DO YOU KNOW WHERE YOUR TAX
RETURN INFORMATION IS?
Q:I gave my personal information to a big accounting firm,
aren't they doing my tax return right in their local office?
A:
Basically, here's the deal. The accounting firm scans all the source documents and emails
them to the Indian contractor, who somehow figures this all out and inputs
the data into tax preparation software. The cost for a business return is $125.
The accounting firm charges you $1,800, pocketing a nice profit.
Apparently, many of the international and regional CPA firm
have been doing this for the last 2 to 3 tax seasons. Their excuse is that
they cannot hire sufficient staff to do the work. (The fact that $125 is
perhaps one-tenth the cost of using local staff never seems to come up.)
Q:What is the problem with unknown third-world subcontractors preparing my tax return?
A: With identity theft, do you want
to send your social security number over the internet to some unknown person?
Do you want to suddenly discover that your "clone"
appeared in Singapore and has incurred thousands of dollars of debt using your
name, address and social security information which your accountant "outsourced" to Singapore?
Why aren't accounting firms telling
clients that they are sending their private financial information over the
Internet to countries where identity theft is a major cottage industry?
Q:Does Acxtax LLC use third world contractors?
A:No, our returns are prepared right here in our USA offices!!!
Answers to Your Most Frequent Tax Questions
Q: What changes to the tax law
affect people still preparing their tax returns for 2003?
A: The IRA contribution
deduction is increased from $2,000 to $3,000. Taxpayers
over age 50 may make an additional $2000 extra for 2003.Your
IRA can be funded until April 15 for last year's taxes.
For 2003, you can defer $12,000 into your 401(k) plan.
Q: What are other overlooked deductions?
A: Some of the typically missed deductions are:
- Teachers can deduct $250
of the money they spend on supplies.
- Self-employed business owners may
deduct 100% of their health insurance premiums.
- The gift tax exemption is increased
to $11,000 a year tax-free. It used
to be $10,000. This permits a husband and wife each year to give
away $22,000 to each child, grandchild or other person without
paying gift tax.
- Grandparents wanting to help pay for their grandchildren's education
can pay the tuition and other expenses directly to
the school or educational institution. That payment
does not count against the gift tax exclusion. Grandparents may
also use the gift tax exclusion to put contributions into an education
savings plan such as a 529 plan.
- The federal estate tax exemption increased to $1
million. That means people do not have to pay taxes
on the first $1 million of an estate. However, the State of New
Jersey estate tax only exempts $675,000, resulting in a $1 million
NJ estate paying $33,000 in New Jersey Estate taxes.
Q: What are common mistakes
people make when preparing their own tax returns?
A: Many people try to use Turbo Tax without understanding
the questions they are answering, and the tax law implications. Frequently,
they may miss out on tax deductions and benefits.
Also, people may not realize that in addition to your principal personal
residence, mortgage interest may be deducted on a second
personal residence, including vacation homes. Real
estate taxes on any property are also deductible.
Q: Taxpayers can deduct personal employment related
expenses more than 2 percent of their adjusted gross income. What
are some of the deductions typically missed?
A: Tax preparation fees,
attorney's fees for tax planning and estate
planning, and union dues are deductible . Required clothing for work,
such as uniforms and safety shoes, are also deductible.
Fees for IRA accounts and safety deposit boxes are
deductible. You want to include everything you can - anything
you do for your job that is not reimbursed by your employer.
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