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Kapital Accounting Solutions, P.A.

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Ten Tips to Help You Choose a Tax Preparer

Posted on January 10, 2012 at 12:00 PM Comments comments (145)
Many people look for help from professionals when it's time to file their tax return. If you use a paid tax preparer to file your return this year, the IRS urges you to choose that preparer wisely. Even if a return is prepared by someone else, the taxpayer is legally responsible for what's on it. So, it's very important to choose your tax preparer carefully.
This year, the IRS wants to remind taxpayers to use a preparer who will sign the returns they prepare and enter their required Preparer Tax Identification Number (PTIN).
Here are ten tips to keep in mind when choosing a tax return preparer:
1. Check the preparer's qualifications. New regulations require all paid tax return preparers to have a Preparer tax Identification Number. In addition to making sure they have a PTIN, ask if the prepare is affiliated with a professional organization and attends continuing education classes. The IRS is also phasing in a new test requirement to make sure those who are not an enrolled agent, CPA, or attorney have met minimal competency requirements. Those subject to the test will become a Registered Tax Return Preparer once they pass it.
2.Check on the preparer's history. Check to see if the preparer has a questionable history with Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Enrollment for enrolled agents.
3. Ask about their service fees. Avoid prepares who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other prepares. Also, always make sure any refund due is sent to you or deposited into an account in your name. Under no circumstances should all or part of your refund be directly deposited into a preparer's bank account.
4. Ask if they offer electronic filing. Any paid preparer who prepares and files more than 10 returns for clients must file the returns electronically, unless the client opts to file a paper return. More than 1 billion individual tax returns have been safely and securely processed since the debut of electronic filing in 1990. Make sure your preparer offers IRS e-file.
5. Make sure the tax preparer is accessible. Make sure you will be able to contact the taxpayer after the return has been filed, even after the April due date, in case questions arise.
6. Provide all records and receipts needed to prepare your return. Reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items. Do not use a preparer who is willing to electronically file your return before you receive your Form W-2 using your last pay stub. This is against IRS e-file rules.
7. Never sign a blank return. Avoid tax prepares that ask you to sign a blank tax form.
8. Review the entire return before signing it. Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.
9. Make sure the preparer signs the form and includes their PTIN. A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.
10. Report abusive tax preparers to the IRS. You can report abusive tax preparers and suspected tax fraud to the IRS on Form 14517, Complaint: Tax Return Preparer. Download Form 14517 from or order by mail at 800-TAX-FORM (800-829-3676).

Do I Need to File a Tax Return This Year

Posted on January 5, 2012 at 9:50 AM Comments comments (19)
You are required to file a federal income tax return if your income is above a certain level, which varies depending on your filing status, age and the type of income you receive. However, the Internal Revenue Service reminds taxpayers that some people should file even if they aren't required to because they may get a refund if they had taxes withheld or they may qualify for refundable credits.
To find out if you need to file, contact Joanel Kellman at 954.612.1591 to set up a free consultation. Even if you don't have to file for 2011, here are six reasons why you may want to:
  1. Federal Income tax Withheld - You should file to get money back if your employer withheld federal income tax from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year's tax.
  2. Earned Income Tax Credit - You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund. To get the credit you must file a return and claim it.
  3. Additional Child Tax Credit - This refundable credit may be available if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
  4. American Opportunity Credit - Students in their first four years of postsecondary education may qualify for as much as $2,500 through this credit. Forty percent of the credit is refundable so even those who owe no tax can get up to $1,000 of the credit as cash back for each eligible child.
  5. Adoption Credit - You may be able to claim a refundable tax credit for qualified expenses you paid to adopt an eligible child.
  6. Health Coverage Tax Credit - Certain individuals who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a 2011 Health Coverage Tax Credit.
         Eligible individuals can claim a significant portion of their payments made for qualified health    
         insurace premiums.

What's New For 2012

Posted on January 4, 2012 at 3:07 PM Comments comments (254)
The following is a summary of important tax changes for individuals that took effect in 2011.
Due date of return. File Form 1040, 1040A, or 1040EZ by April 17, 2012. The due date is April 17, instead of April 15, because April 15 is a Sunday and April 16 is the Emancipation Day holiday in the District of Columbia.
Reporting capital gains and losses on new Form 8949. In most cases, you must report your capital gains and losses on new Form 8949. Then you report certain totals from that form on Schedule D (Form 1040).
Standard mileage rates. The 2011 rate for business use of your car is 51 cents a mile for miles driven before July 1, 2011, and 55 1/2 cents a mile for miles driven after June 30, 2011.
The 2011 rate for use of your car to get medical care is 19 cents a mile for miles driven before July 1, 2011, and 23 1/2 cents a mile for miles driven after  June 30, 2011.
The 2011 rate for use of your car to move is 19 cents a mile for miles driven beforeJuly 1, 2011, and 23 1/2 cents a mile for miles driven after June 30, 2011.
Standard deduction increased. The standard deduction for some taxpayers whio do not itemize their deductions on Schedule A (Form 1040) is higher for 2011 than it was for 2010. the amount depends on your filing status.
Exemption amount. The exemption amount you can deduct for each exemption has increased. It was $3,650 for 2010. It is $3,700 for 2011.
Self-employed health insurance deduction.This deduction is no longer allowed on Schedule SE (Form 1040). However, you can still take it on Form 1040, line 29.
Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount has increased to $48,450 ($74,450 if married filing  jointly or a qualifying widow(er); $37,225 if married filing separately).
Health savings accounts (HSAs) and Archer MSAs. For distributions after 2010, the additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses has increased to 20%.
Also beginning in 2011, amounts paid for medicine or a drug are qualified medical expenses only if the medicine or drug is prescribed drug or is insulin.
Roth IRAs. If you converted or rolled over an amount to a Roth IRA 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.
Designated Roth accounts.  If you rolled over an amount from a 401(k) or 403(b) plan to a designated Roth account in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must must report half of it on your 2011 return and the rest on your 2012 return.
Alternative motor vehicle credit. You cannot claim the alternative motor vehicle credit for a vehicle you bought in 2011, unless the vehicle is a new fuel cell motor vehicle.
First-time homebuyer credit. To claim the first-time homebuyer credit for 2011, you (or your spouse if married) must have been a member of the uniformed services or Foreign Service or an employee of the intelligence community on qualified official extended duty outside the United States for at least 90 days during the period beginning after Deceber 31, 2008, and ending before May 1, 2010.
Repayment of first-time homebuyer credit. If you have to repay the credit, you may be able to do so without attaching Form 5405.
Nonbusiness energy property credit. This credit is figured differently for 2011 than it was for 2010.
Health coverage tax credit. This credit has been extended, and the amount has changed.
Foreign financial assets. If you had foreign financial assets in 2011, you may have to file new Form 8938 with your return.
Schedule L. Schedule L is no longer in use. You do not need it to figure your 2011 standard deduction.
Making work pay credit. The making work pay credit has expired. You cannot claim it on your 2011 return. Schedule M is no longer in use.
Mailing your return. If you are filing a paper return, you may be mailing it to a different address this year because the IRS has changed the filing location for several areas.

Top 6 Tax Tips

Posted on January 4, 2012 at 10:33 AM Comments comments (25)
Top 6 Tax Tips
The income tax filing season has begun and important tax documents should be arriving in your mailbox. Even though your return is not due until April, you can may tax time easier on yourself with an early start. Here are the top 6 tips to ensure a smooth tax-filing process.
  • Gather your records - Round up any documents you'll need when filing your taxes: receipts, canceled checks and other documents that support income or deductions you're claiming on your return.
  • Be on the lookout - W-2s, 1098s and 1099s will be coming soon; you'll need these to file your  x     return.
  • E-file - E-filing is the safe, easy and most common way to file a tax return. Last year, approximately 79 percent of taxpayers - 106 million people - used the e-filing method. Many tax preparers are now required to use e-file. If you owe taxes, you have payment options to file immediately and pay by the tax deadline. Best of all, The IRS issues refunds to 98 percent of electronic filers by direct deposit within 14 days, if there are no problems, and some maybe issued in as few as 10 days.
  • Consider direct deposit -  If you elect to have your refund directly deposited into your bank account, you'll receive it faster than a paper check in the mail.
  • Review! Review! Review! - Don't rush. We all make mistakes when we rush. Mistakes slow down the processing of your return. Be sure to double check all the Social Security numbers and match calculations on your return as these are the most common errors. Don't panic! If you are unsure of an item, remember Capital One Accounting Solutions, P.A. is just a phone call away at 954.612.1591 or an e-mail away at [email protected].
  • Always!Always!Always! - Contact Capital One Accounting Solutions, P.A. for all your accounting and bookkeeping needs.