I am a solo-preneur. Williams Audit Specialists of Arizona is a single owner corporation. Bullet Proof Your Taxes is one division of Audit Specialists.
Yes, I am a brick and mortar business. Yes, I have employees. There was a time when I had several employees. I still do have one employee. I am my number one employee.
Now that our annual 1040 Marathon has finished, I’ll admit that I am tired. Tax season may have critical dates, but it is never really ever over. Most of us in this business will tell you we love it when tax season begins. And we love it when it ends.
Between April 15th and April 30th employment tax returns for my own firm and for my clients must be prepared, filed, and paid. After-season “Post Mortem” professional meetings are held to share stories of the good, the bad and they ugly of our recent months.
Office hours are adjusted. I may have worked evenings and Saturdays before April 15th. Now that our days are getting longer and warmer, my office hours are getting shorter.
I do taxes all year long. And now I am also adding more services. Now I can attend the seminars I want and need to maintain my various certifications. It is important to me to stay up-to-date in the tax laws, policies and procedures for YOU.
Certain activities that were put on the “back-burner” during income tax season are moved to the forefront. Soon I will begin mid-year tax planning for those of you who want to or who need to adjust your tax withholding. And now I can resume my coaching services.
Did you see vacation on that list? I didn’t. When I was an employee it was mandatory that we take our annual leave every year. I remember “use it or lose it.” It is important to take a break to re-charge your energy, to renew your spirit. It is also good business that every company require employees to be away from their job for some time every year. If you have someone refusing to take time off, ask yourself, “What do they NOT want you to know about what goes on at their desk?”
Most years I include an extra personal day at the beginning or at the end of a business trip. There is work involved, but there is also a free day for me and for my husband, Steve, if he comes with me. A hotel room costs the same for one or for two in a room.
I can deduct my travel expense and my meals while away from home on business. And while Steve is very important to me, he is not an integral part of my business so his personal expenses are just that. His expenses are personal and are not tax deductible. I can deduct the cost of my travel and meals. I cannot deduct the cost of Steve’s travel and meals. I am deducting the cost of my hotel room. I just choose to share that room with Steve. There is no extra cost for the second person in the room.
Sometimes I will share the room with another woman attending the same seminar. When we share the room, we share the hotel bill. Of course there are extras that can be added to the room. If you choose to buy from their in-room mini bar that expense is usually not deductible. If you choose to order a movie, it is probably not business-related and would not be deductible. When the hotel adds taxes and a resort fee to your room bill, those are part of your deductible hotel cost.
When I am away from the office my attention is not on the office. My attention is on my seminar or on enjoying my day off. You can still leave me a voice mail message. You can send me an email message. When I return I will give my full attention to you and your needs.
Always to your lowest legal tax,
Nellie T Williams, EA
0
Can you “fix” your tax return?
I don’t mean toy with the numbers. Not THAT kind of fix. I mean repair or correct a return that has already been filed.
Yes, you can fix a mistake on your tax return. This is called AMENDING your tax return. You file an amendment to your tax return. This is an amended tax return.
Form 1040X is the special form used to file a change to an original 1040 series return. Use the 1040X to “fix” a 1040EZ (the easy form), a 1040A (the short form), a 1040 (the long form) or even a 1040NR (the form used by non-residents with income from the United States).
Some of my clients are frustrated when I wait to finish their tax return. And that turns out to be the BEST thing we could have done. Because while they think we’re finished and ready to file, later comes a corrected form or a late-issued form that usually means more tax is due. If we had filed the tax return early in the season, we would be filing an amended return now.
Amended returns are not just for current tax year returns. They are not just for the 2012 tax return you are filing in 2013. Sometimes there is a balance due the IRS. Sometimes the IRS owes YOU a refund.
Tax returns have a time limit for the IRS to review what you have voluntarily filed. Tax returns also have a time limit for you, the taxpayer, to file a claim for refund. You can file an amended return for any tax return that has not run out of time, or “the statute” has not expired.
You might be like one of my clients. We are filing for a solar water heater credit on their 2012 return. AND we are filing a 1040X, amended return, for 2009 to claim the credit for qualifying windows they installed that year. If we waited until after April 15, 2013, we would have run out of time to file that 1040X for 2009 and they would have lost their chance to “claim” that year’s energy credit.
Another client is new to me this year. He is retired from the fire department. He has his health insurance premiums withheld from his pension benefits. I learned that this qualifies for a special treatment on his tax return. The preparer he used the last three years didn’t know about this special treatment. So I am amending his 2009, 2010 and 2011 returns to claim a larger refund. That 2009 1040X will be filed before April 15, 2013 so he doesn’t lose his refund for that year. The other years will be filed now, too. They will each go in their own separate envelope to the IRS.
Another client is going to have to amend his 2011 tax return for additional income he just found out about. In this case he’ll have to pay more tax. But by coming forward voluntarily, he will avoid some penalties that IRS would definitely assess if they had to tell him that he owed money. IRS punishes you with penalties when they have to hunt you down.
There are many different situations that will cause you to file an amended. Can you think of a reason why any of your tax returns should be changed? Did you realize you claimed too much of one deduction? Did you realize you have MORE deduction you are allowed to claim. Did you find out something you didn’t know when you first filed your return?
Preparing the 1040X form is a little more complicated than preparing a return the first time. Don’t be afraid to get some help with this one. IRS will take a close look before they send you money. You’ve waited this long. You don’t want to run out of time to claim the money you are entitled to.
Always to your lowest legal tax,
Nellie T Williams, EA 
OMG! It’s almost April 15th. I’m not ready. What do I do now?
Relax. Breathe. Take inventory. Do you have all your W2 forms? Do you have all of your interest and dividend 1099 forms? Do you have your other income records? Gambling? Alimony? Hobby? Small Business? More?
What about deductions? Is this your challenge? Your papers are all over the place. Some are in this box over here, some are in that file over there. Oh, where IS that receipt? It’s not too late to start getting organized for THIS year. But what do you do now about last year’s information? It is the 2012 tax return we file in 2013. And the 2013 tax return will be filed in 2014.
Does the fear of paying too much tax drive you to buy more deductions?
Yes, I said “BUY” deductions. They cost you money, you know.
Did you know that our government has a FREE deduction for most of us?
That free deduction is called the STANDARD deduction. I say it’s ” free” because you don’t have to spend a dime to claim this one. The amount of your standard deduction does change from year to year and is based on your filing status. Single, Married Filing Jointly, Married Filing Separately, Head-of-Household status all have a different standard deduction.
Categories of Deductions
There are various categories of deductions that are allowable on 1040 tax return form Schedule A, Itemized Deductions. These different categories are 1) Medical and Dental Expenses, 2) Taxes You Paid, 3) Interest You Paid, 4) Gifts to Charity, 5) Casualty and Theft Losses, 6) Job Expenses and Certain Miscellaneous Deductions and 7) Other Miscellaneous Deductions.
In deciding whether to take the standard deduction or whether to itemize deductions, I ask my clients if they own their own home. And if that answer is yes, I ask if they have a mortgage on their home. Interest paid on a home mortgage is usually the largest of deductions. If you own your own home, you also pay real estate taxes. If you live in a state that has an income tax, those taxes you paid or had withheld from your paycheck are deductible. Because there are states that do NOT impose an income tax, the government allows us to choose to deduct sales taxes paid instead of income taxes paid. And if you have a car, you may also be able to deduct the license plate registration fee.
Unusually large medical expenses can also shift you from taking the standard deduction to itemizing deductions. I tell my clients that this is NOT the big deduction I want them to have. Amounts you pay for medical insurance, doctor and dentist visits, prescriptions and lab fees are the common deductions. There are costs that are deductible and there are costs that are NOT deductible. How do you know which is which? Listen to the recording of my August 10, 2012 radio program for more information on medical expenses. LINK
Charitable Contributions Count Too!
If you know you want to itemize, then you will also want to look at the gifts you gave to a qualifying charity during the year. These gifts can be money and they can be what I call “stuff.” Money does not just mean paid by cash. Money means cash, check, credit card. The important key is to get a RECEIPT for your gift. The Internal Revenue Service is paying much closer attention to this deduction because of fraudulent deductions claimed every year. Listen to the recordings of my August 31, 2012 and December 7, 2012 radio programs on contributions for more information. 
Can you really save a bundle in taxes when you work from your home?
I know many very successful business people who do work from their home. I work from my office space in my home. This blog is all about the basics of what you need to know qualify for this deduction. You will know what you need to do to protect your deduction.
For those of you that have a business, it can seem like it is never ending. Just when one deadline is met, another deadline looms ahead.
Corporation tax returns are due March 15th. Big “C” Corporations use Big Accounting firms. We used to have the “Big 8” firms. They shrank to the “Big 4”. I am a smaller service firm and work with smaller companies. Some of them have elected “S” Corporation status and file the “S” Corp return.
Companies are owned by shareholders, mostly by individuals. Your individual tax returns are due April 15th. No matter “C” or “S”, your corporate business income tax returns are due MARCH 15th. If your business is a Partnership, that income tax return is due April 15th.
You may want more time to file these important once a year accountings. You account for your income and you account for expenses. That makes your income tax return an accounting. You may handle this accounting yourself with simple lined paper, or with still popular green column paper, or with simple spreadsheets that can also do the math. Be careful – the spreadsheet results are only as good as the formula you create for your calculations. Maybe you use accounting software and maybe you engage a professional accountant. Whatever manner you choose, you need those accounting results to file your tax return.
If you need more time to file your returns, you can request additional time by filing a form for extension. These extensions can be filed for your individual return and they can be filed for your business returns. The most important thing to remember here is that this is an extension of TIME to FILE. It is not an extension of time to PAY.
When you do complete your tax return and you learn you owe tax, will you be able to pay the tax before the date the return is due to be filed? if this tax is not paid by the due date of your return. the Internal Revenue Service will charge you interest and one or more of several penalties. And if there is tax due, then the extension you had asked for is considered invalid or not valid. And now your return is considered late. Late is not just tardy. Late is delinquent. There is no corner to sit in. There is no detention to attend. You just write another check for these “additions” to tax that IRS will assess.
How can you avoid these penalties for filing late and for paying late? You have two ways to avoid these penalties. First, understand that while “C” Corporations may have an income tax to pay with their Form 1120 tax return, “S” Corporations and Partnerships do not. Both “S” Corps and Partnerships use a Form K-1 to notify each shareholder or partner of their share of the business profit or loss. These profits (or losses) pass through to the individual and are included on their individual Form 1040 tax return.
Employees have taxes withheld from their paychecks. Shareholders can avoid these penalties by making what are called Estimated Tax Payments. When you do a good job of “estimating” what you expect your taxes might be next year, you make four payments to the United States Treasury during the year. And if you pay your estimated taxes on time (not late) you can avoid the late-payment penalty.
Always to you lowest legal tax,
Nellie T Williams, EA 
I hope this never happens to you!
Before we began filing tax returns electronically in 1985, nobody talked much about Identity Theft. E-filed tax returns reject if the names and social security numbers on the tax return do not match the information that the Social Security Administration shares with the Internal Revenue Service.
When I first entered the e-filing workplace, in the first years of electronic tax filing, I spent a LOT of time “perfecting” my client database. A name and SSN match is applied against the primary taxpayer (first name on the tax return), applied against the spouse and each dependent claimed on that tax return.
Mismatches
When a tax return is rejected for a name and SSN mismatch, I first look to make sure I entered the information correctly. Did I spell a new client’s name correctly? Did I accidentally transpose a number? If the name is a woman’s, I ask if she has married. Did she forget to notify SSA of her new last name? If the name is Hispanic, I look at the actual Social Security Card and try to see if there was a confusion between a middle name and a last name.
If everything looks good from my perspective, only then do I suspect that someone else used my client’s information. Did someone else mis-key their own social security number? Did someone need a job, dream up a SSN and did it just happen to be yours? Did someone else “borrow” your ID card for any reason? Was your wallet or purse stolen? Did you even know that someone else was using your identity?
A Growing Problem
Nina Olson, Taxpayer Advocate at the Internal Revenue Service, admits that identity theft is a growing problem every year. In 2012 she reported to Congress that ID theft has become a BIG business. Organized criminals are getting lists of information from hospitals and schools. She was surprised to learn that information about people who have died is available on the internet. Criminals are using this information to file bogus tax returns early in the filing season. When the real owner of the SSN gets around to filing their return it is rejected. This begins the battle to prove it is YOUR social security number.
If you have been a victim of identity theft, you are going to have to wait for the refund that is due you. Most taxpayers have to contact the IRS multiple times. At the end of 2012 IRS had about 650,000 ID theft cases in its inventory. The Taxpayer Advocate Service (TAS) got about 55,000 of these cases that were not already resolved by IRS. Can you believe it takes an average of 6 months to prove to the IRS that YOU really are who you say you are?
What to Do?
What should you do if you are the victim of identity theft? First, file a police report. If you receive a notice from the IRS about your tax return, call the phone number on the notice. If you have not received a notice, contact the IRS Identity Protection Special Unit IPSU) at 800-908-4490. Their hours are Mon-Fri 7am-7pm your local time. Alaska and Hawaii follow Pacific Time.
Fill out and submit IRS Form 14039, Identity Theft Affidavit. It is a simple 2-page form.
Once you are able to prove that YOU are the lawful owner of this SSN, you will be given in IP Pin (Identity Protection Personal Identification Number) to use on your tax return. You will be given a new IP PIN to use every year. Protect it like you would protect anything else of value.
If you would like to talk to me about how you can protect yourself from Identity Theft, send an email to