What should you ask of your San Diego tax preparer and when is it important to look for help with preparing your taxes? Let’s begin with the last question first. If your income falls below $64,000 the IRS provides a free filing option, and that’s probably best for those situations. If you are single or married, and receive a single W-2 and your retirement account or 401(k) is the primary deduction or investment then the off-the-shelf “turbo” solution should work just fine.
Purchasing a home in San Diego is a substantial investment and this is one of the areas where US taxpayers begin to need assistance. However, some of the primary considerations for hiring the experienced tax preparation team at Allen Barron includes but is not limited to:
- You earn more than $150,000 or have an S-Corporation
- You own your own business or an interest in a partnership, LLC or corporation
- You deduct business expenses without having a separate business entity (i.e. a hobby or a business you haven’t registered yet)
- You have offshore bank accounts or investments
High wage earners are one of the IRS’ favorite audit targets. It makes a little sense, as the IRS faces staffing issues due to budget cuts they are targeting those with higher income. The amount they can generate from each IRS audit is substantially increased. This is especially true for those with an S-Corporation, as your “basis” must be recalculated each year and most US taxpayers and off-the-shelf “turbo” software solutions do not accurately handle this complex calculation.
The IRS is cracking down on partnerships, and LLCs who report income as a partnership. The US legislature recently changed the tax code relating to partnerships and the IRS is taking a much closer look at how partnership income is calculated, and how it is reported at the individual partner level. There is a separate IRS audit group targeting these returns alone. Business ownership and K1’s open the door to a variety of IRS audit avenues, and your tax returns should be carefully prepared to avoid IRS investigation or audit.
The presence of offshore bank accounts, FBAR preparation and filing, disclosure of previously unreported or under-reported offshore accounts and income and FBAR compliance is one of the hottest areas of focus for the IRS. The reality check here is the number of CPA’s and tax preparers who are unprepared to advise and counsel their clients and who prepare returns that are simply incomplete or incorrect altogether triggering an IRS audit.
Allen Barron provides extensive business, international and domestic tax and accounting expertise to our tax preparation clients. We provide accurate thorough insight for our clients while extending something a San Diego tax preparer or CPA cannot offer: the protections of the attorney-client privilege.
What you should ask your San Diego tax preparer is: “What accounting education, certification and expertise do you have and what is your experience in business, international and domestic tax and accounting in general?” Most simply take a few courses and offer these services part of the year.
You see, the most important part of your return is the final paragraph just above your signature where you affirm that everything contained within your return is accurate and complete under penalty of perjury. Your San Diego tax preparer should sign as well. Will they sign your tax return? Do you understand every single item contained within your return and are they able to explain it to you? Is it worth the risk to save a dollar or two and risk an IRS audit when you have the type of income and assets the IRS and State of California wish to target?
We invite you to contact Allen Barron for a free consultation at 866-631-3470. If you should be using the IRS’ free service or an off-the-shelf “turbo” solution, we’ll tell you!