tax filing

When an Elderly Parent Might Qualify as Your Dependent

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

It’s not uncommon for adult children to help support their aging parents. If you’re in this position, you might qualify for an adult-dependent exemption to deduct up to $4,050 for each person claimed on your 2017 return.

Basic qualifications

For you to qualify for the adult-dependent exemption, in most cases your parent must have less gross income for the tax year than the exemption amount. (Exceptions may apply if your parent is permanently and totally disabled.) Social Security is generally excluded, but payments from dividends, interest and retirement plans are included.

In addition, you must have contributed more than 50% of your parent’s financial support. If you shared caregiving duties with one or more siblings and your combined support exceeded 50%, the exemption can be claimed even though no one individually provided more than 50%. However, only one of you can claim the exemption in this situation.

Important factors

Although Social Security payments can usually be excluded from the adult dependent’s income, they can still affect your ability to qualify. Why? If your parent is using Social Security money to pay for medicine or other expenses, you may find that you aren’t meeting the 50% test.

Also, if your parent lives with you, the amount of support you claim under the 50% test can include the fair market rental value of part of your residence. If the parent lives elsewhere — in his or her own residence or in an assisted-living facility or nursing home — any amount of financial support you contribute to that housing expense counts toward the 50% test.

Easing the burden

An adult-dependent exemption is just one tax break that you may be able to employ on your 2017 tax return to ease the burden of caring for an elderly parent. Contact us for more information on qualifying for this break or others.

How long does it take to get your tax refund?

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate


Your annual income tax return may seem quite complex to fill out, but its structure is actually quite simple. On this document you calculate all of your earnings and subtract eligible deductions and credits.

The remaining amount is your taxable income, and you multiply this by the applicable tax rate to determine how much income tax you owe to the government.

However, in most cases, you prepay your income tax through deductions from your regular paycheck. If the amount you paid through these deductions during the year is greater than the amount you owe, you receive a tax refund.

After you file your taxes, you wait for the IRS to review your return and issue a refund. The IRS claims that it approves most tax refunds within 21 days but it can take longer.

Understanding this process can help you move the process along to get your refund.

How the IRS evaluates the return

Once your tax return reaches the IRS, an auditor confirms or questions the information you have provided, starting with the first section of the return. The auditor inspects the amount of money you claimed as income, which should accurately show every source of income you had over the course of the tax year.

If you are employed, you should have a form W-2 from each employer. This document contains the total wages the employer paid you during the preceding year.

If you are an independent contractor, you should have a W-9, which contains the same information. Copy all relevant earning and taxation information from these slips accurately on to your income tax return.

If you make a mistake entering information, the IRS must spend more time looking for the correction figures. Double-check your amounts before sending in your tax return to avoid this problem which extends the length of time you wait for your refund.

Tax deductions and credits

The more tax deductions and credits you claim on your annual tax return, the longer you wait for your refund. This is because the IRS must spend more time verifying the deductions and credits. This does not mean you should refrain from claiming legitimate tax deductions. Instead, just make sure to include clear documentation for each deduction.

For example, if you made a donation to a registered charity, you can deduct the dollar amount of the donation and lower your total taxable income. To make sure that the IRS agent auditing your tax return can confirm this deduction expeditiously, include the receipt. Do so with every deduction, reduce the wait time for your refund.


The IRS claims that it approves most tax refunds within 21 days of receipt of the return. However, the IRS does not issue refunds for anyone claiming earned income credit until after Feb. 15 so it has time to match the income you claim on the return with the amount reported by your employer.

If you request an electronic deposit, you receive your refund within one business week after your approval. Checks take up to four weeks to arrive in the mail.

Waiting for your refund may feel like a long time, but if you double-check your math and properly document each deduction and credit, you improve your odds of receiving your refund within the average 21 day period.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Filing Taxes as a Same-Sex Married Couple

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

same sex married couples, tax filing

The good news first: In many cases, if not most, filing taxes as a same-sex married couple in New York state should be as straightforward as it is for straight couples. The bad news: Well, it’s taxes. And taxes can be complicated and tedious.

Some Background First

In 2011, same-sex marriage became legal in New York state. It was already legal in a few other states, and in 2015, it became legal everywhere in the United States. You may have filed as a married same-sex couple on your state taxes since the 2011 tax year and, in 2015/2016, switched to married on your federal taxes as well. (This page breaks down what you were legally required to do.)

If you filed as single until your 2016 return so that you would have the same information on your federal and state returns, it’s possible you could get some money by amending state and federal returns from prior years. To be legally safe, you should amend any state returns from prior years that need changing.

If you transferred property during the past few years or did anything that may have changed due to the recognition of same-sex marriage, it may be a good idea to consult with an accountant.

Now to the Present

Now it’s 2017, and for the most part, same-sex married couples in New York can file taxes just as their heterosexually married counterparts do. A few considerations, though:

  • If you are married and adopt the child your partner gave birth to, you cannot claim the adoption tax credit. On the other hand, if you have yet to marry, you can claim the credit. Of course, the two of you should discuss whether getting married before the child is born is better for your family, both financially and emotionally.

  • Suppose you file taxes as married filing separately. Further suppose that one of you has yet to adopt a child who the other partner gave birth to or is the biological parent of. The legal parent is the one who should claim the dependency deduction.

At Herman and Company, CPAs. P.C., we can help you navigate through gay marriage tax filing and benefits. If you have any questions or are interested in a free consultation, contact us today.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

10 Key Tax Terms To Help You Cut Through The Jargon

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

tax terms

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The tax field has its own lingo, which adds to the complexity of the tax filing task. But don’t despair. Knowing these 10 key tax terms can help you cut through the jargon and have you talking taxes in no time.

1. AGI

Adjusted gross income, or AGI, is all the income you receive over the course of the year, including wages, interest, dividends and capital gains, minus things such as contributions to a qualified IRA, some business expenses, moving costs and alimony payments. AGI is the first step in calculating your final federal income tax bill.

2. Tax credits

Tax credits are much like credits you get from a store. After you calculate your tax bill, you can use the credit to reduce the amount that you owe to Uncle Sam. Tax credits are more valuable than tax deductions because they directly cut the amount of tax you owe, rather than reducing the amount of taxed income. A $200 credit, for example, will turn a $1,000 tax bill into only $800. A few credits could even give you a refund you weren’t expecting.

3. Tax deductions

Tax deductions are expenses the Internal Revenue Service allows you to subtract from your AGI to arrive at your taxable income. In most cases, the lower your income, the lower your tax bill. If, for example, a single filer has income of $38,000 and $8,000 in deductions, then he would pay taxes on only $30,000. The IRS offers all filers a standard deduction amount (more on this later).

Some other deductions — such as student loan interest, moving expenses, deductible IRA contributions and alimony payments — also are listed directly on the 1040A or long Form 1040. The term “deductions” is most commonly associated with the itemized deductions (more on this later, too) that taxpayers who file Schedule A claim.

4. Standard deduction

This is a fixed dollar amount that taxpayers can subtract from their income. The standard deduction is available to all filers and is determined by the taxpayer’s filing status. The amounts change each year because of inflation adjustments. You can find the current standard deduction levels listed on each of the three individual tax forms. Most taxpayers use this deduction method, which eliminates the need to itemize actual deductions such as medical expenses, charitable contributions and state and local taxes.

5. Itemized deductions

These are expenses that can be deducted from your AGI to help you reach a smaller income amount upon which you must calculate your tax bill. Itemized deductions include medical expenses, other taxes (state, local and property), mortgage interest, charitable contributions, casualty and theft losses, unreimbursed employee expenses and miscellaneous deductions such as gambling losses. Some itemized deductions must meet IRS limits before they can be claimed. When you itemize, you must file Form 1040 and detail your tax deductions on Schedule A.

6. Exemption

This is an amount the IRS lets you subtract from your income to reflect all the people who count on your income. You can claim as tax exemptions yourself, your spouse and your dependents. The IRS allows a set amount for each exemption and, as with deductions, this total is subtracted from your AGI to come up with your final, lower earnings amount upon which you must figure your tax bill. Your personal exemption amount is in addition to any tax deductions, either standard or itemized, that you claim.

7. Progressive taxation

This is the system in which higher tax rates are applied as income levels increase. The U.S. tax system uses progressive taxation with tax brackets starting at 10 percent and rising to 39.6 percent for the wealthiest taxpayers.

8. Taxable income

Taxable income is your overall, or gross, income reduced by all allowable adjustments, deductions and exemptions. It is the final amount of income you use to calculate how much you owe in taxes.

9. Voluntary compliance

This describes the philosophy upon which our tax system is based: U.S. taxpayers voluntarily comply with the tax laws and report their income and other tax items honestly.

10. Withholding

Also known as pay-as-you-earn taxation, the withholding method enables taxes to be taken out of your wages or other income as you earn it and before you receive your paycheck. These withheld taxes are deposited in an IRS account and you are credited for the amount when you file your return. In some cases, taxes also may be withheld from other income such as dividends and interest.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Do you have to file taxes? The answer depends on your age, income and filing status

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

tax filing


Some people don’t need to file taxes every year, but this reprieve from tax duties generally applies to those whose earnings don’t meet certain thresholds.

You must consider three things when determining if you need to file a tax return: your age, your filing status and your income. Once you reach a certain income level, the law usually requires you to file taxes. The amounts are adjusted annually for inflation.

Tax-filing earnings thresholds for 2016 taxes

Tax-filing earnings thresholds for 2016 taxes

ACA premium credit claim

If you got health care coverage as required by the Affordable Care Act, also referred to as ACA or Obamacare, you might need to file a return.

This is the case if you qualified for federal help in buying your health care coverage through the health insurance marketplace. If advance payments of the ACA premium tax credit were made for you, your spouse, or a dependent who obtained such marketplace medical coverage, that amount must be reported by filing a Form 1040 tax return and Form 8962, Premium Tax Credit.

This will ensure that you got the appropriate tax credit in advance. If you received too much premium help, you’ll have to repay it with your return filing. If you did not get enough, you can collect the extra when you file.

Filing a return

As the table indicates, individuals younger than age 65 must file if they make certain amounts. The earnings threshold amounts go up a bit for older (65-plus) individuals.

Regardless of age, the earnings target is the same for married couples who file separate tax returns.

In most situations, your age for tax purposes depends on how old you were on the last day of the year. But when it comes to determining whether you have to file a return, the IRS says if you turned 65 on New Year’s Day, you are considered to be 65 at the end of the previous tax year. The one-day grace period allows you to use the higher income thresholds to determine whether you must file a tax return.

Dependents and filing

The IRS also has different rules for dependents who earn money. And even though it’s children we’re usually talking about, the IRS doesn’t make it easy, setting different earning standards for the two types of income — unearned or earned — that trigger filing requirements.

Generally, a child must file a return and pay tax due. But the amounts that trigger the filing depend on the type of income:

  • Earned, generally characterized as a salary, wages or tips. It also includes taxable scholarships and fellowship grants.
  • Or unearned, which includes investment interest or dividends, capital gains, unemployment benefits and some trust distributions.

The amount of each type of earnings that triggers a young person’s filing requirement is adjusted each year for inflation and is calculated using a formula that factors in the annual standard deduction amount.

Older individuals and persons of any age who are blind also must make some extra calculations to determine if they need to file a Form 1040.

Self-employment earnings

Don’t forget about self-employment earnings, whether you’re a teenager running a neighborhood lawn service or an adult with a 10-person manufacturing operation. This money counts toward determining if you have to file a return, regardless of whether it was your sole source of income or just an occasional side job to make a little extra cash.

If your annual gross self-employment income is at least as much as the income level for your filing status, you have to send in a Form 1040 and Schedule C or Schedule C-EZ reporting your earnings.

You also must file a Schedule SE to pay self-employment tax if your net earnings exceed $400.

When it pays to file

For those few who don’t legally have to file, it sometimes pays to send in a return anyway.

This is the case for individuals who don’t earn much but might be eligible for the earned income tax credit. This benefit is available to qualified individuals even if they owe no tax, meaning they would get money back from the federal government. Many people think the credit is available only to parents. It’s not. But the credit amount is greater for eligible low-wage taxpayers with children.

Plus, the IRS says that most individual taxpayers are due a tax refund. But those taxpayers must send in a Form 1040 or Form 1040A or Form 1040EZ to get that cash.

You can check out the filing requirements section of IRS Publication 17 for more details.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

The 10 best tips to prepare for the 2017 tax season

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

2017 tax filing season, tax tips

It’s hard to believe the 2017 tax season is already here, and you’ll be getting the information you need to settle up your 2016 tax return with Uncle Sam. Take advantage of the tax benefits available to you throughout the year.

First, think about getting organized. It’s important to have one place — a large envelope or a file folder — where you can accumulate tax information as it arrives. When it is finally time to fill out the tax return, a lot of information is required and every detail counts in making it a smooth process.

Read on for 10 savvy tips for tax-filing season.

1. Maximize retirement plan contributions

If your employer offers a 401(k) or other type of deferred pension plan, make every effort to contribute the maximum amount allowable — especially if your employer matches your contribution. Otherwise you are leaving money on the table that could benefit you in your retirement. Think of the employer match as an immediate 100 percent return on your money. Even if there is no match, all of the funds are tax-deferred and grow tax-free.

If your employer does not offer a retirement plan, then consider making a contribution to a traditional individual retirement account or a Roth IRA. The former potentially offers a tax deduction for the year the contribution is made, but both offer tax-deferred gains.

2. Adjust your withholding

Check your year-to-date withholding and consider changing the taxes withheld if you are expecting a large refund.

This is especially important if you are claiming the earned income tax credit, or EITC, or the additional child tax credit. Why? The IRS is now required by law to hold all refunds on those returns until Feb. 15. The new law was put into place to allow the agency additional time to detect and prevent tax fraud.

IRS Commissioner John Koskinen said in a statement: “It’s a personal choice if you want to have extra money withheld to get a bigger tax refund, but you have options available if you prefer to have a smaller refund next year and more take-home money now.” You will need to complete Form W-4, Employee’s Withholding Allowance Certificate, to adjust the amount of taxes withheld and submit it to your employer.

3. Protect your identity

Speaking of tax fraud, if you received an Identity Protection PIN, or IP PIN, in the past, then you must provide this number on your tax return not only this year but on all future tax returns. An IP PIN is a six-digit number assigned to eligible taxpayers that helps prevent fraudulent returns from being filed under your Social Security number. Remember, the IP PIN is your friend in getting the IRS to accept your tax return. However, this is no ordinary IP PIN, as it changes every year. You read that correctly: every year! If you do not receive the notification in the mail, you will need to go to the IRS website to retrieve it.

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4. Get what’s yours

According to the IRS, one out of every five workers fails to claim the very valuable earned income tax credit. If you worked and earned less than $53,505 in 2016 (the limit will be $53,930 in 2017), then use the EITC Assistant tool to determine if you qualify for the credit. You must file a return in order to receive the credit. Don’t miss out on this!

5. Declutter and reap a tax break

If one of your New Year’s resolutions is to simplify and declutter your life, now is the time to get going. You can make money by donating all of those things you no longer need or want in your life. There are many charitable organizations that accept items other than cash such as clothing, books, electronics and other household items. The deduction is limited to the item’s fair market value, and the items must be in good condition or better to be deductible. If the value of the noncash items is more than $500, then you must file Form 8283, Noncash Charitable Contributions, and fill it in with some details. But it is well worth the effort.

6. Cash in on scholarly tax breaks

If you, your spouse or dependents had higher education costs in 2016, there may be some tax savings for you. In fact there are multiple benefits available. The only difficult part is figuring out which one works best in your situation.

Basically there are three different benefits: the American opportunity credit, the lifetime learning credit and the tuition and fees deduction. There are various requirements that may limit the benefit, but the IRS once again offers a useful tool: the Interactive Tax Assistant tool to help you find your way through the maze. You should receive Form 1098-T, Tuition Statement, from your school with the information required by the IRS to complete Form 8863, Education Credits.

7. Get health coverage in order

Make sure you know what you need to report to the IRS on your health insurance. The shared responsibility provision requires that you and your family have minimum essential coverage or qualify for a health coverage exemption. Otherwise, you must make an individual shared responsibility payment for all months that you didn’t have coverage or an exemption.

Most taxpayers just need to do one thing: Check the box that indicates you had health care coverage for all of 2016. If that is not the case or you received advance payments of the premium tax credit on the marketplace, then you may need to fill out Form 8965, Health Coverage Exemptions, and Form 8962, Premium Tax Credit, to complete your tax return. For more information, visit the IRS page on the Affordable Care Act.

8. Know the rules about foreign accounts

Have a foreign bank account? Was the balance in the account(s) greater than $10,000 total? If the answer is yes to both, then you need to file what’s commonly referred to as an “FBAR,” a foreign bank account reporting form. The new name is FinCEN Report 114, FinCEN being an acronym for Financial Crimes Enforcement Network. As the name has the word “crime” in it, that should light a fire under your seat to make sure you’re in compliance as the penalties are very high for failing to report.

The requirements don’t stop there. If you maintain very high balances in your foreign accounts, you’ll have to file IRS Form 8938, Statement of Specified Foreign Financial Assets.

Also, if you meet certain thresholds of ownership in any foreign corporations or partnerships, or if you are the beneficiary of a foreign trust, you should be aware of the complex reporting requirements in those instances. Just a few of the pertinent forms are: Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations; Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. All are available at the IRS website.

9. Be generous without tax repercussions

Every so many years, the IRS changes the annual exclusion for gifts that you can give without having to file a gift tax return. If you gave more than $14,000 in cash, property or gifts to anyone, you must report the gift on Form 709. If you are married, you can give a combined $28,000 and remain under the radar.

Note that this applies to the person giving the gift; if you are receiving a gift, congratulations — you don’t have to do anything. That is, unless you receive a gift from a non-U.S. person. If you happen to receive such a gift that is greater than $100,000, you will have to report this on the IRS Form 3520.

10. Be smart when you file

When filing your return, the quickest and easiest way to receive your refund is to electronically file your return and use direct deposit. If you owe money, use IRS direct pay from your checking or savings account. And whatever else you do, please make sure you keep a copy of your filed tax return. Believe me, it saves so much trouble in so many ways in the event you do happen to need it.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Warren wants IRS to provide direct free tax filing

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate


The Internal Revenue Service offers Free File, a partnership with tax software manufacturers that allows millions of taxpayers each year to prepare and e-file their taxes for, as the name says, free.

Sen. Elizabeth Warren, however, says Free File primarily serves the tax industry, not taxpayers. She wants the IRS to dump TurboTax, H&R Block and other companies that are part of the current system.

The Democratic senator from Massachusetts on April 13 introduced a bill that would require the federal tax agency to develop its own free, online tax preparation and filing service. All taxpayers, without the income limits in place under Free File, would use this IRS direct system instead of going through the current tax industry software intermediaries.

Warren’s Tax Filing Simplification Act of 2016 also would give filers the ability to download all the third-party tax info the IRS already has on them, such as W-2 wage statements and some investment and retirement account statements.

Even better, taxpayers with simple tax situations wouldn’t have to fill out their forms. Instead, in these cases, the IRS would send the eligible taxpayers an already prepared tax return for them to review and, if it’s correct, they would simply submit it unchanged.

Perennial call for IRS direct filing

Warren’s ideas are not new. Similar direct IRS tax filing proposals have been proposed over the years. Even President Barack Obama, when he was candidate Obama in 2007, suggested a similar filing system.

In fact, in this current session of Congress, 2 other lawmakers already beat Warren to the punch. In April 2015, Rep. Bill Foster, D-Ill., introduced the Autofill Act of 2015, and Sen. Jeanne Shaheen, D-N.H., introduced the Simpler Tax Filing Act of 2015.

None of the suggested direct IRS tax-filing changes, however, ever made it very far along the legislative process. Will Warren’s bill fare any better? Maybe.

The outspoken advocate for consumer rights already gets a lot of attention and she has proven tenacious in fighting for her ideas. Plus, in this presidential election year, she’s got the backing of 2 prominent candidates.

Sen. Bernie Sanders, I-Vt., is 1 of 7 original cosponsors of Warren’s bill. Former Secretary of State Hillary Clinton issued a statement praising Warren’s tax simplification proposal.

Free File maze

In support of her bill, Warren’s staff prepared a report denouncing the tax industry’s participation in what the Senator calls a tax maze.

Each software company is allowed to set up its own eligibility criteria, notes the report, creating a jumble of offerings that confuses taxpayers into purchasing unnecessary products.

The report also questions the security of the third-party tax prep providers.

And Warren’s report calls Free File a failure. While the IRS and Free File Alliance say that the program’s options apply to around 70% of taxpayers, the report says that only 3% of eligible taxpayers use Free File.

The companies that are part of the Free File Alliance, the coalition of 13 tax software manufacturers that works with the IRS each year to implement Free File, disagree with Warren’s assessments.

“Not only would [Warren’s] legislation create a tremendous and potentially harmful conflict of interest for the American people by enshrining roles of tax preparer, tax collector, tax auditor and tax enforcer together in one entity, the IRS, but the system’s very creation would also be a huge burden for taxpayers,” said Tim Hugo, executive director of the Free File Alliance. “The proposal would make the essential tax administration work of the IRS impossible, while disadvantaging the taxpayer.”

Expanded IRS filing concerns

Kudos to Warren and others looking for ways to make tax filing less expensive and easier. Suggestions that would help filers with very simple taxes hold a lot of promise.

But there also are arguments against putting even more of our annual filing duties into the IRS’ hands.

  • While pre-filled returns could work for some filers, many would be left out. Self-employed taxpayers, for example, don’t get W-2s or even 1099s in some cases.
  • Pre-filled returns could lead to more tax cheating. If the IRS doesn’t get a 1099, either due to a reporting error or oversight by the payer or because the income wasn’t at the $600-plus triggering level, a taxpayer might be tempted keep the IRS in the dark about that added income. Yes, that’s already a possibility. But taxpayers now worried that the IRS might find out about unreported income tend to go ahead and include the earnings on their 1040s. If, however, they get an IRS-completed return that confirms the agency doesn’t know of the earnings, some filers wouldn’t correct that perception.
  • Some tax breaks could be missed, even for those who don’t itemize. Individuals who claim any of the dozen or so income adjustments, popularly known as above-the-line deductions, would have to make sure those were accounted for in any return filled out by the IRS.
  • While there are security issues with private software companies, the IRS is not immune to hackers. And an IRS-only system might make things worse. At least now, criminals have to search many tax-related systems to get the data they want to put to illegal use.
  • Then there’s the money. The IRS already is hampered in doing its current job because Congress keeps cutting its budget. Warren and her bill’s sponsors must convince their Capitol Hill colleagues to loosen the purse strings enough so that the IRS can create and then implement a tax preparation and filing program that can compete with the private sector.
  • Finally, there’s a general public and specific political resistance to giving the IRS any additional power over their tax returns, even if doing so might make things easier.

Would you like the IRS to start the annual filing process by filling out your 1040? Do you use Free File? Would you use a similar system run entirely by Uncle Sam?

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.


10 Ways to Avoid Problems at Tax Time

Follow our recommendations for tax filing and finding a Westchester accountant

You can avoid problems at tax time by following our recommendations

Westchester CPA firm Herman & Company CPA’s have all the answers to your personal finance questions!

If you’re looking for ways to avoid last-minute problems with filing your taxes, take a look at these tips from the IRS:

1.     Don’t Procrastinate. If you wait until the last minute, your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and may increase your risk of making an error.

2.     Organize your tax records. Tax preparation time can be significantly reduced if you develop a system for organizing your records and receipts. Start with the income, deduction or tax credit items that were on last year’s return.

3.     Visit the IRS online at: You can find tax law information and answers to frequently asked tax questions.

4.     Take advantage of free assistance. The IRS offers recorded messages on about 150 tax topics through its toll-free TeleTax service at 1-800-829-4477. It also offers federal tax forms and publications at 1-800-829-3676. Some libraries, post offices, banks, copy centers and grocery and office supply stores carry the most widely requested forms and instructions. Libraries may also have reference sets of IRS publications.

The IRS also staffs a tax Help Line for Individuals at 1-800-829-1040 and a Business and Specialty Tax Line at 1-800-829-4933. Hearing-impaired individuals with access to TTY/TDD equipment may call 1-800-829-4059 for assistance.

5.     Use IRS Taxpayer Assistance Centers and Volunteer Programs. Free tax help is available at IRS offices nationwide. Also, check your newspaper or local IRS office to find locations for Volunteer Income Tax Assistance or Tax Counseling for the Elderly sites. To obtain the location, dates, and hours of the VITA or TCE volunteer site closest to you, call the IRS toll-free Tax Help Line for Individuals at 1-800-829-1040.

6.     Double-check your math and data entries for possible errors and make sure you have provided the names and correct (and legibly written) Social Security or other identification numbers for yourself, your spouse and your dependents.

7.     Have your refund deposited directly to your bank account to speed it up and to reduce the chance of theft. Check the tax instructions for details on entering the routing and account numbers on your tax return and make sure the numbers you enter are correct.

8.     Don’t panic if you can’t immediately pay any taxes owed. You can apply for an IRS installment agreement, suggesting your own monthly payment amount and due date, and getting a reduced late payment penalty rate. You also have options for charging your balance on a credit card either online as part of an electronic return or by phone through a processing agent.

9.     Electronic filers with a balance due can file early and authorize the government’s financial agent to take the money directly from their checking or savings account on April 15th, with no fee.  Note that if you file your tax return or a request for a filing extension on time, even if you can’t pay, you avoid potential late filing penalties.

10.  Ask your accountant to request an extension of time to file. If the clock runs out, you can get an automatic six-month extension of time to file, i.e. until October 15th. An extension of time to file does not give you an extension of time to pay, however. You can call 1-888-796-1074, e-file a Form 4868, Application for Automatic Extension of Time to File, that is included in most tax preparation software, or send a paper Form 4868 to the IRS to request the extension. You will need the adjusted gross income and total tax amounts from last year’s return if you request the extension by computer or phone. You may also get an extension by charging your expected balance on a credit card, and then you won’t have to file the form. Contact Official Payments Corporation at 1-800-272-9829 or Link2Gov Corporation. There is no IRS fee for credit card payments, but the processors charge a convenience fee.

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Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.