We want to be clear that prospective tax planning and tax advice issues not on the 2022 tax return that may impact future returns are not included in the 2022 tax preparation fee. This work will be billed separately. Such prospective planning includes but is not limited to:
2. Future sale of rental property or primary home with capital gain and recapture issues;
3. Starting or selling a business;
4. Future stock/crypto/asset transactions or sales;
5. Retirement tax planning;
6. Withholding allowance certificates with adding/changing employment;
7. IRS audits, letters, or notices;
8. Residency requirements/planning for moving out of state.
Please email us when these conditions arise and we will work out arrangements and terms before commencing work on the issue.
As with prior years, your return cannot be efiled until you review the tax returns, sign the efile 8879 forms (giving us permission to efile your state and federal tax returns), and pay the invoice in full.
Last year, we started a new program where we actively monitor your IRS account. We are again offering this tax year IRS account monitoring service at an additional cost of $199/year.
With this service, we are frequently able to detect pending audits months in advance of the issuance of any notices. We also receive duplicate notices in the mail for our clients a few days before you receive them. The first year of the program was highly successful. We were able to discover and address several correspondence audits and save several hundred to several thousand dollars of penalties for our subscribed clients. Essentially, we fixed the problem before the IRS could impose any penalties. We were able to be proactive, rather than reactive.
If you are interested in this monitoring program or want more information, send us an email.
1099-MISC from the State of California for Middle Class Tax Refunds
In an online FAQ dated December 2022, the FTB announced that it would be sending out IRS FORMS 1099-MISC to taxpayers who received $600 or more from the state’s Middle Class Tax Refund. The state guidance states that the income from this program is NOT taxable to CA but may be taxable federal income. As of this writing, the IRS has not provided guidance as to the taxability of that income. The fact that the state will be sending out MILLIONS of 1099-MISC forms to taxpayers and providing that same form to the IRS indicates that it is QUITE POSSIBLE the income will be taxable.
In an abundance of caution, when providing your tax documents to us, please make sure to provide the 1099-MISC you receive from the state of CA.
Please note:
This is NOT the same form you get each year with the amount of your state tax refund from the prior year or the form reporting unemployment/paid family leave income (1099-G). We need both forms, if received, to properly calculate your federal taxable income.
In summary, the amount of reporting forms that are issued continue to rise and WILL continue to rise in the coming years. Please be sure to include the 1099-MISC and 1099-G (state tax refund or EDD income reporting) to avoid a nasty bill from the IRS next year.
SmartVault Best Practices
Our firm spends a considerable amount of time and money each year to keep up with the most secure and advanced tax systems available. Smartvault continues to be an industry leader with encrypted document exchange in the tax preparation field. A couple of things to make the Smartvault experience even better for both you, the client, and us:
1. Please do not send multiple, separate scans. If you can scan into the least number of files possible, it allows us to efficiently go through the file.
2. Only scan ONE DOCUMENT PER PAGE. Putting 3 different W-2’s on one page is a great way for us to miss something. One document per page ensures that we are seeing each document.
3. To avoid any delay, send only ADOBE ACROBAT .pdf files. Sending picture files or Apple photo files don’t work. They pixel out when we try to enlarge them, and the file sizes are huge. Please no .jpg, .jpeg, .tiff, HEOC, .png, or any other file type except .pdf. The file type is listed next to the file name in Smartvault.
4. When you upload the file, wait a few minutes to ensure that the file has uploaded. If you close out the window before the file uploads, it will cause an error. If you see a green arrow next to the file, it is still uploading or it failed—give it some time or reload that file. If you see a white box with a red symbol next to the file name, the file uploaded properly.
5. Once your file is uploaded, please open the file, ensure all pages are there (i.e. no double-page scan problems) and all pages are readable. Each year we get many emails stating, “I can’t read the pages, but maybe you can”. I ASSURE YOU WE CANNOT READ THEM IF YOU CANNOT READ THEM. We both share the EXACT SAME VIEW—that is the nature of the shared file---we see exactly what you see. If you do not see the file, we can’t see the file either. If you can’t read the pages because of a poor-quality scan, neither can we.
6. It is always a good practice to send an email to us letting us know all of your documents are loaded and you are ready for us to complete the return. Smartvault does not notify us when you have completed uploading all your documents---so if you don’t send an email, there will be a delay is getting your return completed.
Retirement Planning for 2023
For those who wish to “max out” their 401k, 403(b), or 457(b) contributions in 2023, the new maximum contribution rate is $22,500 for those under 50 years of age. For those over 50 years of age, the “catch-up” provision has increased to $7,500—effectively increase the maximum contribution to $30,000.
These contributions must be done through payroll deduction. Contact your employer and the plan representatives for further information and election documents.
Additional retirement provisions have changed or been added with the passage of the Secure 2.0 Act signed into law on 12/29/22. Most take effect in 2024 or 2025. We will have additional information going forward on how these new laws effect your retirement.
Be careful of “electronic delivery” year-end tax documents
In an effort to save postage and paper, many brokerages, retirement accounts, health insurance accounts, banks, credit unions, employers, mortgage lenders, and others have gone to electronic delivery options for year-end tax documents. Some have an “opt-in” where you have to acknowledge that you wish to receive electronic delivery of documents, and some have an “opt-out” where you will get the forms electronically unless you tell them you want them mailed. Sometimes the language for the options is buried or confusing.
YOU CAN NO LONGER RELY ON RECEIVING ALL YOUR DOCUMENTS IN THE MAIL.
Each year we get comments such as “well, they didn’t send me that” or “that’s all I got in the mail so I guess that I don’t need it”. WRONG.
Many accounts now REQUIRE you to go online and print out your own end of year tax documents to provide to us. Nothing is coming in the mail because it is online only. A common example is the Form 1098-T which reports college tuition. Most schools now require a download from a student account to obtain this required form
When you are collecting your documents, take your time. Go through your current accounts and last year’s tax return documents (found in Smartvault) to make sure you are including all the account tax documents. We have no way of knowing if you closed and account or opened an account from one year to the next. We can only report the information you provide to us on the return. Take your time, ensure all documents are present—whether they were mailed or downloaded from your online account.
Except where you are just waiting for tax documents to arrive, for office appointments only, we will be charging additional fees for unprepared clients who require extra follow-up time because they did not follow our appointment instructions and were unprepared as a result. In the past, this lack of readiness has caused delays for other clients who were prepared. Read more
Do not send us anything by US Postal Service (mail) except to our secure mailing address (PO BOX 831, Burson, CA 95225) as we will accept no responsibility for its safe delivery. We are flat-out telling you not to mail anything because of the high risk of identity theft from stolen mail, a risk you must completely assume, especially since we offer our secure client portal. Do not use DropBox, Google Drive or unencrypted email, either. If absolutely necessary, use the fax machine at any office store. Read more
