Tax Chat: We're Talking Taxes With CPA Lynette Patterson! by Donna John

It’s tax time again! We don’t know many people who enjoy them, but luckily for us, we have a 30Second Mom contributor who’s a CPA and yes, she LOVES doing taxes! Lynette Patterson joined us recently to answer basic tax questions and share her tips on how to make the process a whole lot easier!

Q. When do I have to file?
“By April 15 without an extension. If you file an extension you have until October 15. Remember, an extension to file is not an extension to pay!”

Q. What do I do if I haven’t received a W2?
“Go on the IRS website and order or download a transcript. It will tell you what was reported by your employer. You can use your last paystub and submit a substitute W2 with your return.”

Q. Do I need to use a CPA or professional tax preparer?
“It depends. Do you have a complicated return or have you had many changes? If your return is the same as prior years and you understand it, do it yourself. I always recommend periodic checkups when you have major life events or financial moves: houses, kids, retirement, etc.”

Q. How do I find a trusted tax preparer?
“Ask friends and family for referrals, hit up local CPAs, Facebook, etc., for a list of candidates. Look for CPAs or Enrolled Agents (EA). These certifications require continuing education and are most likely to keep up with changing regulations and laws. Interview! These are the people who will be preparing paperwork for the IRS, make sure they know what they are doing! Questions should pertain to your situation. Ask them to explain items in your current return you don’t understand. Remember, a tax preparer should be able to say, ‘I will have to research it.’ Above all else, you want your tax preparer to be honest and to educate you.”

Q. If I didn’t file last year because I didn’t earn much, can I include it in this year’s return?
“No, every year requires a separate return. Don’t skip filing because your wages were low. You may qualify for special tax credits like Earned Income Tax. Remember, you only have three years to file, anything older than that is too old to file.”

Q. If my friend makes about the same amount, why does he get more back for his return?
“This is a frequent question I get. Unfortunately, without looking at your friends return, I don’t know. Your friend could be withholding more, have more deductions you are not aware of.”

Q. What advice do you give your clients to stay organized?
“I use a very low-tech method for people who don’t collect many receipts. A red folder next to where you sort/read your mail. As things come in throughout the year, throw them in the red folder. If you have a business and need to keep receipts, consider a monthly receipt folder. Then scan the receipts. Receipt ink fades and rub off over time. You don’t want to lose a deduction if you can’t read a receipt in three years during an audit.”

Q. Can I claim what I claimed last year; the IRS didn’t send me anything?
“Unfortunately, the IRS never sends out timely notices. This is how fraudulent tax returns happen. The IRS cannot, in real time, compare what you claim to what was submitted by employers. It usually taxes two tax cycles to catch up. Get as close to actual, or less, as you can for things you want to claim as adjustments and deductions.”

Q. Fraudulent returns, what is that?
“A return where you enter incorrect information on purpose. Someone stealing your SSN to file a return and stealing the refund. As more and more data breaches occur, this is becoming common. If you suspect someone has filed a fraudulent return in your name, call a professional tax preparer immediately. They can help you.”

Plenty of great questions were flying during the chat from the 30Second Mom community. Here’s a few and what Lynette had to say!

Q. What is the number one mistake that most people make? 
“The number one mistake most people make is taking a deduction incorrectly.”

Q. What are deductions that people miss/don’t think of? 
“A lot of times people don’t think about moving expenses, or education costs for dependents.”

Q. Are there specific websites that are trusted for tax information?
“Irs.gov. I would only trust that would come straight from the horse’s mouth, so to speak.”

Q. How do you keep up with tax changes? Do you have to re-certify every year?
“As a CPA I do have continuing education requirements. Be wary of tax-in-the-box type establishments, the ones who are not available year round. You would be surprised by number of people who only have high school diplomas doing your taxes at a place like that.”

Q. Is there a way to find out how many times someone has filed incorrectly for someone else?
“Another great question. I do not believe the IRS publishes those statistics. You can always check CPA licenses against the State Board of Accountancy. If license is suspended, something is up!”

Q. Will a good CPA self-disclose?
“They should definitely self-disclose. Anyone you’re purchasing a personal service from should be completely honest. Don’t be afraid to interview! Any CPA or EA worth their salt will sit through an interview and answer questions for you.”

Q. Is there an easy place to find the tax changes for this year?
“Unfortunately no, unless you subscribe to some professional journals. Some do a nice summary, for a fee.”

Q. Should you provide the CPA/EA with original documents and make copies for yourself?
“Typically copies are enough for the CPA, there isn’t much they need to keep our original copies of.”

Q. How long should we keep our paperwork? What is the statute of limitations on an audit?
“The IRS has seven years to claim its money. We only have three years. So don’t leave your money sitting on the table! I would keep documents a minimum of seven years. If you have an asset with depreciation, like the purchase of a home, keep all your receipts until you get rid of the asset.”

Q. If you e-file, will you get a refund faster than snail mail?
“Absolutely! Even faster if you do direct deposit.”

Be sure to follow @CPALynette, check out her blog and read her 10 tips to help prepare your taxes!