2012 Taxpayer Letter
January 2012
OUR NEW OFFICES – 2/1/2012 - no kidding
After 18 years as a home based business…we did it…we took the plunge…we moved into downtown Parker, just south of Mainstreet on East Pikes Peak Court. OK, it looks a lot like a house...(see the web site for a photo of the property if you are reading this in our paper taxpayer letter). You will just have to come visit us to see the interior of this wonderful Victorian building. We have a lot of room to grow so we look forward to seeing you soon – and we will welcome your referrals.
We will make the move to the new offices on February 1. While many of you will miss the deer and squirrels (and cats…?), we think you will enjoy our new central location – much easier to find, no hills, good parking.
This location allows us to do what we have always wanted to do – reach out to the community. We will host a monthly get together called Refresh Friday [3-4 PM on the 4th Friday of each month starting February 24]…an opportunity to mingle with other business owners, munch a few tasty snacks from Parker eateries, and get a quick update on tax, business, marketing, other??? Please watch our web site for calendar. 2012 will have unique opportunities and challenges as the country lurches toward another pivotal election – it is a great time to build community toward a stronger future for all of us. After all, we are in this economic maelstrom together—right left and staunchly moderate.
THE WEB SITE www.zaffore.com.
Back in 1999 we launched our web site. We were proud early adopters and struggled with funky software and slow-as-molasses connectivity. We are pleased to announce that we have UPDATED OUR WEB SITE for 2012 and know you will enjoy using it. Check it out at www.zaffore.com. We are hoping to add some YouTubes to it this year, too… although we will not be dancing or rapping. I promise.
Stuff you will find on the web site:
- Contact information with our bios
- Tax Filing Season 2012 information – like organizers, extension info, checklists, and the all important “Team Gossip Page” etc
- Articles we have written over the years to help you make and grow your money
- Calculators for a host of questions – like should you buy or lease a car? Does it make sense for both spouses to work? How fast can you pay off your school loans? When will you be a millionaire (or, with inflation, a billionaire)? Should you create a b-u-d-g-e-t (a six-letter word)?
- Our Blog – “The Daily Dollar” – I write it and it reflects my *unique* perspective as a staunch moderate, but I also address hot topics (YES, there are accounting and tax “hot topics!!”) like the proper way to report S Corporation health insurance for shareholders…OK, sounds dull as dust, but trust me, it is a Hot Topic. Really, it is. It gets dozens of hits every single day….wow!
- The Portal – this is where you will find secure copies of your tax returns, your QB/PT files, and other items. We plan to use the portal even more proactively in the coming year – wouldn’t you like to be able to store an off-site copy of your QB file? Let’s talk.
Information Sharing
VERY IMPORTANT: THE KIBOSH ON SHARING INFORMATION. WE APOLOGIZE FOR THIS ONE – WE HAVE NO CONTROL OVER IT. We can no longer easily share your tax information with any third party. This is part of a massive IRS privacy crackdown—not a bad thing--but it means that we can no longer send tax returns to mortgage lenders or student loan lenders or attorneys or anyone else other than you without having you fill out a form every time you request your return—a nightmare for all of us. Please keep in mind that we can NEVER speak to ANYONE about your tax return or your business without your written consent. So, please do not have mortgage lenders or others call us before you have contacted us in writing. And BE PREPARED FOR US TO TELL YOU THAT YOU HAVE ACCESS TO YOUR RETURNS 24/7/365 ON THE PORTAL, SO YOU CAN DOWNLOAD AND SEND YOUR RETURNS TO THIRD PARTIES ANY TIME OF THE DAY OR NIGHT. This service costs us some money, but we felt it was a great investment to insure that you can have your returns, financials etc at the click of a button any time whether or not someone is in our office answering the phone. We are PROHIBITED BY LAW from sending your tax returns via unencrypted e-mail. Again, the portal is our solution. If you do not have a computer or do not want to use the portal, we understand, and we will fax information to YOU to send on to your lender.
TAX LAW AND IRS AUDIT
After the Congressional drama at the end of 2010, we have enjoyed a relatively quiet tax law year. Instead of tons of tax law, what we ARE seeing is a LOT of IRS audits. Most are easy to navigate, but … some have been rather broad in scope. Audit topics: charitable contributions, S corporation compensation, economic reality (how does one live on nothing – the IRS has the right to ask that question…), real estate holdings and deductions, Schedule C small business income and deductions.
A few other items of note:
- Everyone can convert Traditional IRAs to Roth IRAs – adjusted gross income limitations are now gone for conversions (you STILL cannot directly fund a Roth IRA if your income is too high—more in a moment on this). If you converted in 2010, you probably chose to include the distribution in income in 2011 and 2012. Well, 2011 is here – time to pay the piper. For conversions made in 2011 – you must recognize the income on your 2011 return – no splitting over two year period (that was only for 2010 conversions). For a lot more information, see the Blog. Did you know that you can fund a traditional IRA and THEN convert it to a Roth, thus skirting the income limitations? Sigh. Can’t any tax thing be easy? Also – keep in mind that conversion is not the best solution for everyone. There are a number of contraindications – so get information before making a decision.
- Estate Tax Mess. We all believed that Congress would fix the estate tax law before the dawn of 2010…but…NO – it was never fixed for the whole year. We now have a 2-year fix. Estates of $5 million or less (per person, if set up correctly—see an attorney!) will pass without taxation. If someone near and dear to you passed away in 2010 with more than around $1M estate valued at fair market, SEE AN ATTORNEY. And see our .
- Payroll Tax Holiday. By the time you receive this letter, you will probably have gotten a paycheck for 2012. You will note that the so-called payroll tax holiday has continued. You, the employee, will pay only 4.2% for Social Security. You have paid 6.2%, and your employer has matched that amount, since 1989 up until last year, 2011. We have had inflation and cost of living adjustments for everything known to humankind in the last twenty plus years, but the amount withheld for Social Security has remained unchanged. How can that be? I don’t have an answer for that one (I have an opinion, of course, but won’t share it here), given the condition that Social Security is in today. In the meantime, though, we all get a little extra money to spend today with no thought for tomorrow. So -- here is a thought for tomorrow—put it into retirement savings and invest it. Two percent of $100,000 = $2,000 to start or shore up a nest egg? As opposed to Social Security? For self-employed people, you will also get the break on the “employee” portion of your self employment tax. Employers will still pay 6.2%. So I’m going to have to revamp my handy dandy formula for calculating SE tax, dang.
Deadlines
- DEADLINE TO PAY YOUR TAXES AND FILE YOUR RETURN OR AN EXTENSION IS APRIL 17, TUESDAY THERE IS (almost) NO EXTENSION TO PAY TAX—TAX IS DUE APRIL 17. Disregard the “almost” because it probably doesn’t apply to you J. See the website for additional deadlines – click on EXTENSIONS.
THE SOCIAL NETWORK HAS ARRIVED AT ZAFFORE CPAs.
I have been flattered that so many of you are reaching out to us and asking us to be friends on FaceBook, Twitter, LinkedIn, etc. But I’m pretty sure that most of you really don’t care about the fact that I’m trying to master the art of making pie crust or growing a sustainable and edible environment for the wildlife in my yard, or that my grandson is perfect, but you DO care about tax deadlines that are creeping up or new mileage rate changes or IRS edicts that effect YOU. With that in mind, we created a FANPAGE on Facebook, Kathleen M Zaffore PC CPAs (www.facebook.com/zafforecpa.com). We are continuing to figure out how to use it so we don’t drive you crazy. You will be able to see the blog topics and we will be able to blast out timely and interesting information – I promise that we will be short and pithy (that is a word—I also like to do crossword puzzles, but you may not care about that either) because your time matters. SO – instead of becoming “friends,” PLEASE SIGN UP AS FANS ON THE FACEBOOK FAN PAGE, KATHLEEN M ZAFFORE PC, CPAS. YOU DO THAT BY “LIKING” US. We will figure it out together – let us know if there are ways you would want us to use the fan page for your benefit. Or ways you don’t. Just as important. We won’t be twittering anytime soon. Whew. But I will say that IF you have a business that has inventory that spoils or goes out of style, you should be twittering as a way to move product. All of you business folk, if you think we need to be on LinkedIn for your benefit, let me know and we will take a look at it as well.
Last year one of our wonderful clients actually brought us a peach pie along with a recipe for pie crust using cream cheese – it is fail proof! We love it when people actually read our newsletters. Thank you!!
Here We Go With Tax Season—the Nitty Gritty.
You now have your very own plastic tax envelope in hand………(If you are not a current client, contact us and we can help you)
- Place the plastic envelope wherever you process your mail (near a shredder, for example).
- As tax info arrives, put documents directly into the envelope. Immediately!
- Review the checklist on our web site—see Home Page and click on Checklist 2011 -- as a reminder of items we need to do your return. Place additional documents in the envelope (ie HUD settlement sheets for refinances and new home purchase, car registration for deductible owner tax, BASIS ON STOCK YOU HAVE SOLD—or good clues so we can find that info--purchase date and number of shares purchased etc.).
- If we normally send you a printed personalized, detailed tax organizer, you will find it in this package. If you haven’t received an organizer and want one, call the office or drop us an e-mail. Remember – use the organizer as a guide. It is not necessary to fill it out in detail. Unless you want to. We love it when you do, but…we still need your original documents—not that we don’t trust you or anything…J (photocopies are ok—and faxes and pdfs.).
- If we normally send you an interactive organizer via e-mail, we will send it on or about February 1. If you would like to try out the e-organizer, let us know. Those of you who have tried E-Organizer in the past, love it – so any new takers this year?. One caveat: if your tax return is very complex, E-Organizer is NOT the best method. Give us a call for other caveats.
- To get your documents to us (choose one or more):
- Mail us the plastic envelope filled with the info you’ve gathered (you MUST put the plastic envelope into a mailing envelope—do not drop the plastic envelope alone into the mail – it is not tough enough to withstand the rigors of the US Postal Service)
- Make an appointment and bring in your documents
- Drop off at the office or in our brown client mailbox at the top of the stone steps – yes, for those of you in the Pinery, if the brown mailbox is convenient, we will continue to use it. We also have a drop slot at the new office! It is conveniently located on the back porch steps leading to parking lot between Mainstreet Center and our building – the Rose Chateau – that is the real name.
- Fax
- Scan and post .pdf files to your portal folder.
Remember: sooner is better!
HIGH NEED TO KNOW
CPAs are basically nosey. We want to know a lot about you – as we probe around, we might discover important ways to save you money or your bacon. So…please take a few moments to fill out the questionnaire enclosed (if you have an organizer, it is in the organizer) and then stick it in your plastic envelope. Your answers will:
a. help you remember things you wanted to ask/tell us
b. remind you of documents we will need to prepare your return
c. help us NOT to overlook income and deduction items critical to your return
d. uncover possible strategies to reduce your taxes now and in the future!
e. all of the above and more. Really.
FULLY ENGAGED
PAPER ENGAGEMENT LETTERS: You will find one copy of our engagement letter(s) in your tax package (for your personal returns and IF APPLICABLE, for your corporations, LLCs, partnerships, trusts, gift and other returns). Under current regulations, we cannot even start your tax return until we have a signed engagement letter. So, please sign and return it with your tax papers. We will scan it and return it to you with your tax returns and documents.
Many of you responded that you would prefer to receive your engagement letter by email. Trust me – we would rather do email engagement letters, too. We had trouble with spam blockers last year and therefore decided that we would mail out engagement letters. Sorry, trees.
PAYMENTS: We are going to try something new this year – you will be able to pay your bill online on our web site using a credit card. Quick, easy, done.
We accept cash, checks, credit cards, and compliments (along with payment). We do not accept livestock but might consider gold. If your account is more than 30 days overdue, we will rebill you with a finance charge of 1.5% per month and a rebilling fee of $5 per month. Sorry L. Do communicate with us if you are having difficulty paying the bill…we will set up a payment plan for you.
WE WILL NOT COMLETE E-FILING YOUR RETURNS UNTIL PAYMENT IS RECEIVED OR YOU HAVE COMMUNICATED WITH US REGARDING A PAYMENT PLAN. We appreciate your help. THANK YOU!!
For TAX CHECKLISTS AND MORE INFO about mileage rates, Social Security limits, team gossip, QuickBooks updates etc etc:
GO TO www.zaffore.com.
SEE YOU SOON!!!!!!!!!!!!!
