A good accountant will be able to go through your personal and business expenses with a fine-toothed comb to find missing deductions that you never imagined.</p> <h2>6. A Good Accountant Is Like a Truffle Pig, But for Money</h2> <p>In addition to sussing out deductions, a good accountant can sometimes alert you to other missed opportunities. When my husband was in the process of selling his old house and buying our current residence, I asked my accountant to look over his financials to see if he'd missed anything. In addition to finding $8,000 dollars in missed deductions from previous years, she also alerted him to the fact that he was possibly due payment by a petroleum company for mineral rights.</p> <p>Even most Angelenos don't know this fact: Los Angeles sits over the third largest oil field in the country. Oil and natural gas companies are drilling and fracking under a large part of the city that includes residential areas like Beverly Hills. To make a long story short, my husband's previously unknown mineral rights were worth over $3,000.</p> <p>$11,000 is a pretty good gift-with-$550-tax-preparation-purchase, don't you think?</p> <h2>7. An Accountant Can Help You Plan for the Future</h2> <p>My accountant knows that my goal is to retire at age 55. Since longevity runs in my family, I have to budget and save for at least 45 years of retirement. To that end goal, she recommended that I start socking away money in a heath savings account, which has a triple tax advantage, in addition to my IRA and other retirement funds.</p> <h2>8. They Can Pull You Out of the Fire</h2> <p>I have been paying taxes since I was in middle school and I have yet to be audited. I say yet because just the specter of an audit sets the tweaker part of my OCD brain ablaze. I just know an audit is hiding behind every bush, just waiting to leap out at me when I least expect it.</p> <p>Luckily, the small, rational part of my brain knows that if I am ever audited, my accountant will come riding to my rescue. I know that not only will she interface directly on my behalf with the IRS, but she will also save me a ton of worry because I know with her supervision that my books are in order.</p> <p>If you are like one of my friends who didn't file personal income taxes for, oh, seven years because she just couldn't get her act together, an accountant can cut through the chaos and help you get back in the government's good graces. You will have to pay fees, but an accountant can do triage and stop the financial bleed. Either way, an accountant is a great ally to have by your side during an audit and can save you time, money, and stress.</p> <h2>9. Never Miss a Deadline Again</h2> <p>Every year I make it my goal to finish my taxes by February 15. Some years I fail miserably. Luckily on those years that I suck at scheduling, my accountant files for an extension, so I never get dinged with a late fee.</p> <h2>10. You'll Stop Giving the Government a 0% Interest Loan Every Year</h2> <p>While most people worry about owing money at tax time, getting a huge return every year isn't the best financial move. Instead of overpaying and getting a refund, that money could have earned interest in your account. An accountant can run the numbers and help you find your sweet spot where you get a refund as close to zero dollars as possible and still owe nothing.</p> <h2>11. A Good Accountant Is a Trusted Advisor</h2> <p>My accountant views her job as providing solid information to her clients, even if it's bad news. I just scheduled a lunch with my accountant so my husband and I can ask her advice about refinancing our mortgage on our second home and ways to save more aggressively towards retirement. Because my accountant has no emotional attachment to either our home or our plan to retire as expats, she provides us with an objective point of view that is based sole on running the numbers and not on magical thinking.</p> <h2>12. They Can Teach You Best Practices</h2> <p>I always feel better after talking to my accountant, even if she's giving me bad news. Knowledge is power. The better I understand my financial picture, the better choices I can make in the present and in the future.</p> <p>Every year, when we sit down for our annual tax meeting, I ask her what I could do the following year to improve my financial situation. Since I am that person who gets exactly no pleasure out of balancing her checkbook, yet tends to get trapped in the details, my accountant has worked with me over the years to develop a bookkeeping system for me that is super simple, doesn't involve a spreadsheet (which hurt my brain), and still provides me with the big picture.</p> <h2>13. They Prevent You From Accidental Criminality</h2> <p>When you've got a lot of little financial irons in the fire, it's easy to forget that the money in your PayPal account from your eBay sales is actually income, and the crates full of trash-picked crap you are selling on Craigslist is inventory. My accountant makes sure that all my miniature businesses are operating legally, at least from the financial perspective. Accidental tax evasion has got to be the dumbest and least sexy way of breaking the law. I can do better.</p> <h2>14. No, Not Everyone, Every Year, Needs an Accountant</h2> <p>If you have a single, salaried job, and only a few assets, you could probably jam through your taxes on a 1040 EZ form in one evening with just a pen. Your entire tax preparation cost would be the price of postage. Some people go back and forth between freelance and corporate cookie work, so their need for accounting help changes with their financial circumstances.</p> <p>And, not everyone hates accounting. For example, my neighbor, who is a professional musician, takes great pleasure in reconciling her books every month. She actually makes a few thousand dollars extra every spring doing other people's taxes.</p> <p><em>Do you use an accountant or do you do your own taxes? Please share your low-stress, low-cost tax hacks in the comments section.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/max-wong">Max Wong</a> of <a href="http://www.wisebread.com/14-reasons-why-an-accountant-is-worth-the-money">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/mccain-or-obama-who-ll-be-better-for-your-wallet">McCain or Obama? Who’ll be better for your wallet?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-protect-yourself-financially-during-a-divorce-or-separation">How to Protect Yourself Financially During a Divorce or Separation</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ten-great-charities-that-deserve-your-dollars-this-year">Ten Great Charities that Deserve Your Dollars This Year</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-surprising-ways-the-rich-get-richer">5 Surprising Ways the Rich Get Richer</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-a-divorce-improve-your-finances">Could a Divorce Improve Your Finances?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance accountants CFP tax professional taxes worth the money Fri, 11 Dec 2015 14:00:03 +0000 Max Wong 1619205 at http://www.wisebread.com Do You Need a Financial Planner? http://www.wisebread.com/do-you-need-a-financial-planner <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/do-you-need-a-financial-planner" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_meeting_accountant_000016565687.jpg" alt="Couple figuring out if they need a financial planner" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you have questions regarding your finances, investments, taxes, or retirement, speaking with a financial planner can provide the answers you need. A certified financial planner (CFP) can help you organize your personal finances and establish a retirement plan. They can also help you make sense of financial problems, whenever they may arise.</p> <p>Most respectable planners will advise you if they think you can handle your finances on your own. However, you can't always count on them to turn you away, which is why we've covered some of the top reasons to hire a financial planner, as well as what to expect once you hire them.</p> <h2>1. You Need to Change Your Retirement Plan</h2> <p>Whether you are <a href="http://www.wisebread.com/6-ways-to-guarantee-income-in-retirement">changing your retirement plan</a>, or haven't started planning at all yet, a financial planner can assist. They can help you develop a plan for financial security both now and into retirement. If you need to save more, they can help you develop a solid plan to increase your savings and contributions. That said, many people are comfortable planning for their own retirement, and if you're investment-savvy enough to do so on your own, a financial planner may be unnecessary.</p> <h2>2. You Need Financial or Investment Advice</h2> <p>If you have trouble organizing your finances and payments, a planner can help you get a grip on it. A financial planner can provide you with investment advice and explain the pros and cons of various investments options. They can also help you develop a strategy for down markets to better protect your money before retirement.</p> <p>All forms of investments and retirement accounts have associated management fees and expenses. If you are unsure of what you're paying for your investments, it's time to speak with a financial advisor. They can explain what your funds cost and can determine if you are spending more than necessary.</p> <h2>3. You Receive a Big Tax Refund Every Year</h2> <p>If you consistently receive a tax refund, you should speak with an adviser about what you owe and what you should be paying. While it may be nice to receive a tax refund at the end of the year, you won't gain any interest on the money when it's in Uncle Sam's possession. Instead, it would benefit you more to receive that money throughout the year. Your planner can help you adjust your tax withholdings so that you aren't overpaying throughout the year.</p> <h2>4. You Got Married</h2> <p>Determining which debts to combine, which debts to pay off, and what you need to do to reach your financial goals as a couple can be very difficult (especially for the newly married). Instead, let a financial advisor deal with the finances and help you organize your spending, debts, and assets. They will help you determine which strategy is right for your taxes, investments, benefits, bank accounts, and personal finances. They can even help you determine what your spouse's retirement plan may be able to offer you.</p> <h2>5. You Are Planning a Big Purchase or Making a Big Change</h2> <p>If you are planning on purchasing a home, or making another large purchase, a professional can help you determine how much you can afford to spend. They can then help you develop a plan to meet your financial goals and afford the home or purchase of your dreams. They can also help you prepare for life's big events, such as an upcoming baby, career change, or new car.</p> <h2>6. You Own a Business</h2> <p>Owning and running a business can be very stressful. Having a planner on your side can help you organize your business expenses and taxes, employee benefits, business investments, and any other financial information related to your business. If you will be buying, selling, or passing on a family business, a financial planner can make sure everything progresses smoothly.</p> <h2>What You Can Expect</h2> <p>One thing that a financial planner cannot provide is a guarantee. All they can do is help you get your financial life in order; they can't make miracles happen. What they can do is help you see the big picture and find ways to create more wealth over time, such as by capitalizing on compound interest.</p> <p>After getting to know you and your financial goals, your planner can help you create a written investment plan to reach them. They will assess all your current assets, liabilities, income, and more to develop a comprehensive plan that you can actually stick to. They can also advise you if you are paying too much for something, saving you even more money over time.</p> <h3>Monitoring Your Progress</h3> <p>Over time, your planner will continue to periodically monitor your progress to ensure you are still on track to meet your financial goals today, tomorrow, and into retirement. They will likely be your trusted financial partner for life because they can help you make wise, informed choices before you make any large financial decisions.</p> <h3>Finding an Advisor</h3> <p>If you can get a referral from a colleague, lawyer, or Certified Public Accountant (CPA), this is usually a good place to start your search for a financial planner. You can also search the <a href="http://www.plannersearch.org/Pages/home.aspx">Financial Planning Association (FPA)</a> and the <a href="http://www.napfa.org/">National Association of Personal Financial Advisors (NAPFA)</a> for a list of potential advisors.</p> <p>There are a number of types of financial planners available to you, including the following:</p> <ul> <li>CFP: Certified financial planners can help you with things like insurance, investments, taxes, retirement, employee benefits, and estate planning.<br /> &nbsp;</li> <li>ChFC: Chartered financial consultants specialize in finance and investing.<br /> &nbsp;</li> <li>CLU: Chartered life underwriters specialize in the finance industry.<br /> &nbsp;</li> <li>CFA: Chartered financial analysts specialize in economics, accounting, portfolio management, and security analysis.<br /> &nbsp;</li> <li>CPA: Certified public accountants specialize in tax issues.</li> </ul> <p>In most cases, a CFP is the right professional for the job, unless you have unusual financial or investment needs.</p> <h3>What Do They Charge?</h3> <p>Each advisor is different and will charge according to the following three basic billing structures:</p> <ul> <li>Fee-only planners: They are paid for their advice only.<br /> &nbsp;</li> <li>Fee-based planners: They earn fees for their advice and commission on the products they sell.<br /> &nbsp;</li> <li>Commission-based planners: They make commission on the products they sell.</li> </ul> <p>Some planners will charge a flat fee, hourly rate, or a percentage of what they are managing. According to CNNMoney, the average financial planner will charge anywhere from $100&ndash;$400 per hour. They may also charge a percentage of your assets if they also manage your money, usually between 0.5%&ndash;2%. If you only need a portfolio checkup every once in a while, then you likely only need a few hours, on a fee-only pay structure. It wouldn't make sense to continue paying an ongoing percentage if you don't need ongoing help.</p> <h3>Can You Do It Alone?</h3> <p>You may not need a financial advisor if you feel confident managing your finances, investments, and retirement accounts on your own. If you enjoy researching your investments and feel confident that you are monitoring your retirement plan well enough on your own, then you likely don't need an advisor.</p> <p><em>Do you have a financial planner? How have they helped you? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/do-you-need-a-financial-planner">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-smart-money-moves-to-make-in-the-new-year">8 Smart Money Moves to Make in the New Year</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/millennial-millionaires-how-the-brokest-generation-can-also-become-the-richest">Millennial Millionaires: How the Brokest Generation Can Also Become the Richest</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-basics-every-new-grad-should-know">The Financial Basics Every New Grad Should Know</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-financial-differences-between-millennials-and-the-next-generation">7 Financial Differences Between Millennials and the Next Generation</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-critical-money-mistakes-people-make-in-their-40s">7 Critical Money Mistakes People Make in Their 40s</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance accountants advisors financial planners investments retirement Fri, 20 Nov 2015 14:00:27 +0000 Andrea Cannon 1614966 at http://www.wisebread.com 5 Signs You Probably Need an Accountant http://www.wisebread.com/5-signs-you-probably-need-an-accountant <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-signs-you-probably-need-an-accountant" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000021395191.jpg" alt="Woman learning she probably needs an accountant" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Do you dread filing your income taxes each year? Does preparing your taxes take weeks of your time? And once you've sent your papers to the IRS, do you have the sneaking suspicion that you might not have taken all the deductions to which you are entitled?</p> <p>You might need to hire an accountant.</p> <p>&quot;Hiring an accountant depends on whether your knowledge, time, and money are best spent on bookkeeping, loan application, and tax preparation, or whether you have higher priorities,&quot; says Valrie Chambers, associate professor of taxation and accounting at Stetson University in Celebration, Florida. &quot;A business owner who excels at sales should probably use her time increasing sales rather than learning and doing accounting. That strategy is just more profitable for the business.&quot;</p> <p>Here are five signs that you need to hire an accountant.</p> <h2>1. You Owe the Government a Lot of Money Each Year</h2> <p>Taxes become complicated when you work for yourself or run your own business. Depending upon how much you earn, you'll have to pay estimated quarterly tax payments four times every calendar year &mdash; January 15, April 15, June 15, and September 15. These payments are supposed to guarantee that you won't owe the federal and state governments thousands of dollars each year in taxes.</p> <p>But if you find that when you file your income taxes each April 15 you do owe the state and federal government $3,000, $4,000, $6,000, or more, you're doing something wrong. An accountant can help you determine the quarterly tax payments you should be making to ensure that you're not hit with a huge tax bill every April 15.</p> <h2>2. You're Worried That You're Missing Big Deductions</h2> <p>Yes, hiring an accountant takes money. But doing so can also <em>save </em>you money. An accountant can prepare your annual income tax returns to make sure that you're not missing out on any important deductions for your household or your business. Missed deductions can cost you thousands of dollars each year in taxes.</p> <h2>3. It Takes You Days to Complete Your Taxes</h2> <p>Filing your <a href="http://www.wisebread.com/5-clever-tax-shelters-anyone-can-use">income taxes</a> isn't necessarily easy. But it shouldn't be a draining chore, either. If your life has gotten complicated &mdash; maybe you've started your own consulting business on the side, perhaps you've adopted and are struggling to understand how the adoption tax credit works, maybe you're not sure how to deduct the bills for a serious medical procedure &mdash; you can bet that your income taxes have, too.</p> <p>If it is taking you a full week to complete your taxes, it might be time to think about hiring an accountant. You just have to determine how important your time is: Would you rather spend your time earning more money or poring over your tax forms?</p> <h2>4. You Own Rental Real Estate</h2> <p>Renting an apartment or two is a great way to earn passive income. But doing so can also complicate your finances. That's why it makes sense to hire an accountant to make sure that you don't miss any important tax deductions related to rental income, and that you file all the paperwork necessary when working as a landlord.</p> <p>&quot;There comes a point when personal tax software is not sophisticated enough to take into account the complexities of real estate investments,&quot; says David Reiss, professor of law and research director for the Center for Urban Business Entrepreneurship at Brooklyn Law School in New York City. &quot;If a taxpayer has multiple properties that have both a personal and investment component, tax software may not be able to accept all of the relevant inputs and generate the correct output.&quot;</p> <h2>5. You've Never Been Able to Balance Your Checkbook</h2> <p>If you're struggled for years to balance your own checkbook &mdash; if overdraft charges from your bank aren't a rare enough occurrence &mdash; it might be time to invest in an accountant, especially if you've started your own business. It's bad enough to struggle with your personal finances, and you don't want to operate a business that doesn't have its books balanced.</p> <p>Chambers recommends that you meet with several accountants &mdash; she recommends that you only work with Certified Public Accountants (CPAs) &mdash; before hiring one. Ask accountants how long they've been in business, whether they've worked with clients at your income level, how much they charge, and what services they'll provide. Ask, too, for referrals from accountants' current clients.</p> <p>&quot;Meet with the CPA to see if you are comfortable sharing your information with this firm,&quot; Chambers says. &quot;CPAs should be forthcoming about their fees. When they are hired, they normally spell out what they will do for those fees in an engagement letter. Finding an accountant who is right for you is part research, part comfort level.&quot;</p> <p><em>When did you realize that you needed an accountant?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-signs-you-probably-need-an-accountant">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-freelancers-and-side-giggers-need-to-know-about-income-taxes">What Freelancers and Side Giggers Need to Know About Income Taxes</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-common-tax-mistakes-we-need-to-stop-making">5 Common Tax Mistakes We Need to Stop Making</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/35-bizarre-things-you-can-be-taxed-on">35 Bizarre Things You Can Be Taxed On</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes accountants cpas deductions finance income taxes IRS self-employment Tue, 13 Oct 2015 13:00:32 +0000 Dan Rafter 1586108 at http://www.wisebread.com 8 Money Moves CPAs Say You Must Make http://www.wisebread.com/8-money-moves-cpas-say-you-must-make <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-money-moves-cpas-say-you-must-make" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy_bank_money_saved_000017996839.jpg" alt="Money moves cpas say you should make" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Everybody and their brother can talk to you about your finances until they're blue in the face, but that doesn't mean their counsel is sound. Frankly, unless they've been formally educated in finance, you should heed their advice with caution. If you want solid suggestions on personal finance best practices, go straight to the source &mdash; CPAs, who make a living crunching the numbers that constitute their clients' lives. What do they recommend? Take a look at these tips we've cultivated from a few successful CPAs on <a href="http://www.wisebread.com/tax-deductions-to-start-thinking-about-now">money moves you must make</a> &mdash; starting today.</p> <h2>1. Get Out of Debt</h2> <p>You've got to start somewhere, and the best place is taking a good, hard, honest look at your debt and devising a plan to eliminate it. According to Federal Reserve statistics, Americans owe nearly <a href="http://www.federalreserve.gov/releases/g19/current/">$900 billion in credit card debt</a>, or about $2800 for every man, woman, and child. Add in student loans, mortgages, auto loans and you're talking serious money.</p> <p>Not all debt is bad, says Roanoke, VA based CPA <a href="http://www.fraimcpa.com/">Micah Fraim</a> &mdash; mortgages are viewed as &quot;good debt,&quot; for example &mdash; but consumer debt can be ruinous.</p> <p>&quot;Unlike small business loans or mortgages, [credit cards] are rarely used to purchase investments or appreciating assets,&quot; he says. &quot;It's much more likely that they will be used for living expenses &mdash; poof, and it's gone. With average interest rates in the teens, credit card debt should be avoided at all costs, and if someone has consumer debt or is forced to take it on, intelligently reducing and eliminating it should be their number one priority. It will save them far more money than most investments could yield and will let them rest much easier at night.&quot;</p> <h2>2. Get on a Budget &mdash; Today</h2> <p>Spending money willy-nilly is the easiest way to drive yourself deep into debt, and you want to avoid that as best you can. The best way to do that is with foresight in the form of a budget. Monitor closely money coming in and going out, and curb your spending accordingly.</p> <p>Why do you need a budget?</p> <p>&quot;It's simple: Death by 1,000 cuts,&quot; says Amanda Argue, a 26-year-old CPA in Florida who, with her husband, spent the past 14 months on an extremely tight budget to pay off $55K worth of student loan debt. &quot;If you're not careful, you can easily rack up those credit card bills, just by eating out for a majority of your meals. By becoming conscious about where your money is going, you can take charge of your finances, instead of your finances taking charge of you.&quot;</p> <p>Based on her own successful debt elimination, Argue also provides a few resources that helped her along the way.</p> <p>&quot;The best free tools I have found for budgeting are Mint.com or Everydollar.com,&quot; she advises. &quot;Both have mobile phone applications and will send notifications if you go over budget. With Mint's free version, you can link up your credit cards and bank accounts to receive up-to-date data as to where your money is going. Everydollar is the Dave Ramsey budgeting tool. It's great for beginners, but if you want to link your accounts, you will have to shell out some cash.&quot;</p> <h2>3. Pay Attention to Taxes</h2> <p>In creating our budgets, we primarily concentrate on our day-to-day expenses to make sure they're covered. But what about taxes? Those are often hefty, overlooked expenses that can quite literally make or break you. It's critical to know what's coming, when it's coming, and how much it's going to cost you.</p> <p>&quot;People spend all kinds of time budgeting for groceries, but not their largest expense &mdash; taxes,&quot; says Dan Lucas, CPA and CEO of Credo Financial Services in Alpharetta, Ga. &quot;Taxes are not 'it is what it is.' They can be managed, mitigated, and planned year-to-year. Tax savings can be invested for retirement and grow with compounding interest. It can be the difference between retiring at 65 and retiring at 75.&quot;</p> <h2>4. Contribute to Your 401(k) and IRA Accounts</h2> <p>Pensions are becoming a thing of the past, and the promise of Social Security when you retire is shaky at best. Given those unfortunate scenarios, it's up to you to invest in your future, starting with a 401(k) and/or an IRA or Roth IRA accounts.</p> <p>&quot;Very simply, the money move everyone should make is to contribute the maximum allowable to your 401(k) or other retirement plan,&quot; says <a href="http://www.lisabcpa.com/">Lisa Bashur</a>, a self-employed CPA in Missouri. <strong>&quot;</strong>And in my opinion, if cash allows, folks should also be contributing annually to an IRA or Roth IRA, depending on income levels. Even if a person makes too much to take an income tax deduction for an IRA contribution, it will still grow tax-deferred, or can later be converted to a Roth IRA, which grows tax-free.&quot;</p> <h2>5. Up Your 401(k) Withholding</h2> <p>While contributing to your 401(k) is a recommended money move you should be making according to CPAs, that's not to say that you should be blindly funneling money into it. You want to understand the ins and outs of the account so you can maximize its benefits. Tim Gagnon, partner at law firm Coleman &amp; Gagnon, a practice covering personal law, corporate, and taxation areas, explains how to navigate a 401(k) withholding strategy.</p> <p>&quot;Make sure you have upped your 401(k) withholding for the year to maximize the new cap &mdash; $18K and $24K,&quot; he says. &quot;Remember, adding $100 more to the 401(k) only costs you $75 if you are in a 25% tax bracket. Review your withholding and if you tend to get large refunds back each year, reduce your withholding and give yourself a take home raise, which could offset the increase in the 401(k) contribution.&quot;</p> <h2>6. Learn How to Cook</h2> <p>You're probably asking yourself what learning how to cook has to do with your finances. Simple: it allows you to stop spending so much money on expensive takeout (it adds up after a while, and it costs much more than groceries when you consider how many meals you get out of each). Send that money to more useful and beneficial parts of your budget &mdash; like savings.</p> <p>Argue &mdash; in pursuit of paying down her $55K in student loans &mdash; counts cooking as one of the methods that freed up a lot of cash that went toward her debt.</p> <p>&quot;If you develop cooking skills, you will no longer need to go out to eat tonight, or try to scramble to find food; instead, plan out your meals for the week, head to the grocery store with a list. and stick to it,&quot; she says.</p> <p>While that may sound daunting to kitchen newbies, there are ways to make the process more efficient.</p> <p>&quot;For those individuals who don't seem to have time to cook during the week, plan to cook one day on the weekend,&quot; Argue suggests. &quot;Make simple recipes, such as soups and casseroles, that can be easily frozen. Then prep veggies and fruits to utilize as quick snacks during the week.&quot;</p> <p>&quot;During this past tax season, I was working 80-plus hours a week with no time to make dinners at night,&quot; she continues. &quot;Instead, I spent all day Sunday cooking eight different meals, half of which I placed in the freezer to be utilized towards the end of the week. My husband and I had enough food and leftovers for lunches and dinner throughout the whole week. Plus, I made sure to bake a cake, cookies, or brownies to keep my sweet tooth in check during the week.&quot;</p> <h2>7. Take Full Advantage of Pre-Tax Accounts</h2> <p>Gagnon brings up a very good point that many Americans probably overlook &mdash; the underuse of their pre-tax health savings and dependent care accounts. If you qualify for these accounts, make sure you're taking full advantage of the pre-tax perk.</p> <p>&quot;Check if your pre-tax health savings accounts and dependent care accounts are on track to be used in full this year,&quot; he reminds. &quot;If dependent care will not be used, maybe a child needs to go to day camp (not overnight) this year, or if health savings will not be used up you may want to plan some year-end purchases.&quot;</p> <h2>8. Let Your Future Serve as Motivation</h2> <p>You want to live a quality, fulfilling, and rewarding life, don't you? Of course you do, and that's exactly why you need to dream. Dream big even, and use those dreams as motivation to get and keep your finances on track. It can be done &mdash; by anyone. You just have to want it bad enough.</p> <p>&quot;The only way you can sustain a lifestyle on a budget, save each month, and begin to develop financial freedom is to realize why you are doing this. What are your financial goals? How much money would you like to retire with? What is your ideal job? How long will it take to pay off your home?&quot; Argue asks.</p> <p>&quot;[My husband and I] had zero dollars in our bank account and $55K in student loan debt to deal with [when we got married]; we were flat-out broke,&quot; she explains. &quot;Fast forward 14 months, we got on a budget, stopped eating out, cut our lifestyle in half, and we are now 100% debt free! We also accumulated enough savings for us to travel and work at the same time. Our dream was to knock off the debt as soon as possible and save for a house that we will pay for in cash in two to three years &mdash; and we're well on our way to that house.&quot;</p> <p><em>What do you think of these tips? Are you actively engaged in any of them currently? Will you institute any of them into your lifestyle? I'd love to hear from you in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/8-money-moves-cpas-say-you-must-make">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-basics-every-new-grad-should-know">The Financial Basics Every New Grad Should Know</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-decide-if-its-a-fund-worthy-emergency">8 Ways to Decide if It&#039;s a &quot;Fund-Worthy&quot; Emergency</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-personal-finance-skills-everyone-should-master">12 Personal Finance Skills Everyone Should Master</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-money-moves-to-make-before-the-leaves-change">10 Money Moves to Make Before the Leaves Change</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ow-do-you-deal-with-family-members-who-are-bad-at-managing-money">How Do You Deal With Family Members Who Are Bad At Managing Money?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance accountants advice budgeting cpas money saving Wed, 24 Jun 2015 17:00:10 +0000 Mikey Rox 1462269 at http://www.wisebread.com When You Should Fire Your Accountant http://www.wisebread.com/when-you-should-fire-your-accountant <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/when-you-should-fire-your-accountant" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/539061478_8fc426ca8e_z.jpg" alt="arguing" title="arguing" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Having an accountant can help you keep track of finances, reduce your tax burden, and make more efficient use of your money. If you own a small business, it&rsquo;s especially important to <a href="http://www.backtaxeshelp.com/tax-blog/tax-help/small-business-accounting-services-what-cpas-do-what-to-expect.html">hire an accountant</a>, but even individuals can benefit from their services. Those advantages, however, only happen when you have a professional accountant who can do the job well. If you have had some doubts about your accountant's abilities, then you should know when it makes sense to fire your accountant and find someone else. Here are some reasons to consider firing your accountant. (See also: <a href="http://www.wisebread.com/small-business/3-things-your-accountant-may-not-be-telling-you">3 Things Your Accountant May Not Be Telling You</a>)</p> <h2>Dishonesty and Over-Billing</h2> <p>Your accountant's job isn't to scam you out of money or find ways to make your bill larger. Dishonest accountants can cost you thousands of dollars in fees every year.</p> <p>Typically you can gauge an accountant's honesty by asking him to teach you some basic accounting and bookkeeping skills that you can do on your own. Your accountant shouldn't have any problems teaching you these simple methods to help you save money. If he's unwilling, and you think it's because he wants to earn more money by performing menial tasks, then you should consider letting him go.</p> <h2>Poor Communication</h2> <p>Few people will ever know as much about your life, especially your financial life, as your accountant. Without such intimate knowledge, your accountant couldn't make educated recommendations that will help you do more with your money. &nbsp;</p> <p>Good communication based on trust, therefore, is incredibly important. If you feel uncomfortable talking to your accountant or you just don't like his communication style, then you should feel free to move on to another professional. You shouldn't expect an accountant to become your new best friend, but you should expect him to provide good information in a manner that you can understand.</p> <h2>Vague Advice</h2> <p>Your accountant needs to give you specific advice that will help you save money. Vague advice like &quot;you need to save more money for retirement&quot; doesn't get the job done. You need specifics.</p> <p>A reliable accountant should be able to give you advice that considers the advantages and disadvantages of:</p> <ul type="disc"> <li>Buying or leasing equipment for your business</li> <li>Saving money in IRA, <a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">Roth IRA</a>, and other specific <a href="http://financialmentor.com/calculator/retirement-calculator">retirement accounts</a></li> <li>Reducing your tax burden by finding more deductions</li> <li>Choosing accounting software for your business</li> </ul> <h2>Outdated Advice</h2> <p>Tax laws, <a href="http://www.irs.gov/Filing">tax filing</a>, and business regulations change all the time. Accountants have to keep up with those changes to offer their clients quality advice. Unfortunately, not all accountants are good at learning the evolving tax code and regulations.</p> <p>If you suspect that your accountant is giving you outdated advice, then you might want to make an appointment with another CPA to see what suggestions she gives you. If you find that her advice is much better and up-to-date than the advice provided by your current accountant, then it's time to move on. Getting outdated advice not only costs you money, it could get you in trouble with the IRS and regulatory agencies.</p> <p>The vast majority of accountants do their work very well. Occasionally, though, you will find one that doesn't meet your needs. When this happens, you should know the warning signs so you can fire him and move on to <a href="http://www.wisebread.com/how-to-find-the-right-accountant-for-you">someone with better skills</a>.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/debbie-dragon">Debbie Dragon</a> of <a href="http://www.wisebread.com/when-you-should-fire-your-accountant">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-reasons-to-hire-a-tax-professional-even-if-you-dont-mind-the-work">3 Reasons to Hire a Tax Professional (Even If You Don&#039;t Mind the Work)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/five-easy-steps-to-keeping-track-of-expenses-for-the-self-employed">Five Easy Steps to Keeping Track of Expenses for the Self-Employed</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-when-your-tax-preparer-makes-a-mistake">What to Do When Your Tax Preparer Makes a Mistake</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tax-document-checklist-what-to-gather-before-doing-your-taxes">Tax Document Checklist: What to Gather Before Doing Your Taxes</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-signs-you-probably-need-an-accountant">5 Signs You Probably Need an Accountant</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes accountants hiring professionals tax preparation Thu, 08 Nov 2012 10:36:51 +0000 Debbie Dragon 955161 at http://www.wisebread.com 3 Reasons to Hire a Tax Professional (Even If You Don't Mind the Work) http://www.wisebread.com/3-reasons-to-hire-a-tax-professional-even-if-you-dont-mind-the-work <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-reasons-to-hire-a-tax-professional-even-if-you-dont-mind-the-work" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/business_women.jpg" alt="Two business women" title="Two business women" class="imagecache imagecache-250w" width="250" height="150" /></a> </div> </div> </div> <p>The final stretch of tax season is here, and the question of whether you should hire a tax professional is becoming an increasingly stressful matter for those who still haven't touched their tax returns. There are certainly many reasons to pursue the DIY route, especially for people who qualify for free tax filing. But on the flip side, a tax professional may be able to help you more than you think. Here are a few reasons why you should hire a tax professional this year. (See also: <a href="http://www.wisebread.com/how-to-find-the-right-accountant-for-you">How to&nbsp;Find the Right Accountant for You</a>)</p> <h3>You Can Focus on&nbsp;Saving More Money</h3> <p>Many people are surprised by the amount of time it takes to work with a certified public accountant (CPA), because it may seem like it requires even more time to work with someone than to file everything yourself.</p> <p>In reality, though, most clients are getting more value out of the extra time they spend with a third party. When you are spending time filing your own taxes, most of the time is spent on paperwork and administration like gathering documents, adding up numbers, and figuring out which forms to fill out. You might also be spending quite a bit of time researching tax rules that may or may not apply to your case. When you work with a CPA, your time is usually spent making sure she is thinking about every deduction that applies to your situation.</p> <p>It's difficult to promise that your tax return will take advantage of every legal deduction that applies to you even if you work with the most diligent pro, but you will likely find more deductions than if you were just filing your own 1040.</p> <h3>You Can Get Advice If You Are Audited</h3> <p>I always recommend working with a tax professional who is willing to represent you in case of a tax audit, because that also implies that she will stand by the work that is being performed. But even if you are told you will be on your own if you get audited, your accountant will almost certainly give you advice if the day comes. After all, she was the person who did your tax return in the first place and will need to make sure you understand the reasons behind all those numbers.</p> <h3>You Have Another Point of Contact for Your Financial Needs</h3> <p>As you work your way up the career ladder, you will eventually have assets to manage. When that day comes, you'll want to talk to as many people as you can about how best to manage those assets. Since many accountants work with small business owners, they may know good estate planners, responsible financial advisers, and even private <a href="http://www.wisebread.com/how-to-find-free-or-cheap-health-resources">health insurance providers</a>. Take the advice with a grain of salt, because it's up to you to figure out whether the referral is worth the cost, but having the additional option for advice is always good.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/david-ning">David Ning</a> of <a href="http://www.wisebread.com/3-reasons-to-hire-a-tax-professional-even-if-you-dont-mind-the-work">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-you-should-fire-your-accountant">When You Should Fire Your Accountant</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/five-easy-steps-to-keeping-track-of-expenses-for-the-self-employed">Five Easy Steps to Keeping Track of Expenses for the Self-Employed</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-when-your-tax-preparer-makes-a-mistake">What to Do When Your Tax Preparer Makes a Mistake</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-signs-you-probably-need-an-accountant">5 Signs You Probably Need an Accountant</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tax-document-checklist-what-to-gather-before-doing-your-taxes">Tax Document Checklist: What to Gather Before Doing Your Taxes</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes accountants financial advice tax preparation Tue, 20 Mar 2012 09:36:56 +0000 David Ning 911744 at http://www.wisebread.com Accountant 101: Finding the Right Match http://www.wisebread.com/small-business/accountant-101-finding-the-right-match <div class="field field-type-link field-field-url"> <div class="field-label">Link:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="http://www.openforum.com/idea-hub/topics/money/article/accountant-101-finding-the-right-match-tom-harnish" target="_blank">http://www.openforum.com/idea-hub/topics/money/article/accountant-101-finding-th...</a> </div> </div> </div> <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/small-business/accountant-101-finding-the-right-match" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000013243296XSmall.jpg" alt="woman holding binoculars" title="woman holding binoculars" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>&quot;Do you want to eat well or sleep well?&quot;</p> <p>That's the first thing a former IRS agent turned pubic accountant asked us when we approached him about doing our company taxes.</p> <p>Over the years, we learned he could do both: He helped us save money and we worried less about an IRS audit.</p> <p>Are you worried about an audit? If you're the sole proprietor of a small business, you'd better be. You're a prime a target for IRS audit. If you run a company that uses contract labor, you should be worried, too. The IRS just hired 100 new auditors to check up on you.</p> <p>Regardless what your company does or the size of your firm, an audit can be an intimidating and expensive experience &mdash; even if you did everything correctly and honestly.</p> <p>A small business financing consultant and former banker I know intimately (literally &mdash; I married her) endured a line-item audit. For a consultant, time is money, but for days her time was tied up preparing for the audit and then defending every expense and every deduction. In the end, the exasperated auditor admitted the IRS actually owed her money. It was a small triumph, but it didn't make her any happier or come close to paying for the time she'd lost.</p> <p>In these tough economic times, adding extra cost may not seem like a good idea. But take a hint from my wife. As a financial expert, she knew it was a good idea to have a Certified Pubic Accountant (CPA) prepare her taxes. That extra level of expertise was worth the cost to her, and it can be for you too.</p> <p>The problem, of course, is how to find a good accountant. Some will work alone on your dining room table, and some are part of huge multinational operations with thousands of accountants and dozens of specialized divisions. How do you decide?</p> <p>Before you go CPA-shopping, decide what you really need most and try not to force a square peg into a round hole. Do you want tax planning and financial advice? Do you need someone who can help you with employee compensation and benefit issues? Are you looking for personal retirement and investment planning? Do you just want your taxes prepared at calendar year-end or fiscal year-end? In any case, keep in mind that it's very hard to find a CPA who can &quot;do it all.&quot;</p> <p>The best way to find a good accountant is to talk to other business owners about who they use. People tend to have strong opinions about their advisers, and are eager to refer a good one. Once you decide what you want and what you need (those aren't necessarily the same thing when it comes to cost), interview potential accountants to be sure they can handle those issues that are most important to you.</p> <p>Ask for references &mdash; then talk to them. Ask if they're happy with the level of advice, contact, and attention they get from their accountant. It's one thing for an accountant to tell you what he or she can do for you; it's another for their clients to tell you what the accountants actually do.</p> <p>One way to make sure your financial house is in order, given the complexity of our tax laws, is to find an individual or firm with experience in your industry or, at the very least, the type of industry you're in (such as manufacturing, service, software, retail). And size does matter. A firm equipped to handle issues associated with a big company may not understand the realities of running a sole proprietorship, for example.</p> <p>If your business grosses less than about a million dollars a year, your needs can probably be met best by a small firm where you can have a personal relationship with an individual. They don't need to work in your home, of course, but they should be nearby. If your business is larger, you may need a firm that can offer a range of specialized advice on issues such as employee compensation and benefits, or pension plans.</p> <p>Not all accountants and accounting firms are created equal. A CPA will cost you more than a bookkeeper, but they're better qualified to do your taxes. CPAs must pass a rigorous exam and are required to complete continuing education every year to stay current. And while someone who doesn't have a CPA designation may be qualified, the IRS, your banker, and others will place more confidence in a CPA's work. You may also want to see if your prospective CPA is a member of the American Institute of Certified Public Accountants (AICPA) because of the institute's membership standards.</p> <p>In any case, be sure you meet the person who'll be handling your account, not just the individual who &quot;sells&quot; you on the firm. If you decide on a medium or larger firm, a junior accountant will likely do the actual work on your account. Satisfy yourself that they will be properly supervised so you'll get the 'big firm' advice you're paying for.</p> <p>You really don't want to buy accounting advice, or any other professional service, from the lowest bidder. But rates and fees do vary, so shop around. Fees for accounting services vary based on the size of the firm, the experience of the accountant, and the area of the country in which the firm is located. Rates can range from $35 to over $300 per hour. An uncomplicated small business tax return can cost between $200 and $1,500. One way to find out what to expect is to take your prior year return to the prospective accountant so they can give you an idea of what they would charge to do it.</p> <p>Finally, be sure you're comfortable with the individual you choose. While you shouldn't choose an accountant (or doctor or lawyer) simply because you like them, you don't have to settle for someone you don't like.</p> <p>If you spend a few dollars for professional accounting help, you'll find you can eat better and sleep better, too.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tom-harnish">Tom Harnish</a> of <a href="http://www.wisebread.com/small-business/accountant-101-finding-the-right-match">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/250-tips-for-small-business-owners">250+ Tips for Small Business Owners</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-for-small-businesses">Best Credit Cards for Small Businesses</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-inspiring-stories-of-normal-people-building-a-thriving-online-store">4 Inspiring Stories of Normal People Building a Thriving Online Store</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-hire-your-first-employee">How to Hire Your First Employee</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-smart-ways-to-get-a-small-business-loan">10 Smart Ways to Get a Small Business Loan</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Small Business Resource Center accountants small business Sun, 22 Aug 2010 04:05:30 +0000 Tom Harnish 205945 at http://www.wisebread.com