Annual Newsletter

Welcome to the 2012 tax filing season!

It’s “tax time,” and we’re looking forward to assisting you with your tax return again this year. We will open for the season on Monday, January 23, 2012. Office hours will be 9 a.m. – 5 p.m. weekdays and 9 a.m. – 1 p.m. Saturdays. We will be accepting MasterCard and Visa credit cards and debit cards again this year. For those of you who mail your return information to us, we can accept your credit card information over the phone.

After holding our basic price for ten years, the rising costs of software, etc. have forced us to increase our price for the 1040 forms (1040-EZ, 1040A, and 1040) to $80. As always, electronic filing and refund direct deposit is included.

After completing your tax return, we can fax, e-mail, or snail mail the original IRS signature page for you (and/or your spouse) to sign and return to us (via fax, e-mail, or snail mail) prior to e-filing your return to IRS. As paid income tax preparers, we are required by IRS to e-file all qualifying returns unless a taxpayer requests in writing that we not do this.

The tax bill passed by Congress and signed into law by the president in December 2010 is still having an effect on 2011 income tax law. Most of the provisions extended for 2010 are extended to 2011, and some will continue to affect 2012 tax law as well. Provisions such as the 10% income tax bracket, the reduced dividend and capital gains rates, the child tax credit remaining at $1,000 per qualifying child, the Earned Income Credit available for up to three children, the ability to deduct Washington State sales tax as an itemized deduction, the deduction of $250 of teachers’ classroom-related out-of-pocket expenses, and the expanded higher education expenses credits are a few of the more popular provisions extended for 2011. Without additional Congressional action this year, most of these provisions will disappear or return to the limits and rules used in 2000.

For those who are able, we encourage you to drop off your paperwork — no appointment required! We will process your return, call you with any questions, and notify you when it’s ready.

Be sure to keep any reports concerning tax-related items that you receive. If you are unsure about something you receive, or something you did during the last year, be sure to bring the information in with you for our consideration when we prepare your tax return.

Please consider making your appointment (or dropping by to see us) early. The sooner your tax return is filed, the sooner your refund will be on its way to you—or, if you have an amount due, you will know where you stand without any last-minute surprises. If you are missing some information, we can begin your tax return and you can supply the final items when you receive them.

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Following is a checklist of items to bring with you.

INCOME: (we must see the actual forms)

____W-2 forms—all copies (food service workers, bring in your tip books)

____1099-MISC forms

____Social Security statements (SSA-1099)

____Pension statements (1099-R) (any distribution from your pension plan)

____Interest received on savings accounts (1099-INT)

____Brokerage statements – year end ‘Final’ version, also see “If you sold stock, bonds, investment/business/rental property, etc.”  near the end of this letter

____Dividends forms (1099-DIV)

____IRA withdrawals (1099-R)

____Bankruptcy or forgiveness of debt (1099-A & 1099-C)

____Alimony received (total)

____K-1s from partnerships, investment companies, estates, etc.

____Traditional and/or Roth IRA year-end statements

____Lottery and gambling winnings; any other prizes

____Other miscellaneous earnings: jury duty, hobbies, etc.

Seller-financed mortgages: Interest and principal received or paid: IRS regulations require reporting the other party’s tax identification number (SSN), name, and address. Your tax return cannot be filed if this requirement is not met.

EXPENSES: (please bring in receipts except for medical expenses)

____Medical expenses (please bring in TOTALS ONLY): doctor bills, hospital and nursing home fees, cost of prescription drugs, insurance premiums (private pay and from W-2 paystub), dental fees, glasses, hearing aids and batteries, miles driven to obtain medical care, etc. (do not include amounts your insurance paid for you)

____Home mortgage statements (Form 1098)

____Real estate taxes paid on your home—often reported on mortgage statement

____Personal property tax paid (example: mobile home taxes)

____Charitable contributions given by cash or check (you must have a written receipt from the organization, no matter how small the contribution)

____Charitable donations—receipts required (fair market value of clothing or household goods which must be in “good” condition or better), miles driven (mileage records required), etc.

____Adoption expenses

____Job expenses: union or professional dues, cost of safety shoes and equipment, educational expenses to keep your present job, miles driven for your employer’s convenience, job-related travel records

____Safe deposit box fees

____Investment expenses

____Childcare or dependent care & summer day camp expenses: we need provider’s name, address, Social Security # or EIN, and total amount paid to each provider for each child (provider’s ID is required by IRS)

____Contributions to your IRA(s)

____Alimony paid (not child support) and recipient’s name and SSN (please bring in proof of payments such as canceled checks/money order receipts and your divorce or separation papers)

____Education expenses: Tuition and lab fees, student loan interest (Forms 1098-T & 1098-E are usually mailed to the student’s address)

SPECIAL SITUATIONS:

If you are self-employed:

____Gross income

____Any and all expenses related to your business, including loan interest (if you have any questions, bring the information in with you)

____Car information: self-employment miles, commuting to a regular job miles, and total miles put on your car during the year for all reasons plus purchase loan interest

____Inventory $’s (if applicable): beginning inventory value, purchases during year, value of items taken out of inventory for personal use, ending inventory listing & value

 If you own rental property:

____Total rent received, including amounts received from assistance programs (security/damage deposits are only included as ‘rent received’ in the year a tenant forfeits the deposit)

____Expense totals to operate rental: include statements of taxes and mortgage interest, totals of improvements, advertising, repairs, maintenance, miles you drive to tend property (see ‘Car Information’ under ‘Self-Employed’ earlier), and any other expenses

Ask us for our special rental income & expense worksheet

 If you are separated or divorced:  (IRS rules: if you are ‘separated’ you are not required to file a joint return)

____Separation or divorce decree documents

____Separated, or divorce not final by December 31? Bring in spouse/ex-spouse income papers if possible; you may or may not benefit by filing separate returns. Washington is a community property state, and income and expenses need to be prorated (spouses may come together or at different times)

____If you are a non-custodial parent and this is your year to claim the child(ren), please contact us as soon as possible to obtain a ‘Release of Exemption’ claim form no matter what your divorce or separation papers say

*Note: Divorce or separation creates its own set of income tax consequences. Please keep this in mind when talking with your lawyer. I am available for consultation.

 If you sold your home: Bring all the closing papers you received from the escrow company when the sale closed plus when you bought your home

If you received property or assets (including investment) as an inheritance, gift or to ‘clear up the affairs’ of an elderly person:

____Donor’s basis—we will explain this to you; give us a call

____Amount of gift tax paid, if any

____Fair market value of inherited property or items on date of death

If you sold stock, bonds, investment/business/rental property, etc.:

____Purchase and sale prices and dates (we need to see the buy and sell papers)

____Final year-end broker statement(s)

____December 2011 and January 2012 brokerage statements

____Dividends reinvested (stocks only)

____Permanent improvements (property only)

____Depreciation schedule (business & rental property only)

____Costs of sale (broker commissions, package of closing papers received from escrow company, etc.)

If you paid estimated tax payments:

____Amount and date of each payment—bring in your canceled checks or records of payments made approximately April 15, June 15, September 15, 2010, and January 15, 2011 (many banks do not return checks to customers)     (IRS will not send you confirmation)

Tax Tip: Write down the odometer reading on each of your vehicles on January 1 (or a reasonable estimate) as you never know what a year may bring! There could be several reasons for wanting to know the total miles driven during the year.