Common Questions - and the answers to go with them
not exactly david letterman's top 10, but (hopefully) useful stuff
I will update this page as issues present themselves - last update 12-25-17

Q0) How much money will the latest tax reform pakcage passed in  2017 save me on my 2018 tax return?
A1) Follow the link here and you will be able to calculate that.  Have your 2017 tax return in front of you when you do this.

Q1) How long does it take to get refunds?
A1) Depends on how you filed and how you elected to receive your refund.  Federal refund times are usually:

      E-Filed with Direct Deposit  - 8-13 days                    Filed by Mail with Direct Depsit - 4 to 5 weeks 
      E-FIled with Refund Check  - about 3 weeks           Filed by Mail with Refund Check - about 6 weeks

     State refunds usually come first, unless you filed by mail, in which case they can take 8-10 weeks - mine took that long!
     Check the link on my web site for the latest status of your refund.

Q2) I need an extension to file.  What do I do?
A2) If you are an existing client, e-mail me your name and SSN and I will file an extension for you.  If you are a new client, send me a new client worksheet (link is
here) and put "Extension Request" on the form and I wil file an extenson for you.  I will also mail you a copy of the Form 4868 (Extension Request).  I do not charge for this service.  Keep in mind an extension to file is NOT an extension to pay.  If the only reason you are doing this is to avoid paying your taxes - don't.  File the return on time and then work out an installment agreement with the IRS.

Q3) Why is the State of California sending me a Head of Household Audit Form?  Is something wrong with my return?
A2) Nothing's wrong.  It's not really an audit, they just say that to scare you.  Either (1) Fill out the form so that it matches your tax return EXACTLY or (2) Mail it to me with $10 and I'll file it for you.  If you make a mistake and the state of CA denies your HOH status, it can cost you thousands in taxes.  Be careful.

I personally get one of these every year.  Why?  The state is just trying get more money, HOH is the best filing status for taxpayers, and they know it's more profitable (and easier)  to get a hundreds of dollars from a million poor people than $10K each from a few wealthy persons.  And single parents tend to be less educated and have smaller incomes than the population as  a whole, so the state of CA targets that group.  Great ethics, don't you think?

Q4) I got a letter from the IRS.  Am I being audited?  What do I do?

A3) First, send me a copy.  I won't be able to tell you anything until I see the letter.  The most common reason for these letters is the IRS received a tax document that we did not include on the tax return.  Maybe that 2-day part-time job that didn't work out, or those two weeks you collected unemployment.  And then you moved and didn't get the year-end tax form.  For the record, the audit rate of returns I prepare has been less than 1%.

Q5) I got a really big refund, and my friend told me that's bad, because the goverment is holding my money interest-free.  I could have invested that money during the year.  Correct? 

A4) Yes - and no.  Look at it this way.  Let's say your refund is $2,500.  So you can get it one of two ways - (a) all at once at the end of the year or (b) change your withholding and get an extra $50 per week in your check.  If you get an extra $50 a week, are you going to save it?  No - you will spend it without even thinking about it.  Americans typically spend 103% of what we earn (sad, but true).  However, get $2,500 all at once and maybe you can afford that new appliance or to get the car fixed.  And interest rates are extremely low right now, so you will get next to nothing if you put it in the bank anyway.  I personally see nothing wrong with large refunds - in my opinion it's a great way to save money wihout realizing it.  Out of sight, out of mind.

Q6) I'm getting married soon.  How much will this save me on my taxes?

A5) It will most likely cost you.  MFJ (married filing jointly) is NOT the best filing status - HOH (Head of Household) is.  The tax code was set up in 1913 before most women were in the work force.  It was never designed for two-income households.

A single person with one kid and income of $25K qualifies for HOH status and an EIC (Earned Income Credit) of over $2250 and their total tax liability is <$200>.  If he/she gets married to someone in identical circumstances, they're now MFJ and no one qualfies for the EIC and their joint tax liability goes up to $350 .  So their combined refund just dropped at least $5000.

Marriage licenses are issued by the County and no agency reports your change in marital status to the IRS that I am aware of.  However, If you change your last name and file from the same address, the government will be expecting an MFJ return.  Even if you're married on December 31st, you are considered married for the entire year.  BTW, if you are legally married but maintain a separate residence and file from that address, you can legally file as unmarried (single or HOH).

Q7) My neighbor has a similar household, similar income, and he/she got as refund $2000 higher than mine.  What did I miss?
A6) There are literally hundreds of variables on tax returns that affect refund amounts.  The only way for me to answer this? - bring me a copy of the other return.  I will compare it with yours and show you exactly why their refund is higher.

Q8) How do I know my tax preparer is legal (registered with the State of CA to prepare taxes)?
A7) Go to this link
here and type in their name.  If they are in the state database, it will say so.  If not, they are not licensed to prepare taxes in the State of CA.

Q9) How do I know if my tax refund will be confiscated by a state or federal agency?
A8) Call the Refund Offset Hotline at (800) 304-3107.  Press "1", "1", and then enter your SSN.  This will provide the information you need.  To the best of my knowledge, tax refunds can only be siezed for unpaid taxes, student loans, child support, or traffic citations (state only).  Tax refunds CANNOT be siezed for private debts, like credit cards or unpaid bills.

Q10) Should I increase my 401(k) contribution at work to save money on my taxes?
A9) Maybe yes, but probably a bad idea.  Read my page on IRA's and 401(k)'s - link is
here.  Then make an informed decision.

Q11) Should I omit my college-age child from my tax return as a dependent so he/she can file independently so they will qualify for more financial aid?
A11) Absolute NOT.  It will not matter.  FASA's rules for dependents are very different from the IRS rules.  Read all about it