Tax Preparation

Tax Preparation

 

Tax Preparation

We’ve all done it. But, this year is going to be different! I’ll have my taxes filed early this year! Sound familiar? You said it once, you’ve said it a thousand times, and every year, it’s the same story. Maybe you realized you never received a crucial document in the mail, you misplaced some receipts necessary to back up that big write-off you were counting on, or maybe your total deductions aren’t quite adding up.

Relax, you’re not alone — or doomed to miss the filing deadline. Tax-time problems are quite common. And while they may seem scary at first, most issues can be easily fixed-with a little tax preparation and know how.

To help you navigate the season’s trickiest head scratchers, we’ve laid out several common tax problems — plus some tips for putting you back on track.

1. There’s A Mistake on My W-2

If your W-2 — the federal form issued by your employer that indicates how much you’ve earned for the year reports the wrong amount of income, the Internal Revenue Service could slap you with an inflated tax bill.

As soon as you realize there’s an error, contact your employer and ask for a corrected form.

This process can take a while, so think about filing for an extension. The good news is that the IRS will have records showing that you’re working toward a resolution.

2. My Former Employer Is Out of Business

If you haven’t received a W-2 because you’re company has gone out of business, it’s possible that the IRS could bill you for back taxes, with interest and penalties.

If your company went under before issuing you a W-2, you can file a substitute wage statement, also known as Form 4852. Use information from your last pay stub to complete the document. Can’t find your last paycheck? Then carefully estimate your numbers. You’ll have to substantiate your figures on Form 4852 should you ever get audited by the IRS

3. I Didn’t Receive My 1099

Independent contractors are typically on their own when it comes to reporting their income and paying taxes, unlike W-2 employees. So it’s crucial to keep track of the 1099’s issued by clients in order to substantiate your income claims.

If a company fails to send you a 1099, it’s not the end of the world. Just because there are no withholdings reflected on the 1099, your own records of income are enough to file your tax return. Make sure you’re keep records of client invoices, deposit receipts and bank statements, all of which can be used to determine your income and tax liability without a 1099.

4. I’m Missing Substantiating Documentation for a Deduction

If you choose to itemize your deductions, receipts and other supporting documents will be needed to prove how much you spent. Otherwise, the IRS could disallow your deduction. If you’re just missing a few records or receipts, you’re probably OK.

If you can determine the number of miles you’re vehicle averages per gallon of gas, then you can calculate how far you drove. Be sure to deduct personal use from the total mileage. For other business deductions, a credit card or bank statement may serve as proof of an expense.

5. How Do I Prove I Had Health Insurance

Starting in 2014, all taxpayers must prove they have health insurance to avoid paying federal penalties. If you obtained a policy on the exchange you will receive Form 1095-A, as supporting documentation

The IRS has not given specific instructions about what types of documentation to provide to show health insurance coverage, and that can be confusing. It is suggested that you offer as much information as possible including copies of your insurance card and/or billing statements from your insurance provider, or your final pay stub, showing how much was deducted from your paycheck for premiums.

Consulting Services Tax & Accounting offers business and personal tax services, including tax services for late filer, non-filers, and for anyone who may have fallen behind in the payments of their tax obligations. Estate & Trusts tax preparation is also one of our specialties.
If you or your business has been audited and you require representation, you can rely on our expertise with the audits.
A full service agency, we offer in-house accounting or payroll services. Call today, and we will be happy to give you a free strategy session before we begin to work together.