Frequently Asked Questions: | Professional Tax & Financial Services

Every financial decision you make will have tax consequences, whether positive or negative. At Professional Tax & Financial Services, we are available to answer questions for our clients year round. We encourage our clients to contact us first to discuss the decisions they need to make, and the effects that those choices will have. In most cases, we can save our clients both time and money simply by talking to us first. Our financial and tax planning guidance is included in the full service we provide. Feel free to call us today to discuss your tax and financial future.


1	IRS Frequently Asked Questions
2	What do I need to bring to my tax appointment?
3	Should I itemize my medical and dental expenses?
4	How long should I keep my tax documents?
5	Is professional tax preparation affordable?
6	What are the tax law changes for 2011?
7	Do I owe estimated taxes?
8	How can I make a million dollars and not pay taxes?

IRS Frequently Asked Questions

What do I need to bring to my tax appointment?

Should I itemize my medical and dental expenses?

How long should I keep my tax documents?

Is professional tax preparation affordable?

What are the tax law changes for 2011?

Do I owe estimated taxes?

How can I make a million dollars and not pay taxes?


1	IRS Frequently Asked Questions For a list of the FAQs on the IRS web site please click here: IRS FAQs return to top
2	What do I need to bring to my tax appointment? For a list of the documents necessary for your tax appointment, please click on the following link: Tax Appointment Checklist.doc return to top
3	Should I itemize my medical and dental expenses? If your medical and dental expenses exceed 7.5% of your adjusted gross income, it may be beneficial to use those expenses as an itemized tax deduction. Add up the totals of your doctor visits, prescription costs, and dental costs for the year, and bring those totals to your tax appointment. return to top
4	How long should I keep my tax documents? You should save both your Federal and State Tax Returns and all of your supporting documents for at least 5 years after the filing of your return. However, we recommend that you keep all W-2’s, Sch. C, Sch. F and K-1’s from partnerships. You may need these forms to compare and verify your Social Security earnings report. There is no statute of limitations for fraud, so if fraud is alleged, the IRS can require supporting documents for all years. Also, never give your original return or documents to anyone, rather, make copies of anything that you need to give to someone else. If someone else is making the copies for you, wait for the copies to be made, and keep the originals in your possession. For a more detailed account of which documents to keep and the length of time to keep them, click here: Records You Should Keep.pdf , How long should I keep Federal tax records? , How long should I keep California State Records? return to top
5	Is professional tax preparation affordable? Yes, it's actually more affordable than one might think. It's our business to understand the complexity of the IRS Tax Code, and to find tax credits and deductions of which the average person is unaware. As a result, we often save our clients much more than the cost of the preparation. We'll do everything possible to maximize your return, and ultimately save you money. In addition, as our client, we are available to you year round to discuss all of your financial decisions. When you consider that almost every financial decision you make will ultimately affect the taxes you pay, how can you afford not to consult with us before you spend your money? Please feel free to call us today for a free tax preparation estimate. return to top
6	What are the tax law changes for 2011? Here are some highlights of the 2011 tax law changes: Current tax rates and certain tax breaks extended for two years. The Tax Relief Act extends the tax rates of 10%, 15%, 25%, 28%, 33%, and 35% for another two years. The new law extends for two years the repeal of the phase-out of personal exemption for certain high-income taxpayers. The new law also extends for two years the repeal of the limitation on itemized deductions for certain high-income taxpayers. Other points of interest: Capital gains and dividends: The Tax Relief Act sets capital gains and qualified dividends tax rates at 0% and 15% for another two years. AMT patch: The new law increases the AMT exemption amounts for two years. The Tax Relief Act sets the estate tax exemption at $5 million per person and $10 million per couple for estates of decedents dying in 2011 and 2012. The new law reunifies gift and estate taxes. The gift tax exemption increases to $5 million per person for gifts made in 2011 and 2012. The new law also caps the tax rate at 35% for estates, gifts, and generation-skipping transfers. The new law provides a choice for estates of decedents who died in 2010 to use the new estate tax exemptions/rates with a stepped-up basis rule, OR to use the existing 2010 law with no federal estate tax but a limit in the amount of basis step-up that is allowed. The new law allows for "portability" of the estate tax exemption, meaning that any unused estate tax exemption of a deceased spouse can be carried over and utilized by the other spouse who dies second. The employee withholding portion of the Social Security payroll tax will be reduced by 2.0% for 2011 (e.g., 6.2% withholding is reduced to 4.2%). Extends for 2010 and 2011 the ability of taxpayers age 70½ or older to exclude from gross income up to $100,000 of qualified charitable distributions. Extension of unemployment insurance benefits for 13 months. *As summarized by Allianz Life Financial Services return to top
7	Do I owe estimated taxes? During your tax appointment your tax preparer will determine whether or not you need to pay estimated taxes. In general, tax payers who owe more than $1000 may be set up for estimated taxes. You will see this information on the letter in your copy of your tax return. If there are no scheduled payments listed on your letter, you do not need to pay estimated taxes. return to top
8	How can I make a million dollars and not pay taxes? Steve Martin has the answer....."You can be a millionaire and never pay taxes! You can be a millionaire.. and never pay taxes! You say.. "Steve.. how can I be a millionaire.. and never pay taxes?" First.. get a million dollars. Now.. you say, "Steve.. what do I say to the tax man when he comes to my door and says, 'You.. have never paid taxes'?" Two simple words. Two simple words in the English language: "I forgot!" How many times do we let ourselves get into terrible situations because we don't say "I forgot"? Let's say you're on trial for armed robbery. You say to the judge, "I forgot armed robbery was illegal." Let's suppose he says back to you, "You have committed a foul crime. you have stolen hundreds and thousands of dollars from people at random, and you say, 'I forgot'?" Two simple words: Excuuuuuse me!!" return to top

IRS Frequently Asked Questions

For a list of the FAQs on the IRS web site please click here: IRS FAQs

return to top

What do I need to bring to my tax appointment?

For a list of the documents necessary for your tax appointment, please click on the following link: Tax Appointment Checklist.doc

return to top

Should I itemize my medical and dental expenses?

If your medical and dental expenses exceed 7.5% of your adjusted gross income, it may be beneficial to use those expenses as an itemized tax deduction. Add up the totals of your doctor visits, prescription costs, and dental costs for the year, and bring those totals to your tax appointment.

return to top

How long should I keep my tax documents?

You should save both your Federal and State Tax Returns and all of your supporting documents for at least 5 years after the filing of your return. However, we recommend that you keep all W-2’s, Sch. C, Sch. F and K-1’s from partnerships. You may need these forms to compare and verify your Social Security earnings report. There is no statute of limitations for fraud, so if fraud is alleged, the IRS can require supporting documents for all years. Also, never give your original return or documents to anyone, rather, make copies of anything that you need to give to someone else. If someone else is making the copies for you, wait for the copies to be made, and keep the originals in your possession. For a more detailed account of which documents to keep and the length of time to keep them, click here: Records You Should Keep.pdf , How long should I keep Federal tax records? , How long should I keep California State Records?

return to top

Is professional tax preparation affordable?

Yes, it's actually more affordable than one might think. It's our business to understand the complexity of the IRS Tax Code, and to find tax credits and deductions of which the average person is unaware. As a result, we often save our clients much more than the cost of the preparation. We'll do everything possible to maximize your return, and ultimately save you money. In addition, as our client, we are available to you year round to discuss all of your financial decisions. When you consider that almost every financial decision you make will ultimately affect the taxes you pay, how can you afford not to consult with us before you spend your money? Please feel free to call us today for a free tax preparation estimate.

return to top

What are the tax law changes for 2011?

Here are some highlights of the 2011 tax law changes:

Current tax rates and certain tax breaks extended for two years.
The Tax Relief Act extends the tax rates of 10%, 15%, 25%, 28%, 33%, and 35% for another two years.
The new law extends for two years the repeal of the phase-out of personal exemption for certain high-income taxpayers.
The new law also extends for two years the repeal of the limitation on itemized deductions for certain high-income taxpayers.

Other points of interest:

Capital gains and dividends: The Tax Relief Act sets capital gains and qualified dividends tax rates at 0% and 15% for another two years.
AMT patch: The new law increases the AMT exemption amounts for two years.
The Tax Relief Act sets the estate tax exemption at $5 million per person and $10 million per couple for estates of decedents dying in 2011 and 2012.
The new law reunifies gift and estate taxes. The gift tax exemption increases to $5 million per person for gifts made in 2011 and 2012.
The new law also caps the tax rate at 35% for estates, gifts, and generation-skipping transfers.
The new law provides a choice for estates of decedents who died in 2010 to use the new estate tax exemptions/rates with a stepped-up basis rule, OR to use the existing 2010 law with no federal estate tax but a limit in the amount of basis step-up that is allowed.
The new law allows for "portability" of the estate tax exemption, meaning that any unused estate tax exemption of a deceased spouse can be carried over and utilized by the other spouse who dies second.
The employee withholding portion of the Social Security payroll tax will be reduced by 2.0% for 2011 (e.g., 6.2% withholding is reduced to 4.2%).
Extends for 2010 and 2011 the ability of taxpayers age 70½ or older to exclude from gross income up to $100,000 of qualified charitable distributions.
Extension of unemployment insurance benefits for 13 months.

*As summarized by Allianz Life Financial Services

return to top

Do I owe estimated taxes?

During your tax appointment your tax preparer will determine whether or not you need to pay estimated taxes. In general, tax payers who owe more than $1000 may be set up for estimated taxes. You will see this information on the letter in your copy of your tax return. If there are no scheduled payments listed on your letter, you do not need to pay estimated taxes.

return to top

How can I make a million dollars and not pay taxes?

Steve Martin has the answer....."You can be a millionaire and never pay taxes! You can be a millionaire.. and never pay taxes! You say.. "Steve.. how can I be a millionaire.. and never pay taxes?" First.. get a million dollars. Now.. you say, "Steve.. what do I say to the tax man when he comes to my door and says, 'You.. have never paid taxes'?" Two simple words. Two simple words in the English language: "I forgot!" How many times do we let ourselves get into terrible situations because we don't say "I forgot"? Let's say you're on trial for armed robbery. You say to the judge, "I forgot armed robbery was illegal." Let's suppose he says back to you, "You have committed a foul crime. you have stolen hundreds and thousands of dollars from people at random, and you say, 'I forgot'?" Two simple words: Excuuuuuse me!!"

return to top

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