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Receiving notification from the Internal Revenue Service (IRS) of an audit against a recent tax return can be an intimidating feeling. Typically the audit request will come associated with a specific return within a one or two year period. The IRS will also notify the specified taxpayer with a letter in regards to the audit type and details, never a phone call. Do not fall victim to a scam by revealing any personal information over the telephone unless you have initiated the call with an IRS representative, as all IRS audits notification will be mail delivered.

While an audit can initially be cause for concern, allowing a tax professional to assist you with the procedure is ultimately best for the taxpayer as many times deductions are disallowed and individuals could end up paying more in addition to penalties and interest. By investing in the help of a trained professional, these potential shortfalls can often be reduced or waived completely to minimize the effect of a detailed audit.

Following are the four types of audits executed by the IRS and a brief description of what each entails.

CORRESPONDENCE AUDIT

The least invasive of audits most often these are performed through mail remittance in regards to a specific question levied by the IRS about a return. Usually the request will be made for specific backup in regards to a deduction or question the IRS may have about a return, dependent or claim being made.

Normally, once verified through mail, fax, or a telephone conversation initiated by the taxpayer it is deemed closed if no further questions arise during the process. In most occurrences, no face to face interaction is needed to complete a correspondence audit.

OFFICE AUDIT

More invasive than a simple correspondence audit, the office audit will require an individual to enter an IRS office and bring with them the requested paperwork. Here the taxpayer will meet with an auditor and can answer any questions that may arise.

While more serious than a simple correspondence, the office audit normally concludes within one day unless something is unresolved or more questions arise.

FIELD AUDIT

The most serious of audits will require an IRS representative visiting your home or office and interviewing you in regards to the return in question. These audits take an extended period of time as an entire return is often evaluated and the taxpayer may be asked to prove such items like an office in home deduction by physically showing the auditor around both.

If notified of a field audit the IRS normally has specific questions in need of answering and will ask leading questions to dig into the reasons behind why a return was filed a specific way. These are detailed looks into an individual’s tax implications and could result in serious penalties and interest additions if the IRS is not satisfied with received answers.

RANDOM AUDIT

These type audits are not in search of any particular item nor have they been flagged for uncommon return figures but are solely the result of a random selection. While the entire return will be evaluated and potential questions asked for clarification or proof, the audits are initiated as described, at random.

The experts at Bloch, Rothman, and Associates can answer any questions regarding individual or business income taxes and assist with a variety of bookkeeping options. It is recommended taxpayers selected for an audit enlist the services of a professional tax service prior to providing any information to the IRS auditor. A full detailed review of your tax situation can be completed in addition to resolution issues and estate compilations. All services will be completed in a timely manner, depending on your restrictions and possible tax deadlines. Whether you need a simple explanation on a random tax form, are in need of representation, or would like help in a variety of other services our tax experts are ready and willing to assist. Call 303-321-7160 or contact us for your initial free no obligation consultation.

As a small business owner, tax preparation is a year-long feat. One of the best ways to handle this is to stay organized and strategically plan. When accomplishing these goals, you will make the upcoming tax season a breeze. Whether this is your first year as a small business owner, or 10th, there is always room to brush up. Learn more about how you can grow using a premier e-filing system, top ways to plan ahead for the future, and reasons to use a local accountant to help with your bookkeeping.

Using an e-Filing System

When tracking expenses for your small business, one of the best advancements you can make it moving to an electronic filing system for your documents. When saved in a cloud system, this will help protect your business in the event of an emergency. An electronic system is also a great way to keep track of all documents for quick reference as you turn in items to your accountant. An e-system is also space saving which is crucial for small offices. When using an electronic system, make sure you use keywords and naming conventions that are easy to find through search. Still unsure of making the switch? Small Business Chron shares the advantages of electronic document management system to help you see the pros.

Planning Ahead for Future Expenses

Being a small business owner, you can never be too careful for your future. Whether it is a financial crisis or a natural disaster, accidents can happen. To get started on your emergency plan, you need to take some time to look over your business’ plan for the year. What types of expenses will you need for upgrades for systems and equipment? How is the outlook of profits for your business? Do you foresee any events where you will need to pull additional funds or move them? What would you do in the event of a natural disaster? Throughout all the changes, it is important to stay on top of your day to day expenses and make sure everything is tracked.

Reasons to Use an Accountant

One of the best investments you can make for your small business is working with an accountant to assist with your bookkeeping. As a team, you can work with your accountant,  which allows you to provide an easy access to documents. From there, they can use these tools to help you with all your bookkeeping. In addition, a go-to accountant knows the ins and outs of tax codes. They will help you meet all of your deadlines for your quarterly tax payments and inform you of all of the tax deductions your business can qualify for.

As you look for a quality accountant to help your small business grow, you can count on the expertise of the team at Bloch, Rothman and Associates. Be sure to review the four bookkeeping tips for small business owners from premier Denver accountants and let us help. Contact Bloch, Rothman and Associates today to set up your free initial consultation.

A majority of individuals work for an employer who withholds the necessary tax implications from their check each pay period. At times an individual may elect to have their employer keep additional money out of their check in order to cover their tax requirement necessitated by other means, such as alimony, interests, dividends, or capital gains.

Opposite these individuals are those who work for themselves, partners in a business or members of an S corporation. This group of people typically need to make estimated tax payments to the United States Treasury in order to ensure they receive no penalties at the end of the year when organizing their personal tax preparation.

Just as individuals earn money throughout the year, the United States government expects to receive their share in a timely manner. In an effort to avoid catching up all at once during the normal filing period and submitting required monies at one point, most commonly the April 15 deadline, taxes can, should and may be required for submission during the year.

The IRS essentially computes an individual’s estimated earnings for the entire tax year and divides the amount into four equal payments made throughout the calendar year. Those paying estimated taxes then make a payment complete with a voucher for each quarter. The payment schedule is typically as follows.

1st Quarter - April 15
2nd Quarter - June 15
3rd Quarter - September 15
4th Quarter - January 15

If you have income subject to tax but not withheld the IRS provides a form to assist in computing your estimated taxes. The Form 1040-ES is available online providing step by step instructions for specific calculation. While accessible the computations and specific requirements in order to assure proper payments are made and received requires professional assistance. You do not want to avoid estimated tax payments believing a one-time lump sum can be made to “catch up” with the IRS at the end of the year. If incorrect or late, penalties may be levied.

Not only will the penalties be enforced for payments not received during the year but interest may also be attributed depending on when the non-tax assessed income was received. For example, if you win money and forget about the tax implication, profits may be spent prior to settling with the IRS at the end of the year. If the sum was won in June, the estimated tax payment should be made in September - NOT the following April. Interest could be assessed for the lapsed time period if not properly handled.

Come see the experts at Bloch, Rothman, and Associates who can help you determine your specific tax implications and if estimated payments apply to you. They will decide which deduction method is best and answer any other questions regarding individual or business income taxes while assisting with a variety of bookkeeping options. A full detailed review of your tax situation can be completed in addition to resolution issues and estate compilations. All services, including free of charge E-filing options will be completed in a timely manner, depending on your restrictions and possible tax deadlines. Whether you need a simple explanation on a random tax form or are in need of a variety of other services our tax experts are ready and willing to assist. Call 303-321-7160 or contact us for a free, no obligation consultation.

When filing your income taxes one of the most common questions for individuals involves itemizing or taking the Internal Revenue Service allowable standard deduction. Depending on your specific tax situation a wrong choice could have definite implications either costing you, especially in the pocketbook, or benefiting your return. Before deciding, knowing what the results of each possible scenario could be and making the correct decision will be extremely important. Also, just because you choose to take a standard deduction most of the time doesn’t mean itemizing couldn’t help, it all just depends on each individual situation and what has taken place in the prior year that could have a tax implication.

Prior to making a decision, let’s look first at what each choice entails and when, most commonly, each is applied.

Standard Deduction

The IRS defines the standard deduction as, “a dollar amount that reduces the amount of income on which you are taxed and varies according to your filing status; there is also an additional standard deduction for individuals who are blind or age 65 or over.” Anyone who takes the standard deduction automatically becomes ineligible for itemizing and vice versa.

For the 2017 tax year, applicable during the upcoming 2018 filing season, the standard deduction is as follows depending on your filing status:

Single - $6,350
Married Filing Jointly and Surviving Spouse - $12,700
Married Filing Separately - $6,350
Head of Household - $9,350

Each of these amounts is increased over the 2016 tax year for all filing qualifications.

Itemized Deduction

Itemized deductions are monies spent which may equal more than the allowable standard deduction and can be utilized by individuals or couples if the tax implications are beneficial. For example, if a person filing single can show more than the standard deduction in various expenses then choosing to itemize could prove beneficial.

Some of the expenditures which are allowable in an itemized return are: mortgage interest, real estate and personal property taxes, gifts to charities, theft losses and unreimbursed medical expenses.

Only about one-third of filed tax returns are itemized because typically the standard deduction is enough to cover the tax implications in most cases. However, for those individuals or couples who fall into the one-third of needed itemization the capability to itemize a return can prove beneficial.

Come see the experts at Bloch, Rothman, and Associates who can help you decide which deduction method is best for you and answer any other questions regarding individual or business income taxes while assisting with a variety of bookkeeping options. A full detailed review of your tax situation can be completed in addition to resolution issues and estate compilations. All services, including free of charge E-filing options will be completed in a timely manner, depending on your restrictions and possible tax deadlines. Whether you need a simple explanation on a random tax form or are in need of a variety of other services our tax experts are ready and willing to assist. Call 303-321-7160 or contact us for a free, no obligation consultation.

Tax preparation and filing can often seem like a daunting task whether you’re filing for one, a family, or an entire company. Often a slow process involving increasing paperwork yearly, ensuring you have everything properly completed, together, and ready for submission to the Internal Revenue Service (IRS) can be a painstaking process.

History of E-File

Fortunately, the IRS helped to rectify this situation not too long ago and now almost every tax return can be electronically filed. Instead of rushing to the post office on April 15 in an effort to have your return postmarked and mailed before closing time, you can now opt to have returns filed electronically by licensed professionals.

Electronic filing (E-file) dates back to the mid 1980’s, when the increasing amount of paperwork required to be kept on hand for both preparers and the IRS grew too large. Upkeep and cost to secure all of the required documentation was growing increasingly expensive and something needed to be done.

For these reasons much of the information began to transition from hard copies to electronically stored information. At the time, servers and computers used to hold information were still considerably larger than they are today but much smaller than cumbersome boxes and file cabinets needed to house paperwork for every person and company in America.

As a result, the ability to e-file returns was birthed and by 1990 the IRS rolled out the procedure nation wide. To date, over 1 billion returns have been electronically filed in addition to the IRS allowing refunds to be directly deposited into bank accounts, as opposed to waiting for a check in the mail.

Eliminating the wait on both the filing and refund process to take place over the weeks and sometimes months time period associated with paper filing became an immediate draw to the program from both consumers and professionals. This aspect along with other benefits are why both the taxpayer and IRS benefit from electronic filing.

Further, associates can provide evidence of a submission within minutes or hours instead of being left without proof of filing a return. The IRS will acknowledge receipt of all documentation filed electronically noting the date and time of file.

If any errors are detected, a failed receipt will be displayed along with a notification for the error. Often the mistake can be immediately corrected and a successful submission entered within minutes. In the past, three or four days would pass before the error was noticed on paper, then the return would be sent back, corrections made and resent. A past process that took weeks can now be completed in mere minutes if needed.

Come see the experts at Bloch, Rothman, and Associates who can E-file your return and answer any questions regarding individual or business income taxes while assisting with a variety of bookkeeping options. A full detailed review of your tax situation can be completed in addition to resolution issues and estate compilations. All services, including free of charge E-filing options will be completed in a timely manner, depending on your restrictions and possible tax deadlines. Whether you need a simple explanation on a random tax form or are in need of a variety of other services our tax experts are ready and willing to assist. Call 303-321-7160 or contact us for a free, no obligation consultation.