Understanding Your Tax
Professional
BETH LOGAN
KOZLOG TAX ADVISERS
TAXES@KOZLOG.COM
Topics
• Why this topic and presentation?
• Who are the Tax Professionals?
• What your tax professional needs from you?
• What do you need to do regarding taxes?
• Tax Payers Bill of Rights
Who are the Tax Professionals
What is an Enrolled Agent (EA)?
From National Association of Enrolled Agents:
Enrolled agents (EAs) are America's Tax Experts. EAs are the only federally licensed tax practitioners
who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS.
From IRS:
An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal
Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax
returns, or through experience as a former IRS employee. Enrolled agent status is the highest credential
the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete 72
hours of continuing education courses every three years.
Enrolled agents, like attorneys and certified public accountants (CPAs), have unlimited practice rights. This
means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can
handle, and which IRS offices they can represent clients before.
Tax Information Needed
Income Limits for 2015
Income limits
◦ plus exemption amount of $4000 per qualifying family member
◦ Except for dependents
Contractors & business owners must file taxes if income is over $400
Questions
 Are you married?
 Can someone claim you as a dependent?
 Do you have any dependents and did they earn any income,
including investment income?
 Are you a Citizen/Resident or Non-resident?
 Are you an Employee or Contractor?
 Employee – Complete W-4 and receive W-2
 Contractor – Complete W-9 and receive 1099-MISC
Questions
 Did you pay any estimated taxes?
 Are you a business owner?
 Other information
 Health insurance
 Home ownership
 Retirement savings (outside of employers’ plans)
W-4
Paystubs
Simple W-2: Income Only
W-9
1099—MISC
instead of W-2
If you received a 1099-MISC,
you cannot file a 1040-EZ.
Tax Documents
 Income
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

W-2 for wages
1099-MISC and other revenues for Business/Contractor
SSA-1099 for Social Security Payments
1099-R for pensions and IRA distributions
 Investments:
 1099-INT for bank and bond interest
 1099-DIV for dividends and some capital gains
 1099-B for stock sales (capital gains)
 Other income
 W-2G for gambling winnings
 1099-G for unemployment and state tax refunds
Tax Documents - continued
 Deductions
 1098 for mortgage interest paid
 1098-T for tuition paid
 1098-E for student interest paid
 Health Insurance
 1095-A, 1095-B, and/or 1095-C
1098-E
1095-C
Other Information
 Name, address, birthdate, Social Security number for taxpayer,
spouse (if married), and dependents
 Real estate and excise tax paid
 Asset sales
 Home
 Art or other collectibles
 Childcare expenses
 Donations (with proof)
 Foreign bank account, business ownership, and other assets
Your Tasks
For Everyone
 Tell the truth and do not withhold anything
 Except for criminal activities – get a tax attorney
 Complete your W-4 correctly
 Tax Professional can help
 Keep records
 Check your tax return
 Ask questions
 Sign the return (spouse must also sign)
 Pay Estimated taxes if necessary
W-4
Record Keeping
 Tax returns and related tax documents – 4 years or longer
 Documents regarding assets – as long as you own it plus 4 years
 Example: your home and the new siding
 Brokers keep stock records unless you change brokers
 Contributions to IRAs – until IRA is closed (NOT transferred)
 For traditional IRAs, this is a state tax issue, not federal.
 For ROTH IRAs, this affects state and federal.
 Unreimbursed employee expenses – becomes part of tax return docs
 Businesses – as long as you own it plus 4 years
 If no NOL or assets, then only 4 years
Record Keeping – Asset Example
 Purchase home with spouse in June 1980 for $120,000
 Sell home in 2015 for $760,000
 Gain of $640,000 but only $500,000 is exempt
 Expense to sell home $40,000 (realtor fees, etc)
 Invested in home
 2003 new roof for $6,000
 2006 new kitchen for $15,000
 1988 new tile flooring $7,000
 1996 new bathrooms $15,000
 1984 garage addition $30,000
Asset Example - Continued
For Everyone
 Tell the truth and do not withhold anything
 except for criminal activities – get a tax attorney
 Complete your W-4 correctly
 Tax Professional can help
 Keep records
 Check your tax return – your responsibility even if you hire a tax pro
 Ask questions
 Sign the return (spouse must also sign)
 Pay Estimated taxes if necessary
Estimated Taxes -- Examples
 Example 1:
 Investments generating lots of interest, dividends, and capital gains
 Wages taxed according to W-4 without your adjustment
 Example 2:
 Contractor or business owner
 No withholdings through wages because not an “employee”
Estimated Taxes Example
Example 1: Investments
Adjust W-4 or pay estimated taxes
Example 2: Business
Pay estimated taxes
W-4
Estimated Taxes Due Dates
 April 15
 For income earned Jan-Mar
 June 15
 For income earned Apr-June
 Sept 15
 For income earned July-Sept
 Jan15
 For income earned Oct-Dec
Your Tasks –
For Contractors and Business Owners
 Expenses
 Rent
 Home office
 Utilities
 Wages
 Costs of Goods Sold (CoGS)
 Supplies
 Insurance
 Etc.
 Travel
 Automobile
 Track mileage
 Standard or actual
 Hotels
 Airfare
 Meals
 50%
 Include dinners names and purpose
Schedule C
IRS – Tax Payers Bill of Rights
The Right to Be Informed
The Right to Finality
The Right to Quality Service
The Right to Privacy
The Right to Pay No More than the Correct Amount of Tax
The Right to Confidentiality
The Right to Challenge the IRS’s Position and Be Heard
The Right to Retain Representation
The Right to Appeal an IRS Decision in an Independent Forum
The Right to a Fair and Just Tax System
Thank you!
BETH LOGAN
KOZLOG TAX ADVISERS
TAXES@KOZLOG.COM
Back-up Slides
1040A
Use if:
Taxable income below $100,000
Are not claiming any Health Coverage Tax Credit
Do not own a small business
Do not want to itemize
1040A
Not for stock sales
1040A
1040A
1040
1040
1040
1040
1040
1040
1040
Schedule C
Schedule C
Schedule C
Schedule A:
work deductions for some Post Docs
MA State Taxes
Mass DoR
https://wfb.dor.state.ma.us/income/Default.aspx
Create an account (name, address, SS#, and password),
Then just answer the questions using your 1040-A OR 1040 and you are done.
Mass uses Form 1
Mass Form 1
Mass Form 1 - Income
Mass Form 1 - Deductions
Mass Form 1 – The rest
Form 1 is 3 pages long
Other sections:
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Interest & Dividends
Long-term capital gains
Credits
Voluntary contributions
Healthcare penalties
Tax payments
Refundable credits
Tax due / refund
Healthcare Requirements
Must carry healthcare if you earn enough to file taxes
Gap of less than 3 months = no penalty