January 2011 Newsletter

The Honest Truth 

What a Tax Preparer Shouldn't Tell You

Wipe the sweat from your brow.  I'm not about to list the reasons why you should spend over $200 using a professional tax preparer or CPA to complete your 2010 tax return.  I'm going to tell you why you should do it (and if you don't like the "why," THEN you can utilize someone else's services).

Using tools such as Turbo Tax and H&R Block Online are great resources for a number of reasons.  You can't exactly sit in your CPA's office in your bathrobe on a NMD (no makeup day) and have him or her prepare your return.  BUT you can sit at your home computer and do so! In fact, as I write this, I'm doing just that (only my two year old is at the baby gate saying "Hole Me Mom, Hole Me." And I AM a Registered Professional Tax Preparer...I just work from home and it's a snow day (AGAIN!).

Back to my point, as long as you follow the step-by-step instructions and have all of your tax materials organized, you CAN complete your own tax return.  It's knowing what those materials are that can sometimes get you in a bind come April 14th.  In my business I offer my clients an organizer, but I encourage them to use it more as a checklist than to complete a 30-page questionnaire.  Organizers instruct you as to what's relevant in your own little tax world and assist you in setting your limits on deductible items.  For example, did you know that you can deduct the rental expense of a safe deposit box?  However, if that deduction does not show up on your return, it's because it is below the limit allowed in your miscellaneous deductions.  Therefore, if you already know your 2% AGI limit, you shouldn't even take the time to accumulate these expenses.  Same principle with regards to unreimbursed employee expenses.

Now, on to what a lot of my clients ask me.  CHILD CARE EXPENSES - you can deduct (claim) a certain amount of child care expenses, even if your care giver is an individual and not a daycare center.  Of course, there are limits on this deduction, but (in my opinion) this is one that is worth calculating.  In the case of an individual, you can prepare or have prepared a MISC-1099 to give to that individual.  Once you do so, you can deduct the cost on that 1099 on your individual tax return.  The trick is knowing what the annual amount is and where to include it.  If you can do this and manage to gather everything else that accompanies the preparation, I'm a firm believer in the DO-IT-YOURSELF mechanism of self-prepared tax returns.

To Summarize:

1. Do your homework (I think this is in every "article" involving do-it-yourself projects).
2. Organize (create a checklist or a stack of papers that you think or know are relevant to your tax year)
3. Find a cost-effective tax preparation tool
4. Google your questions

5. Throw your hands in the air and give your stack of stuff (along with your prior years' tax return) to a trusted Tax Preparer (preferably one that is a Register Tax Preparer*)

   *The IRS began requiring all Paid Tax Preparers to Register with them in order to prepare tax returns.  If you use someone who is not registered, they may not be allowed to prepare any subsequent returns.

    

    

   Thank you and Good Luck!

    

   Coe Allen of SeaCoe, LLC is a Certified QuickBooks ProAdvisor, Bookkeeper/Accountant/Professional Tax Preparer. 

     

    Coe can be reached at coea@seacoe.com
    205.467.7562 (home/fax), 205.368.9736 (cell).
    Check her out at www.seacoe.com

    

    http://www.facebook.com/SeaCoeLLC  

    

    

If you decide to utilize #5 - Mention that you found Coe here and she'll give you the ChildCareBirmingham.com discount

                                              ~Meredith