How to Decide between an Accountant vs. Turbo Tax

Accountant Turbo Tax Computer Advice Business Growth

Accountants vs. Turbo Tax

We currently live in a technology driven world, and because of this we often rely so heavily on technology that we fail to realize that working with humans on a day to day basis is very important. Software developers have been doing everything to eliminate the need for an accountant or CPA, and now thanks to modern software advancements many have been falsely led to believe that Turbo Tax can solve all of their accounting needs.

Below are a few reasons why you should hire an accountant instead of relying on Turbo Tax:

To Avoid Computer Errors

Even though modern technology continues to change and shape lives, it is still imperfect. When using software to do accounting or tax functions, you run the risk of encountering computer errors. While humans have been known to make mistakes, you increase your chance of making even more mistakes when you rely on technology more than you rely on an actual person.

To Get Real Time Advice

No one can give you real time advice like an accountant can. Instead of using Turbo Tax and then later hiring an accountant, consider hiring an accountant right now. An accountant can help you with questions or concerns as they arise, but Turbo Tax cannot.

To Assist You with Predictions

How well do you predict your company’s successes? Probably not too well. Because of this, it’s important that you have a CPA or accountant readily able to process information to give you an adequate forecast of your business’s future.

To Help You Grow Your Team

As much as many people may love Turbo Tax, in all reality the software cannot help your team grow. An accountant can give you the services offered by Turbo Tax and also give you the insights needed to actually grow and develop your company.

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What to Do if You’re Being Audited without Your Receipts

There is nothing worse than being audited by the IRS and not having receipts. Not having your receipts can leave you in hot water simply because you have no documentation that backs up the amount of income you have in your bank. While it can be frightening, it’s important that you document every single expense or deduction you have prior to filing in order to minimize the probability of an audit. So what do you do if you are being audited and have no receipts?

Receipts Tax Audit Accountant CPA

Receipts

Don’t Panic

The worst thing you can do during an audit is panic; everyone knows that panicking has never solved any problems. The moment you start to panic, the moment you’ll start making more mistakes, and making mistakes is probably what led you to the audit to begin with.

Make a Mental Note to Start Keeping Your Records

While it may not help you with this particular tax audit, make a mental note to start keeping your records for everything moving forward. Sometimes the best teacher is experience, so learn from this mistake.

Don’t Make Up Receipts

Whatever you do, don’t attempt to create your own receipts fraudulently. You may be able to fool people for a little while, but you won’t be able to keep it up for very long.

Don’t Lie

When you tell the truth, you never have to remember what you said, and for that reason alone you should always be truthful. While this could leave you in hot water with the IRS, lying about records you don’t have could have you in even hotter water, so it’s best to be up front and honest about your current documentation or lack thereof.

Hire a CPA

Hiring a CPA can be your best decision, especially when you are faced with an IRS audit. Many CPAs have had years of experience with the IRS and can help you navigate the process more efficiently.

Have you recently found yourself in an IRS audit without having receipts? Leave your comments below.

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Buying a Dental Practice: The Indispensable Background Research

Deciding where to buy, how to handle it, and what kind of dental practice to purchase is a crucially important step in the career of a dentist. There are many essential decisions to make and key factors to examine as you search for the perfect dental practice that meets all of your needs.

Research Research Research

Dentists must not rush into a purchase, and need to manage their expectations, understanding that the process will take some time. There is no need to hurry through important steps and be impatient. Buying the right dental practice for you matters more than closing a deal quickly when the first opportunity presents itself.

Location Location Location

Decide on where you would like to live. You’ll end up being a big part of this community, so you’ll want to make sure it’s a good fit. Participating in local activities and mingling with neighbors will help your business grow. And shortening your community wouldn’t hurt either. When you can avoid the long commute, those hours you might have spent on the road can be paid forward and spent instead with family and friends.

Establish yourself amongst people you can relate to and people you can enjoy. Your practice and your interpersonal life will reap the benefit. Suburbs? Intercity? Rural? These choices will dictate how many competitors will be in close proximity. Will your spouse be able to find work? Will your kids end up in a school district that will nurture them and grant you piece of mind?

Choose the Ideal Practice for You

Lay out a working business plan. What size of dental practice do you anticipate? And do be careful to leave room for growth. Do you want to practice general dentistry or do you prefer an expensive practice that focuses on cosmetic dentistry? Do you prefer a long client list with a five-day-a-week-schedule? Or do you want a smaller practice, with a slower pace, that will allow you to work fewer hours? These decisions affect your finances and stress levels–what can you reasonably make work?

Seek an Appraisal

Get a CPA or CVA to perform a business appraisal on the proposed business purchase. Then you’ll have an informed point of view going into things. This will help ensure you are within the means of your projected income.

Establish a Support Net

Trying to save money by being completely self-sufficient is a poor decision when you plan on purchasing a dental practice. You’ll have to rely on the expertise of others as your patrons will have to rely on you. Trusted advisors can save you plenty of trouble. Here are a few people you’ll need:

  • A certified public accountant versed in advising dental care practices and other small businesses on reducing tax burdens and remaining tax compliant. You need an accountant who can help you establish tax-saving strategies. Find a certified public accountant that can advise you on the best entity structure for your small business (LLC, PLLC, Sole Proprietorship, S-Corp, C-Crop).
  • A Bookkeeper who has familiarity in a bookkeeping software system such as Quickbooks. A certified Quickbooks Advisor means they are certified by Quickbooks as proficient with the Quickbooks program.
  • An attorney at law to review all documents related to the sale and to legally protect your interests in the future.
  • A consultant also could prove useful in helping you navigate toward success.
  • Right at the beginning, you should establish a relationship with a bank. Getting prequalified helps you keep perspective on how much you can afford and how to put in a good offer.
  • Your insurance needs will increase ten-fold once you’re a business owner. An insurance representative will assess the value of your business and evaluate risk to see exactly how much coverage you’ll have to have.
  • It is a wise idea to seek the counsel of a mentor or business confidant of some kind, perhaps a veteran dentist who once went through the same process you’re going through now.
  • A marketing pro that knows online marketing.

Starting your dental practice is a big deal. Set up a team that can help you start off right.

Tax CPA John Huddleston has a law degree and masters in tax law from the University of Washington School of Law. He has been a guest tax expert on the radio. He advises small businesses in the Seattle Bellevue Tacoma & Everett area on various tax and accounting issues. His firm, Huddleston Tax CPAs, also provides tax preparation service, quickbooks consulting, business valuation, general accounting and bookkeeping service. Profile information on CPA John Huddleston and the CPAs employed by Huddleston Tax CPAs is available at CPA tax accountant profile. Seattle CPA John Huddleston is a frequent publisher of tax saving ideas.

Preparing Form 656 & Supporting Documents

Preparing Form 656 and Supporting Documentation in Pursuing an Offer of Compromise of IRS Back Tax Debt

An Offer for Compromise (OIC) is a tax settlement offer from the Internal revenue service to taxpayers, both individuals and businesses, who are unable to manage tax debt. There are certain strict criteria that determine eligibility to apply for the OIC. And if you fulfill these requirements, you’ll need to complete Form 656 and submit a whole host of supporting documents to be considered for the offer.

In Preparing the Form 656

There are two circumstances in which you’ll meet the requirements to file Form 656. In the first, you’re making a case that paying the full amount of owed taxes will create economic hardship. In the second, you are make the case that there is doubt as to collectiblity.

If you meet the above criteria, here are some considerations for when you begin to complete the Form 656:

• All persons submitting the offer should enter their social security numbers.

• You’ll have to supply the names of both the persons if you are seeking a joint offer for joint liabilities. If you owe a liability jointly and both your partner and you are submitting for an OIC, then do so on Form 656, just one form. Now you could owe a liability, such as employment taxes for yourself and hold other liabilities, such as income taxes, with another person. If you are submitting this offer solely this form, then you will have to list all liabilities on one of Form 656. In case both of you want to submit this application, then you have to include all tax liabilities on your Form 656 and the other person must show only the joint tax liability on their Form 656.

• You will need to provide the relevant information In each field of the form.

• You’ll need to provide the employer identification number (EIN) of all businesses, except corporate concerns, that you own, either wholly or partly.

• If your claim to an Offer for Compromise is based on a Doubt as to Collectability, you need to also furnish a completed Form 433A if you are an individual taxpayer and Form 433B if you are a business taxpayer.

• If your claim to an OIC is based on Effective Tax Administration, then apart from submitting a Form 433B or 433A, you will also complete the info in the “Explanation of Circumstances.” You can also include supplementary corroborating information on separate sheets together with your EIN and social security numbers.

• In providing the total amount of your offer, you don’t include a sum that the IRS owes back to you or any amount that you may have already paid in taxes.

• All persons submitting the offer should sign the 656 Form and provide a date. They will also give the titles and names of authorized corporate officers, trustees, Powers of Attorney, and executors where requested.

• Ensure that you disclose the name and if it is possible, the address of the Offer in Compromise preparer.

• You might want the IRS to contact a family member, a friend, or some other acquaintance to go over your case so as to understand your situation more fully. In that case, you will have to tick the “Yes” box for the “Third Party Designee” field. Also, if you’d like a CPA, your attorney, or an enrolled agent to represent your case, you have to finish the Form 2848 and submit it together with your offer. to better the chances of your offer being accepted. After you have compiled all the above-mentioned documents for submission, be sure that you make duplicates of each one for your personal records. Additionally, you might also submit documents that corroborate your claim for this offer.

Attention to Detail

Applying for an Offer in Compromise is complicated. Be sure to spend ample time with Form 656 and provide all supporting documents to strengthen your chances of your offer being accepted.

Visit the Guide at:
Yakima CPA
Woodinville CPA
Shoreline, CPA

Booklet 656 Form 433-b

Form 433-B

Booklet 656 form 433-B is needed for those business owners that have businesses that are any other entity than sole proprietorships. This form is used to determine the minimum offer you can make the IRS when attempting an offer in compromise, that is unless you’re able to provide evidence that would lead the IRS to think otherwise.

Completing the form

Section 1: In setting your minimum offer, Form 433-B will first seek some basic data regarding the entity, like its employer identification number and frequency of tax deposits. This form asks for the identity of all partners, officers, LLC members, and major shareholders associated with the business.

Section 2: Next, the form asks for business asset details. This includes the company’s banking accounts, investment accounts, and notes receivable. Additionally it requests facts on the business’s real estate, vehicles, and equipment. However, in reporting their worth, the irs permits you to exclude your equity in any income producing assets.

Section 3: In section 3 you are to provide information regarding your business income, such as average gross monthly income (supported by corroborating documents).

Section Four is where you will give the details of your business expenses. This would be details such as, your average gross monthly expenses of the more recent period 6 — 12 months (all supported and verified). And, if you do include a profit and loss report for the period, you can give an average amount here.

When calculating an offer

There are two ways of calculating the offer amount, this depends on whether you plan to satisfy payment of the offer within a period of 5 months or beyond a 5-month period. If you arrange to pay the offer in full in 5 months, the formula for repayment is as shown below.

[ 48 x Business income in excess of expenses] Total available assets

If you do need an amount of time extending beyond 5 months, you will then use the formula as it appears below.

[60 x Business income in excess of expenses] Total assets available

As a minimum contribution amount you must exceed zero, regardless.

Section 6

In section 6, you can expect to give details like whether your business has filed bankruptcy before, and whether your business has any other affiliations that might owe money to your business. In this section, you will also be asked to disclose information on whether you have sold any assets at a discount in these past ten years.

See more of our offers in compromise guide at:
Huddleston Tax
Accountants and Tax Preparers in Des Moines
Accountants and Tax Preparers in Edmonds

Business Travel Tax Deductions

Tax Deductible Business Travel Expenses

It’s imperative that you plan business trips in an effort to gain the maximum deduction. The same as other costs of doing business, it’s possible to claim income tax deductions for any business travel expenditures which you personally incur in doing business with your customers.

You are allowed to only deduct for your travel costs if they are ordinary in nature and required in providing services to the clients. Travel expenses you may deem lavish or extravagant, won’t qualify for a deduction. Although not an absolute guarantee, these below types of travel expenses are usually tax deductible:

Fuel and other automotive costs you pay while working at the client’s location. Transportation costs incurred while travelling from your personal home to the client site. Dry cleaning and laundry expenses occurred during business travel. Meals and hotel costs.

The everyday commute between home and the office is in the eyes of the IRS a personal expense.

Qualifying travel expenses demand that you travel more than just a few miles from your main workplace to provide service to a customer. This will typically mean you must go beyond the city in which you work or, for small towns, you will have to leave the general surrounding area. In general, travel expenses are eligible if you have travelled far on long enough that requires you must stay at a hotel.

It is permissible to deduct for travel costs incurred while doing your job away from your tax home. However, if you provide services at a client location for an indefinite amount of time or for over a year, you cannot claim the tax deduction.Maintaining detailed records is key. Establish this practice to ensure easier tax prep, and support all deductions you claim on your return.

Contact your tax accountant for any help.

How to Work through the 433A

Preparing Form 433-A

Form 433-A is a personal financial statement that must be prepared and submitted alongside your initial Offer in Compromise application. This is an official form that the Irs uses to analyze your income, expenses and additionally assets. Ultimately, the Internal Revenue Service uses the presented information to ascertain whether you will have the potential to full pay your debt via a calculated combination of disposable monthly revenue and equity in assets. If a Form 433-A reveals that full payment is not an option, you may qualify for settlement through the Offer in Compromise program.

Personal Information and Employment Information: Sections 1 and 2

This first section of the form is where you will present personal information. For those that are married, you are going to also need to present information with regards to your spouse.

In Section 2: you’ll furnish employer information for self (and your companion). If you’re self-employed and owner of your company, just write in “self” (and similarily for your legal partner) in Section 2, line 4a after which you are gonna indicate the period of time you’ve been self-employeed. Other information about your self-employment will be dealt with in a different area of the 433-A form.

Other Financial Information: Section 3

This section will tackle any kind of information regarding court or legal proceedings plus any would-be adjustments with regards earnings.

Now in line 6: if you’re party to a lawsuit, whether as plaintiff or defendant, list the details here. You are only to include law proceedings that have been formally filed with the court.

Line 8 queries that you deliver findings regarding any scheduled increase or abatement in paycheck. As a general rule, consider it best to not tally increases that are merely speculative. The Irs may consider an expected increase when calculating your offer amount, so you’ll want to be pretty secure of the increase if counting it. A couple examples of deserved increases to list may be, if you’ve recieved drawn notice of a salary increase or a similar on the page notification of court awards.

Personal Asset Information: Section 4

Section 4: requests the specifics of all personal cash & equity property that you claim ownership of, including: bank account and credit card information, real estate information, and life insurance policy information.

Line 11 asks for the cash amount that you’ve on hand. Give an average of what you typically have in pocket, as the amount for most will fluctuate from one day to the next.

Lines 12a and 12b: Utilize these blanks to list any checking/savings account(s) for which you are the owner. If you claim ownership of more accounts than two accounts, provide all accounts in addition on an attached page of paper and fix it to your form. You will have to provide bank statements to the Irs for every accounts that youown. In general, it’s a boon to provide the ending balance shown on the most recent bank statement you attach on Form 433-A.You’ll want it so that the Irs can see the form entries fit with the numbers in the supporting documents.

For lines 13a — 13d: you’ll report your investments such as bonds, stocks, and retirement accounts. Also, lay claim to 401Ks even if you are not fully vested in the accounts.

Lines 14a and 14b: List any credit cards you have with readily available credit on each.

On lines 15a through 15g, record life insurance plans with the corresponding cash values. Do not list term life packages information. The IRS is considering purely in whole life coverages.

Line 16 requests that you document assets transferred, sold or given away for less than full value within ten years from present. This data is to aid them assess whether or not you might have eliminated assets to free yourself of liquid equity that might help pay your tax debt. The IRS asks for this information to determine if you’ve eliminated assets fairly recently to keep clear of owning liquid equity accessible to pay back your debts.

In line 17 to 17c: make known real estate which you are the owner of. In the event that you do not personally own real estate, produce your address along with your landlord’s name and address. Lines 18a through 18: List all transportation assets you have in these lines. Include cars and trucks, motorbikes, watercrafts, trailers and campers in this part. If any one of these vehicle assets is held by a loan, list the note details here in this section, including your monthly payment and balance data. You must also note the accepted market value for each listed asset. You will be able to determine fair market values for free on websites like Kelley Blue Book (kbb.com) or NADA Guides (nada.com)

Line 19a and 19b: List the variety and value of your personal effects you own. Personal assets comprises home furnishings, residence goods, collectors items and jewelry. When you register the price of your effects, show the expected liquidation worth. A pretty simple method to establish of the liquidation value connected with these items is to estimate what the goods might move for in a quick-sell platform, for example a yard sale or auction. Don’t give the original purchase price as the actual value. The Internal Revenue Service does not usually request that you sell your personal materials unless you have a lot of luxury effects. The IRS furthermore allows a personal exemption amount of $7,900 for the value of items in this particular category.

Expense Statement and Monthly Income

On page 4 of the 433-A form, you’ll see the monthly income and expense statement. In this section you will provide a report of your month-by-month income and expenses that is cumulative. And if you’re self-employed as a sole proprietor, fill out pages 5 and 6 before doing the income and expenses statement within page 4.

Income: this is the section where you’ll provide your gross incomes. Gross wages are your earnings before taxes. For those self-employed or recieving rental income, you’ll report net income. Net income is revenue you recieve minus operating expenses. Use the guide beneath the statement to help with calculations.

In the Expenses Section, you’ll report monthly, regular costs, this includes taxes and deductions.

Self-Employment: Pages 5 & 6

If you’re self-employed, you must supply similar information for each of your work activities that you claim for yourself as an individual. Which includes business asset facts, for instance related equipment, accounts receivable and revenue streams details. You have to similarly report the number of staff you’ve got and the businesses payroll frequency. Submitting Form 433-A

Don’t forget to attach supporting documents, for example bank statements, paystubs, and whatever other docs provide support to your 433-A. Usual documents consist of current bank statements and paystubs, recent invoicing statements, and monthly statements and payoff information for loans.

Look at the Oic guide at:Accountants and Tax Preparers in Bothell

Requesting an Installement Agreement after the IRS Rejects an Offer in Compromise (or OIC)

Receiving a rejection letter from the Internal Revenue Service on an OIC application could pose you with a bit of anxiety and panic, however don’t stress — you’re still eligible the option of making payments toward the balance in payment installments.

The Internal Revenue Service offers a couple of installment agreement payment options for instance full-payment installment plans and a partial-payment installment plan. Full-payment plans include the guaranteed installment agreement, the streamlined installment agreement, and the financially verified installment agreement. The payment plan you qualify for is based upon financial details you offer to the Internal Revenue Service, but each monthly repayments for the various options are assessed a little differently than Offer in compromise settlement amounts.

In this article, we’ll discuss these payment plan options and assist you determine which plan of repayment is best suited for you.

The Guaranteed Installment Agreement

The guaranteed installment agreement plan is available only if your balance is below $10,000 and your monthly installments will full-pay your full Irs owed balance inside a period of 3 years. The Internal Revenue Service must agree to this option if you conform to the requirements.

Streamlined Installment Agreement

A streamlined installment agreement option is a possibility if your balance due is less than $25,000 and you agree to pay in full your full debt balance in the period of 5 years or 60 months. Your total balance takes into consideration your principal tax liability, plus penalty accruals and interest for each tax year you have a balance.

Calculating The Monthly Payment Installments

In order to calculate the bottom amount the Internal Revenue Service will permit each month, divide the total amount owed, including the interests and penalities, by fifty. The resulting amount will be the lowest amount that will have to be paid. The left-over 10 months of the 60-month payment plan is set aside for interest. If you do not have sufficient disposable monthly income to grant a 60-month payment plan, you just might qualify for a partial pay plan instead.

Installment Agreement Partial Payment Plans

A partial payment installment agreement option is an option that will allow you to pay only what you can afford to pay on a month by month basis, even if the amount is less than what the Internal Revenue Service typically accepts in an installment agreement plan. You must make payments for the remainder of the period in which the Irs can by law collect debt, which might be a period of time extending more than 60 months. When the collection statute of limitations comes to its expiration date, any balance remaining is then written off . The repayment plan is a partial pay installment agreement plan as you never will pay the total balance that you owe.

Statute of Limitations on Collection

A collection statute exists for each tax year you have a balance on. The collection statute begins the date your tax return is filed, or the actual date a principal tax balance is assessed to your account, whichever occurs most recently. In general, the statute ends 10 years after it begins, but certain processes can cause the collection statute to be longer than 10 years. Either you, or your Power of Attorney, may contact the IRS and request the Collection Statute Expiration Date (CSED) for each balance-due period.

Calculating Payments

The partial payment installment agreement is determined by your disposable monthly income, which is the amount left each month after your expenses are paid. Calculate your monthly disposable income by the number of months which remain on your collection statute to determine the total amount you will pay the Internal Revenue Service over time. That is, if disposable income is $100 and the time remaining on the collection statute is two years, or 24 months, you pay $2,400 toward your tax liability. The rest is not collectable by the Irs. Though, you need to make the payments in installments – you can’t offer the full amount in a single lump sum payment.

Non-Streamlined Installment Agreements or Financially Verified Installment Agreement

The non-streamlined or financially verfied agreement is assessible when your owed balance is over $25,000 or where the repayment period exceeds 5 years or 60 months. This agreement must be negotiated with the Internal Revenue Service. Full financial disclosures must be imparted to the Internal Revenue Service. Your monthly payment amount is arrived at by reviewing your full-picture financial situation, and the Internal Revenue Service could potentially require you liquidate assets so as to reduce the remaining debt balance.

The Rules that Apply to the Installment Agreement Plan Options

Whatever the type of payment plan you request, some basic rules are applied for retaining and obtaining your installment contract.

Offer In Compromise Rejection Period

Generally, you are going to have to wait at the least a period of 60 days after the date specified on your OIC rejection letter to request an installment agreement. During this 60-day period, your file is coded as an “Offer” case in the Internal Revenue Service system to allow for your legal right to appeal the rejection. Internal Revenue Service officers are unable to pull your case out of this status to establish an installment agreement contract.

Staying Compliant and Current

Once you are locked into an installment contract, you must stay compliant and current with the determined payment calendar and your forthcoming tax obligations. Meaning that if you’re bound by this contract, you will have to meet all installment pay dates on time and in full, file all future tax returns as scheduled, and pay any new balances on time and in full.

If you do not comply with the stipulations, you will default on your payment plan, and therefore be opened up to various IRS Collection Measures

A Change in Financial Circumstance

A change in your financial situation that will interrupt your ability to meet set pay dates, might warrent that you request a modification to your monthly installment payments.

The change in your financial situation should be considered permanent, or expected to last longer than one month. Examples of acceptable financial changes include loss of income, a reduction in income, divorce, the addition of a dependent or an increase in regular living expenses. The IRS will request an updated financial statement and proof of new expenses to process the modification request.

Modifications may result in your full-pay installment agreement being changed to a partial payment plan. Installment agreements are typically more simple to arrange with the Internal Revenue Service and demand less desk work than an OIC application. The installment agreement option is a an alternative to your Offer In Compromise rejection.

Have a look at the Offer In Compromise Guide at Los Angeles Accountants & Tax Preparers

Offer in Compromise Guide

We’ve just started to lay out an offer in compromise (or OIC) manual. Even though it’s only at its very beginning, we’re working at adding to it with serious intent. So please have a glimpse at the Huddleston Tax Library and return regularly, as we mean to update the article titles often. This OIC Guide will look at subjects including but not limited to:

• Preparing Form 433-A.

• IRS rejection of offer in compromise: installment and partial-pay installment agreement

• Preparing Form 656 and supporting documentation.

  • Huddleston Tax CPAs / Huddleston Tax CPAs – Burien
    Certified Public Accountants Focused on Small Business
    14900 Interurban Avenue S, Suite 271 / Tukwila, WA 98168
    206-229-7169

    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
    QuickBooks consulting, bookkeeping, payroll, offer in compromise debt relief, and business valuation services for small business.

    We serve: Tukwila, SeaTac, Renton. We have a few meeting locations. Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.