Facebook Q&A
Earlier today, I asked my Facebook followers if they wanted any free tax advice. Here's what they asked, and my responses:
Q: How late can you get your tax stuff to your accountant and still make a deadline?
A: Technically, depending on how busy 'your accountant' is, October 15. But I would recommend sooner rather than later.
Q: Here's one for you: how long do I need to hang on to old tax returns and old receipts?
A: You should save tax returns themselves indefinitely (yeah, I just said keep em forever :P) but you can trash back-up documentation (receipts, etc.) after the statute of limitations for audit, which is 3 years after the later of the date you filed the return or the date it was due. So, if you filed your 2010 tax return on time, you can now throw away the documentation for it, although I'd save the return itself.
Correction: if you filed your 2009 (due in 2010), you can now throw away the documentation for it.
Q: Is it true that certain things will "flag" your return for an audit? I've heard rumors that certain envelopes, etc. will make you more susceptible.
A: I've heard those rumors as well but I don't think they've been confirmed. Your audit risk as a 1040 filer is just over 1%, and lower than that for people who make less than $200k. Also, if you haven't been cooking the books, an audit or examination is nothing to really worry about. In-person audits are extremely rare these days. More likely, you will receive a letter asking for additional documentation, which you will, ideally, send in, and the issue will be resolved. Pain in the neck? A little bit. Something to lose sleep over? Definitely not. However, if you're worried about the envelope or your handwriting or the paper you printed your return on flagging you for an (extremely unlikely) audit, you can always efile!
Q: I know some CPA's also act as a mediator between buyers and sellers of businesses. Do you do that and if so do you have any listings?
A: I've never heard of that before! We do have a CVA (certified valuation analyst) in our office (one of our CPA's/principals). That just means she's qualified to perform a valuation of a business for either the buyer or seller. We've also taken on projects that include projecting taxability of different types of business sales, and of course consulting our clients on the feasibility of such projects. But acting as a broker for business acquisitions, no, we don't do that. I'd be a little hesitant before getting into that type of endeavor given the regulations involved in real estate dealing.
Correction: I've been informed that we do in fact act as mediators between buyers and sellers of businesses, and have done it recently. I don't believe we actually maintain any listings, however. We're not a broker. Learn something new every day!
Thanks to my Facebook peeps for staving off my boredom! I may expand on these topics in future blog posts, so if any of them interest you, please stay tuned.
Q: How late can you get your tax stuff to your accountant and still make a deadline?
A: Technically, depending on how busy 'your accountant' is, October 15. But I would recommend sooner rather than later.
Q: Here's one for you: how long do I need to hang on to old tax returns and old receipts?
A: You should save tax returns themselves indefinitely (yeah, I just said keep em forever :P) but you can trash back-up documentation (receipts, etc.) after the statute of limitations for audit, which is 3 years after the later of the date you filed the return or the date it was due. So, if you filed your 2010 tax return on time, you can now throw away the documentation for it, although I'd save the return itself.
Correction: if you filed your 2009 (due in 2010), you can now throw away the documentation for it.
Q: Is it true that certain things will "flag" your return for an audit? I've heard rumors that certain envelopes, etc. will make you more susceptible.
A: I've heard those rumors as well but I don't think they've been confirmed. Your audit risk as a 1040 filer is just over 1%, and lower than that for people who make less than $200k. Also, if you haven't been cooking the books, an audit or examination is nothing to really worry about. In-person audits are extremely rare these days. More likely, you will receive a letter asking for additional documentation, which you will, ideally, send in, and the issue will be resolved. Pain in the neck? A little bit. Something to lose sleep over? Definitely not. However, if you're worried about the envelope or your handwriting or the paper you printed your return on flagging you for an (extremely unlikely) audit, you can always efile!
Q: I know some CPA's also act as a mediator between buyers and sellers of businesses. Do you do that and if so do you have any listings?
A: I've never heard of that before! We do have a CVA (certified valuation analyst) in our office (one of our CPA's/principals). That just means she's qualified to perform a valuation of a business for either the buyer or seller. We've also taken on projects that include projecting taxability of different types of business sales, and of course consulting our clients on the feasibility of such projects. But acting as a broker for business acquisitions, no, we don't do that. I'd be a little hesitant before getting into that type of endeavor given the regulations involved in real estate dealing.
Correction: I've been informed that we do in fact act as mediators between buyers and sellers of businesses, and have done it recently. I don't believe we actually maintain any listings, however. We're not a broker. Learn something new every day!
Thanks to my Facebook peeps for staving off my boredom! I may expand on these topics in future blog posts, so if any of them interest you, please stay tuned.
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