When I was a lot younger, I looked for ways to save money; one way was to build home improvements myself. For example, I built a closet, closed off some windows, and added foam insulation in the “sleeping porch” across the back of our home so our son would have a bedroom that was reasonably warm in the winter. It also included Thermax shutters on the remaining windows. That resulted in things that created problems later on.
Fast-forward to 1998. Now we were more interested in a remodel “done right” so we hired professionals to help us through the process. While we were still involved in making myriad decisions, we were free to use our time for other pursuits. I still had my office at home, and some of you will remember meeting in the midst of the construction dust. Since that only involved the main level and the garage, we chose to continue to live in the home!
In 2008 we began a second remodel, primarily involving the second floor (see picture). This time we chose to move to a town home during the construction — much more pleasant!
So, what does that have to do with tax return preparation? When you are young, without a lot of tax issues, it may take only an hour or so to prepare a Form 1040-EZ or Form 1040A. Once you own a home, you graduate to the more complex standard tax form, the 1040, with one or more additional schedules. The time comes when you realize you are spending a lot more time getting the return done, especially if you are uncertain how an item should be treated; you have to spend time researching the tax law. You begin to worry that you might not be handling things correctly, and fear that one day that dreaded letter from the IRS arrives.
I used a paid preparer once. I had just gotten my Ph. D. in Environmental Chemistry from the University of Colorado, and was hired by Westminster College in Salt Lake City, Utah to teach chemistry and other physical sciences. I thought to myself, “I know how to do the federal and Colorado tax returns, but I’m not sure about Utah.” So I had one of those come-to-your-home preparers to do our tax returns.. This was well before the days of computer processing, so the return was done on paper. Afterwards, as I looked at the returns, I realized, “I could have done that myself, too!” But it took nearly another decade before I had changed careers and began preparing tax returns for a living.
The people who seem to have the hardest time giving up preparing their own returns are engineers and scientists (as was I before my career change!). After all, “it’s only numbers!” Would that it were so simple. Once you put the figures in the tax software, it will come up with a tax “bottom line.” But are you putting them in the best place? That’s the part of taxation that isn’t "just numbers."
When I started as a CPA over 30 years ago, tax laws changed about every two years. But now it seems that almost every bill that Congress passes has an impact on taxes. I have to keep up with all those changes, at least to the extent of knowing how to research a specific problem in light of the tax code. Many of the rules aren’t “logical.” They just “are.” If you’ve grown up with alcoholic parents, you know that you had to follow their rules whether they make sense or not; Congress is the country's alcoholic parent! Mr. Spock wouldn’t make a good tax accountant.
2. Some clients will need other services, which may result in a higher price. These can include: extending your return to October; additional state returns; calculation of actual 2020 estimated tax for each quarterly payment, based on the information you provide; preparing Form 5500-EZ for a retirement plan (preparing Form 5500 will be a separate engagement with your business); preparing tax returns for your minor children or retired parents (income only from social security, retirement plans, interest, dividends, and capital gains); and gift tax returns.
I will be available to answer your inquiries on specific tax matters and to consult with you on income tax and business planning. Because of the substantial reforms in the tax law over the past decade, tax planning has become more defensive. You need to be more concerned with the adverse consequences of doing (or not doing) particular actions. Often these consequences do not show up for several years. Examples of this are disqualifying transactions with pension plans(such as excess contributions); misclassification of workers as non-employees; and changes in the ownership of a partnership. I suggest that you consult with me before taking a new course of action, so as to become aware of the most desirable way to structure a transaction and to avoid potential problems.
For tax planning services, I may require you to sign a Use Consent, permitting me to use your tax return information in connection with tax planning services. This is a new IRS requirement. If you want me to discuss your tax circumstances with a third party (i.e., investment advisor), I may also require you to sign a Disclosure Consent, permitting me to disclose your tax return information to the third party (this needs to be specific to the circumstance); this consent is also part of the new IRS requirement.
The taxing authorities might audit your returns or send you other notices that require a response. You have the right to appeal anything in the audit with which you disagree.
When you receive notices from government agencies, I will respond to them on your behalf if you have provided a signed power of attorney (Form 2848 or equivalent) regarding the tax issue; otherwise, I will assist you in responding appropriately.
If you are audited, I will provide one or more of the following services:
Phone: (303)443-1804
Fax: (720) 489-3772
Email: tom@tomhealycpa.com
Address: 1015 Pine St, Boulder, CO 80302-4022
Colorado CPA certificate #4781