Frequently Asked Questions
1. What is an Enrolled Agent?
An Enrolled Agent (EA) is a federally licensed tax practitioner who has technical expertise in the field of taxation and is empowered by the U.S. Department of the Treasury to represent taxpayers for audits, collections and appeals before all administrative levels of the Internal Revenue Service.
For more information: http://www.naea.org/memberportal/Resources/ForTaxpayers/whatis_EA.htm
2. How long do I have to keep old tax returns and documents/what is a good records retention policy?
According to the IRS, taxpayers must keep old tax returns and other tax records for as long as they may be needed for the administration of any provision of the tax code.
- Normal Audit Limit-3 Years
- Audit limit if gross income is understated by 25% or more-6 years
- Time limit for deducting worthless securities/bad debts-7 years
- Audit limit if no return is filed-no limit
- Audit limit if fraud is committed-no limit
For more information http://maryjowalker.com/wp/2011/08/storing-tax-records-how-long-is-long-enough/
3. How do I calculate my estimated taxes?
When figuring your estimated tax for the current year, it may be helpful to use your income, deductions, and credits for prior year as a starting point. Use your prior year’s federal tax return as a guide. You can use the worksheet in Form 1040-ES (PDF) to figure your estimated tax. You will need to estimate the amount of income you expect to earn for the year. If you estimated your earnings too high, simply complete another Form 1040-ES worksheet to refigure your estimated tax for the next quarter. If you estimated your earnings too low, again complete another Form 1040-ES worksheet to recalculate your estimated tax for the next quarter. You want to estimate your income as accurately as you can to avoid penalties.
4. How do I find out when I will receive my Federal and/or State refund(s)?
5. What tax deadlines should I be aware of?
- Filing deadline for an Individual Income Tax return: April 15th (Depending on holidays)
- Filing deadline for an Individual Income Tax return on extension: October 15th (depending on holidays)
- Filing deadline for Corporate and Partnership Tax Returns: March 15th (depending on holidays)
- Filing deadline for Extension for Corporate and Partnership Tax Returns: September 15th (depending on holidays)
- For Quarterly Tax filings check our website
- For changes, check out the Filing Due Date chart on our “Helpful Links” page
6. Do I need to charge sales tax?
Visit the following link to determine if your business’ services and or products are subject to sales and use tax: http://www.ct.gov/drs/cwp/view.asp?a=1477&Q=269930&drsPNavCtr=|40829|#40952
7. What is the standard mileage rate?
Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 53.5 cents per mile for business miles driven, down from 54 cents for 2016
- 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2015
- 14 cents per mile driven in service of charitable organizations
8. What if I can’t pay my Federal Taxes?
Your return is done — Send it in. Don’t hold it just because you owe money that you can’t pay.
You can’t go to jail because you don’t have the money to pay your tax bill, but you can go to jail for not filing.
If you file and don’t pay in full, IRS computers will automatically send you a letter asking for the tax due and any interest from the due date.
What if you can’t find the cash? You can ask for a streamlined installment plan. You will need to submit an Installment Agreement Request using Form 9465 (.pdf download). The form comes with instructions. Additional information can be found at IRS Topic 202 or in Publication 17 (.pdf download). Fill the form out and send it to the IRS for review and approval.
9. What are the ramifications of taking an early distribution from my IRA?
Distributions from an IRA, 401(k) or other retirement plan generally must be included as part of your taxable income. Also, withdrawals from a retirement account may be subject to an additional tax of 10% if the distribution is made before you reach age 59.5 years old.
For more information about your particular situation contact the staff at MJW EA & Company LLC.
Please email Tracey Brownell firstname.lastname@example.org or call 203.245.6175
10. What do I need to know about hiring household employees?
If you pay a household employee cash wages of more than the amount specified by law ($1600.00) in a tax year, you generally must withhold social security and Medicare taxes from all cash wages you pay to that employee. (Cash wages include wages you pay by check or money order.) Unless you prefer to pay your employee’s share of social security and Medicare taxes from your own funds, you should withhold a certain percentage set by law from each payment of cash wages.
For more information http://maryjowalker.com/wp/2011/08/hiring-household-employees-2/
11. What are my rights as a taxpayer?
Click here for the Taxpayer Bill of Rights.
12. What types of expenses can I itemize?
If you itemize deductions on your tax return, here is a quick refresher on the guidelines.
Types of expenses that you may be able to itemize:
Real estate and/or car taxes (property)
State estimated taxes
Certain non-reimbursed employee expenses – it is important to review your company’s reimbursement policy
Items count as expenses in the year they are paid. To clarify, “paid” means:
Checks: date check is issued
Credit cards: date expense is charged (even if credit card bill is not paid)
Cash: when exchanged
13. What do I do if I get a Form W-9 to fill out?
You might receive requests to fill out a Form W-9 especially in December and early January. The reason is that small business owners are getting their paperwork ready so they can send out Form 1099-MISC to report payments made to independent contractors. You should fill out the form as appropriate, using either your EIN or SSN. If you are a single member LLC or a sole proprietor, you should use your name on Line 1, d/b/a your business name and your SSN.
14. How do I know how much my charitable donations (for example, to Goodwill or the Salvation Army) are worth?
Many sites have a value calculator. Here is one for the Salvation Army you might find helpful!
15. Did you e-file my return?
It’s not our policy to confirm or alert our clients that their returns have been e-filed and accepted. We are required by law to process a signed e-file authorization form within 3 days of the date on the signed e-file form, and we typically file the same day the e-file form is provided to us. We are happy to provide confirmation of e-filing upon request.
16. What is the minimum wage?
As of January 1st, 2017, the minimum wage will be $10.10.
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