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MTX Frequently Ask Questions

Frequently Ask Questions

Here are the answers to some of the most Frequently Asked Questions our firm receives. PLEASE NOTE: The information found on this website is general in nature and may not apply to your situation. Therefore, do not rely on the information on this website ALONE. For specific advise, please call us at (818)772-2277 or email us your specific question to thomas@mtxaccounting.com Thank you.

What services do you provide?
What are your hours and are you a seasonal company?
What size clients do you serve?
What size clients do you accept?
Do you service clients outside of California?
How do you charge for your services and how does your cost compare to other tax preparation firms?
Do you work with Start-up Companies?
I want to start a new business. Can you tell me which type of business I should form?
What do I need to do to start a new business?
Should I use a lawyer or an accountant to incorporate my business?
Do you offer free business consultations?
What is a reasonable wage for S corporation owners?
Which items qualify for a cafeteria plan deduction?
How do colleges calculate student financial aid?
Can I deduct student loan interest?
Do I need to visit your office to have my taxes prepared?
Can I ever save tax by filing a separate return instead of jointly with my spouse?
How are Limited Liability Companies (LLCs) taxed?
How do I know when certain taxes are due?
What is the Social Security wage base and rate?
What is the standard mileage rate?
What is the unified credit shelter amount?
What is the annual gift tax exclusion?
When should I give you my tax information?
I prepare my own tax return, why use your services?
How can I pay my taxes by credit card and which credit cards are accepted?
Is the IRS storing credit card information?
Is there a fee charged for using by credit card to pay my taxes?
Can I pay my balance due by phone or Internet with a credit card if I'm a 'married filing joint' filer?
What if I owe and cannot pay the full balance due on my taxes?
What is a Form 9465, Installment Agreement Request?
Where can I get additional information about IRS e-file?
If I owe, how do I pay my taxes electronically?
What do I gain by using IRS e-file?
What is an Authorized IRS e-file Provider?
What is the Personal Identification Number (PIN)?
Do I really get my refund faster?
Should I wait until April 15 to file electronically if I owe taxes?
Do I have a greater chance of getting audited by the IRS if I use IRS e-file?
How do I know that the IRS really has my return?
Can my state tax return be e-filed with my Federal return at the same time?
If my return is electronic, how do I sign it?
What happens if my return is filed electronically, I am receiving a refund, and I owe taxes from previous years?
Is there any non-tax record that I should keep?
Should I keep my old tax returns? If so, for how long?
What pieces of paper do I need to keep in order to do my taxes?
Are QuickBooks or Peachtree good products?
By using QuickBooks, can I reduce my fees?

What services do you provide?

We prepare all tax returns including individual, corporation, LLC and LLP, non-profit, estate and trust, partnership, payroll, sales tax, property tax, and other taxes. We offer bookkeeping and complete payroll processing. We can prepare your financial statements and assist you with managing your business. We also provide computer and information consulting utilizing QuickBooks, Quicken, Peachtree, Microsoft Excel, Microsoft Access, Microsoft Outlook, ACT! and many other office automation/accounting/contact management programs.

What are your hours and are you a seasonal company?

We are open all year round from 8am to 5pm Monday through Friday. Closed Saturday and Sunday.

Extended hour during tax season from 8am to 6 pm and Saturday from 9am to 1pm. appointments may be available by appointment.

What size clients do you serve?

We provide services to home based businesses, professionals, and small convenience stores, as well as larger businesses.

What size clients do you accept?

We have the capacity to accomodate our clients and no one is too small or too large to be considered important in our office.

Do you service clients outside of California?

Our practice services clients in many states. We have several business and tax clients in places outside California.

How do you charge for your services and how does your cost compare to other tax preparation firms?

Fees vary based upon the work being performed. It is hard to quote without knowing the nature of you business, therefore, we offer you a free cost analysis of your business. on or documentation relating to your questions. BUSINESS - STARTUPS

Do you work with Start-up Companies?

Yes! Many of our clients are just starting in business. We will lead you through the necessary governmental forms. Through our networking, we can also assist in finding you other necessary professionals to deal with (lawyers, insurance agents, mortgage brokers, etc.) throughout the state.

I want to start a new business. Can you tell me which type of business I should form?

Yes. When setting up a new business, it is crucial to set up the right type of business, such as corporation, S corporation, limited liability company, limited liability partnership, partnership, sole proprietorship, etc. Our consulting services will help you form the right type of business based on your unique situation with consideration given to liability issues and tax advantages.

What do I need to do to start a new business?

Typically, most people will go to their lawyer first, get the business set up and then contact an accountant. We would rather that you contact us at the beginning. There are many different kinds of companies and we can help you select the best one for the kind of company that you will be setting up. Then we will continue to help you with payroll, tax returns, monthly accounting, financial statements to whatever degree you need.

Should I use a lawyer or an accountant to incorporate my business?

Although lawyers can get the paperwork together to make your incorporation happen, they might not know all the different tax laws that can apply to the different kinds of incorporations. Therefore, we suggest you see an accountant first to find out exactly which kind of incorporation you should pursue. Then have either your accountant or the lawyer finish the paperwork.

Do you offer free business consultations?

Yes, we offer a free hour consultation for businesses. The consultation is to gather information about you and your business, while you find out more about us. We can usually answer a few questions at that time and determine if you have done the necessary registrations and filings. We request that you bring your last two income tax returns and financial statements (if any). Also bring anything else that you may have a question on. BUSINESS - GENERAL

What is a reasonable wage for S corporation owners?

Ideally, the best way to set pay is to use an amount comparable to an individual being paid similar rate in your industry. Otherwise, I use a standard rule of 70\30. Basically, 70% of income available to owners should be taken as wages and the other 30% should be taken as dividends.

Which items qualify for a cafeteria plan deduction?

The main items consist of Qualified dependent care costs, disability income * accidental insurance, group-term life, dental, & health insurance premium costs, and medical cost not covered by insurance. Any unused amounts in a particular category are lost by the employee and revert to employer by the end of the plan year. EDUCATION

How do colleges calculate student financial aid?

Colleges calculate student financial aid awards by calculating the college’s cost of attendance (COA) and then subtracting the expected family contribution (EFC). Any remaining amount may be funded with financial aid. Other considerations are how early the financial aid application is filed and the particular school’s available financial aid resources.

Can I deduct student loan interest?

Since personal interest is generally non-deductible must meet several tests: You must be the person liable on the debt and the loan must be for education only. Your income can't exceed $130,000 on a joint return or $65,000 on a single return; married couple filing separately can't deduct. You can't deduct if you're claimed as a dependent. TAXES - GENERAL

Do I need to visit your office to have my taxes prepared?

It is not necessary to visit our office. Many clients utilize the mail or express services or email to send their information to us. For new clients, we encourage a meeting so that we can discuss your unique tax situation.

Can I ever save tax by filing a separate return instead of jointly with my spouse?

You sometimes may benefit from filing separately instead of jointly. Consider filing separately if you meet the following criteria: One spouse has large medical expenses, miscellaneous itemized deductions, or casualty losses. The spouses' incomes are about equal. Separate filing may benefit such couples because the adjusted gross income "floors" for taking the listed deductions will be computed separately.

How are Limited Liability Companies (LLCs) taxed?

A single-owner LLC defaults to being taxed as a Sole Proprietorship. Income/loss from the LLC is reported on the owner’s personal income tax return. A multi-member LLC defaults to being taxed as a Partnership. A Partnership tax return must be filed. The profit or loss is then reported on the owners’ personal tax returns. Any LLC can elect to be taxed as a corporation. To do so, one must file an election within 75 days of creating the LLC.

How do I know when certain taxes are due?

You can give us a call or check out the Due Date Calendar on this website.

What is the Social Security wage base and rate?

The wage base is $87,000 for 2003, up from $87,000 in 2002. The FICA rate remains the same: 7.65% for employees and 15.3% for self-employed individuals. The Social Security portion is 6.2% of wages up to the wage base. The Medicare portion is 1.45% (2.9% for self-employed) of wages with no ceiling.

What is the standard mileage rate?

The standard rate is 36.0 cents/mile in the year 2003. The rate was previously 36.5 cents/mile for 2002 and 34.5 cents/mile for 2001.

What is the unified credit shelter amount?

The applicable credit amount for estates of decedents dying during 2002 or 2003 is $345,800, which would shelter $1,000,000 from gift and estate taxes. For 2004 and 2005, the credit increases to $555,800, sheltering $1,500,000 from estate tax, however, for gift tax purposes, the exclusion remains at $1,000,000.

What is the annual gift tax exclusion?

The annual exclusion is $11,000 for 2002 and 2003, per donee, with an annual maximum of $22,000 per donee applicable to spouses who utilize gift splitting. Additionally, there is an unlimited exclusion for payments of tuition and medical expenses.

When should I give you my tax information?

You should bring all your information in as soon as you have it all together. The sooner you bring it in to us the better chance we have at making sure we've done the best possible job for you.

I prepare my own tax return, why use your services?

To answer the following questions: Did I take all the deductions to which I’m entitled? Did I take the available tax credits? Did I go to a tax course in the past 12 months? We find that many self-prepared returns have errors and/or are lacking in all the deductions that can be taken. TAXES - PAYMENTS

How can I pay my taxes by credit card and which credit cards are accepted?

Credit card payments can be made by phone (1-8002PAY-TAX or 1-888-ALLTAXX, toll free) or Internet (www.officialpayments.com or www.1888ALLTAXX.com) using Discover, American Express, or MasterCard. You will be provided a confirmation number at the end of the payment transaction and your credit card statement will provide confirmation of your electronic payment. The payment and return are reconciled based on the social security number entered and type of tax selected during the transaction.

Is the IRS storing credit card information?

No. IRS does not have access to credit card numbers or directly participate in the credit card transactions. The IRS relies on private credit card processors to verify the validity of the card and line of credit. The processors forward the appropriate tax payment information to the IRS.

Is there a fee charged for using by credit card to pay my taxes?

The company that processes your credit card payment charges a convenience fee. You are informed of the convenience fee amount before you authorize the payment. The fee is in addition to any charges, such as interest, that may be assessed by your credit card issuer.

Can I pay my balance due by phone or Internet with a credit card if I'm a 'married filing joint' filer?

Yes. Just be sure to enter the Social Security number of the first taxpayer listed on the return's pre-printed mailing label or postcard. This is usually the taxpayer listed on the return.

What if I owe and cannot pay the full balance due on my taxes?

The tax preparation software used by our firm can allow you to make partial payments. In this case, you can make a payment for less than the balance due amount on your return. If you cannot pay in full by April 15, you can file Form 9465, Installment Agreement Request.

What is a Form 9465, Installment Agreement Request?

This form requests an installment agreement to allow you to make a predetermined series of partial payments after April 15. Regardless of how you pay, you are responsible for paying the amount of tax due by April 15 of each year or you will be subject to late payment penalties and interest. TAXES – E-FILING

Where can I get additional information about IRS e-file?

You can visit the IRS website at www.irs.gov - or feel free to call our offices to ask us questions as well (734-429-7172).

If I owe, how do I pay my taxes electronically?

You can e-pay by credit card. If you e-pay by credit card, you delay out-of-pocket expenses and may earn miles, rewards or money back from you credit card issuer. Payment by check or money order is acceptable. If you do owe money, we will provide you with a voucher and addressed enveloped to mail your check into the IRS. Your return can be e-filed at any time before April 15, and then you can mail your payment in later - as long as it is postmarked on or by April 15.

What do I gain by using IRS e-file?

Accuracy! Security! Electronic Signatures! Proof of Acceptance! Fast refunds with direct deposit! Electronic Payment Options! Federal/State e-file! Only IRS e-file offers these advantages.

What is an Authorized IRS e-file Provider?

An Authorized IRS e-file Provider is a tax professional or firm that is accepted into the IRS electronic filing program. One type of Authorized IRS e-file Provider is an Electronic Return Originator (ERO). An ERO is a person or firm that taxpayers entrust with tax information for the purpose of filing income tax returns electronically to the IRS.

What is the Personal Identification Number (PIN)?

The PIN allows you to personally sign your electronic tax return using a five-digit number. The PIN serves as your signature on your tax returns. Our firm will have this form all filled out for you when you come to pick up your returns or they are mailed to you. All we need you to do is sign the form for us to keep on file and then we are able to e-file your returns.

Do I really get my refund faster?

With IRS e-file you get it back in half the usual time. It's even faster and safer if you have your refund deposited directly to your bank account in as few as 10 days. Ask us for the estimated date of deposit. For more information about Direct Deposit, go to the Financial Management Service (FMS) web site, www.fins.treas.gov/eft/.

Should I wait until April 15 to file electronically if I owe taxes?

No. You can e-file your return as soon as it is completed. Then send your payment in on or before April 15. We will give you a payment voucher and addressed envelope to make sure it goes to the correct IRS center.

Do I have a greater chance of getting audited by the IRS if I use IRS e-file?

No. The chance of an audit of an e-filed return is no greater than with a paper return.

How do I know that the IRS really has my return?

The IRS notifies your Authorized IRS e-file Provider within 48 hours of transmission that your return information was received. If the IRS detects any errors, it sends a message back to our firm indicating the error. Our firm will correct the error and notify you to let you know what the error was. We will then retransmit your returns to the IRS.

Can my state tax return be e-filed with my Federal return at the same time?

There are 37 states and the District of Columbia currently participating in the IRS e-file program. Some of these states have returns that can't be filed electronically unless it is with the Federal return. Oregon and California are two of them. Other states will be filed as independent states - meaning that they can be filed without the Federal return attached to it.

If my return is electronic, how do I sign it?

The most convenient way for you to sign your electronic return is to use a Personal Identification Number (PIN). It's completely paperless! We’ll have you sign a document that shows that you agree with the numbers in the return and are allowing us to e-file your return for you. The signed forms stay at our firm for four years.

What happens if my return is filed electronically, I am receiving a refund, and I owe taxes from previous years?

The amount owed on back taxes is automatically deducted from your refund just as if you filed a paper return. RECORD KEEPING

Is there any non-tax record that I should keep?

There are other records you should keep, even though they don't appear to have any use for your tax returns. Family documents, certain medical records, insurance policies, records of major purchases, are just a few examples. These documents will be needed in the case of any emergency that may arise.

Should I keep my old tax returns? If so, for how long?

Yes, you should keep your old tax returns for at least 7 years. When a return contains information pertaining to the basis of property owned, it should be kept until that property is sold. One of the benefits of keeping your tax returns from year to year is that you can look at last year’s return while preparing this year’s. If you do throw out an old return you may fill out form 4506, Request for Copy or Transcript of Tax Form, and send it to the IRS service center where you filed your return.

What pieces of paper do I need to keep in order to do my taxes?

Keep detailed records of your income, expenses, and any other information you report on your tax return. A good set of records can help you save money when you do your taxes and will be a trusty ally in case you are audited. COMPUTER APPLICATIONS

Are QuickBooks or Peachtree good products?

QuickBooks and Peachtree can help you with your small business accounting, but they cannot think for you. The software has to be set up properly from the beginning or you will have problems. We find that by setting it up yourself, it can cost you more in accounting fees because it takes longer for us to resolve those errors. We advise that if you are going to use one of these products you have your accountant help you set it up. We can help you with this process.

By using QuickBooks, can I reduce my fees?

Our experience shows us that if you know something about accounting AND your computer software is set up properly from the beginning, it is possible that we don't need to spend as much time on your accounting. But in some cases, the initial set up was not done properly and we end up spending more time 'cleaning up' the errors than if we had just entered the detail from the beginning.

 
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