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Getting Started, Checklists, Submit Forms.. let the fun begin!

This is long. No way around it. Grab some coffee, put the phone in a different room, turn off notifications, and please give us 15 minutes of your time.

 

This checklist is more geared toward individuals (Form 1040). Partnership (Form 1065) and Corporate (Form 1120 and Form 1120S) tax returns have a separate business tax return review checklist. Click on the button below-

 

Reviewing and understanding your personal tax returns are important things. And with our virtual tax preparation world, sitting down with your CPA or tax accountant to review your tax return is a challenge. Today we rely on emails, telephone calls and Skype. And, people are busy with life on life’s terms. So, we developed this flowchart to help you review and understand your tax returns, and know the process of approving and filing your tax returns.

 

Rest assured that if you are concerned or have questions, you can always communicate with us and we will stop, find some time and review these items with you. That is our promise!

 

The Final Steps

Here are the final steps necessary for the filing of your tax returns-

 

  • Review your federal and state tax returns as necessary. Ensure the information being presented looks and feels right, and all material tax related matters are addressed.
  • Provide eFile authorization via our website or tax forms.
  • Make payment for the tax preparation services with credit card or bank draft.
  • Receive an email and text message stating that your tax returns are filed.
  • Receive an email about 2-3 days later from each taxing agency (IRS, state, etc.) that your tax returns have been accepted.
  • Look to next year (probably the least favorite part).

We will now discuss these items in more detail.

 

Tax Return File Delivery

It is a challenge to know if our clients are done sending tax documents to us. So, if you are still waiting on more tax forms from various sources such as interest (1099-INT), stock sales (1099-B), partnerships (K-1), etc., please let us know. We will suspend your tax returns and complete it when we have all the necessary forms.

 

Every document and correspondence that was received has been entered into your tax returns- however, fax machines and internet uploads can still fail everyone. Please follow the steps below to review your tax returns ensuring there are no omissions or misstatements.

 

We have sent you your tax returns in two different ways-

 

Email
Tax returns are emailed as PDF attachments, and are password protected with the taxpayer’s primary SSN or the entity’s EIN (partnerships, corporations, etc.) without dashes. So, 9 digits, all in a row. SSNs are masked for security and privacy.

 

Client Portal
Same tax return PDF as the emailed version, but since the client portal is SSL encrypted and secure, the PDF is NOT password protected and has your full SSN/EIN as well.

 

We have also sent you TWO tax return PDFs-

 

Full
One PDF is the full-blown tax return with all the bells and whistles you would expect, plus a lot of stuff you wouldn’t expect. We always give you the complete tax return which goes way beyond the filing copy by providing supporting statements, depreciation schedules, etc.

 

ActionRequired
The other PDF is labeled “ActionRequired” and basically only lists the essential items for filing your tax returns. It includes eFile authorizations, payment vouchers (if necessary) and filing instructions. This file is only about 8-10 pages long, and should be printed and reviewed in its entirety. Very important. You might be getting a tax refund from the IRS but owe taxes to the state.

 

Remember, your tax return PDFs are also available in your Client Portal. You can use the blue button in the upper right hand corner or using the link below-

 

www.watsoncpagroup.sharefile.com

 

Tax Return Assembly

Your tax return PDF is assembled in this order-

 

1. Cover Letter (usually one page, directing you to this webpage)

 

2. Invoice and Payment Information

We cannot file your tax returns unless payment has been made for our preparation fees. There are instructions contained within your invoice, but you can also click on the button below-

 

 

3. Filing Instructions

Following the transmittal letter and invoice are detailed filing instructions. Since these are automatically created by our tax software and we prepare tax returns in all 41 states, there are some blanket comments pertaining to these generated filing instructions. Please read all these pages in the entirety as they discuss signing and dating tax returns, mailing tax returns, payment vouchers and estimated tax payments.

 

Please do NOT mail any tax returns. If this becomes necessary, we will advise you directly. And we always provide you a tax return package complete with tax forms, envelopes, labels and postage. If the ActionRequired PDF is stating conflicting information, please contact us.

 

4. Form 8879 eFile Signature Authorization, State eFile Authorizations

Please print the ActionRequired PDF, sign the eFile Authorizations, and either upload to your client portal, fax to 855-345-9700, drop off with donuts or mail to 9475 Briar Village Point Suite 325, Colorado Springs CO 80920.

 

However, the IRS has now loosened its rulings and allows for an electronic submission of your eFile Authorization. You can click on the button below to submit your authorization electronically (very simple)-

 

 

We cannot file your tax returns without the eFile authorization forms. Sorry, the IRS can be demanding that way.

 

5. Federal Return Summary, Two-Year Comparison

This is a summary of your Federal tax return. Please ensure the amounts “feel right”. Also, use this comparison to help understand differences in tax due or tax refunds from previous years. Two-year comparisons are only available if you are a returning tax client or if you provided last year’s tax return (since we input this information into your tax returns for history).

 

See below for more information on reviewing your tax returns.

 

6. Form 1040

This is beginning of your Federal tax return. We are happy to walk through each line and figure of these forms. Happy might be a stretch, but we want you to be 100% comfortable with your tax returns. Please see FAQs below for some common questions and concerns.

 

7. State Tax Return(s)

If your PDF reader has bookmarks in a pane, you can quickly jump to your state tax returns(s). Otherwise you’ll need to scroll (sorry).

 

Tax Return Review

There are several things we want to bring to your attention.

 

Two Year Comparison

As mentioned, this compares your current tax return data to your previous tax return data. And in the accounting and engineering world, we are looking for deltas (differences) or changes. And Yes, as a part of our review process your tax professionals and managers are reviewing this as well. Click on the following link for a quick line by line checklist.

 

Additional Instructions

 

The Two Year Comparison follows your Tax Return Summary, and is right before the start of Form 1040 (your tax return). In true comparison fashion, these two pages have three columns- where you were, where you are, and the difference. Review these pages, and pay particular attention to these lines-

 

Low refund? Refunds can vary from year to year depending on withholdings, disparate incomes and temporary tax credits. Before walking out on the ledge, please read our quick guide on how refunds change from year to year at-

 

www.watsoncpagroup.com/Refunds.pdf

 

Your effective tax rate (lines 70 and 71) is a true benchmark of your tax consequence. However, your marginal tax rate is what your last dollar of income is being taxed at. So, if you have a 28% marginal tax rate you might only have a 9% effective tax rate. But, if you contributed $100 to charity you would save $28 not $9.

 

As a side note, the top 10% of all wage earners (those who earn $112,000 or more) pay nearly 70% of all Federal taxes. We believe this is an amazing fact despite media reports.

 

Form 1040

This is the heart of your tax return. This is where all your schedules and other related items are tabulated, and presented to the IRS in a two-page document. Names and address spelled correctly? Is there a silent Q in Aimee’s name that we overlooked? All dependents listed? Click on the following link for a quick line by line checklist.

 

Additional Instructions

 

Schedule A Itemized Deductions

If you have itemized your deductions by exceeding the standard deduction, then you will have a Schedule A that follows your Form 1040. Schedule A details several deductions which are totaled on Line 40 of your Form 1040. Please pay particular attention to these lines-

 

Additional Instructions

 

Other Schedules

 

  • Schedule B – Investment Income (interest and dividends)
  • Schedule C – Business Income and Expenses
  • Schedule D – Investment Income (capital gains)
  • Schedule E, Page 1 – Rental Property
  • Schedule E, Page 2 – Royalties, Partnerships, S Corps

Common Deductions Clients Forget

Many clients forget to tell us about charity donations and the tax portion of their auto registrations. If your tax return has a Schedule A following Form 1040, ensure your personal property tax (auto regs) on line 7 and charity on line 19 have appropriate values. We can always update.

 

Other considerations- did you move for your job? Job search costs? Any investment related expenses? Buy a new house? Let us know! Use the link below-

 

 
 

From there you can complete our online submit forms to provide additional information.

 

Tax Return Review with a CPA

Every client is different. Having said that, we welcome an opportunity to review your tax returns with you, answer any questions you might have, and ensure a comprehensive and accurate tax return is being submitted to the IRS. We never want to stray away from this level of access and customer service. We live in a virtual world, and we use technology as a tool in the tool box. But we never want to lose focus on our clients’ traditional needs. High tech versus high touch.

 

Reviewing your tax returns with us is not required. It is only offered as benefit to you if you have concerns or questions. Please call our office at 719-387-9800 to schedule this review. We typically reserve 15-20 minutes for this review for individual tax returns, and about 30-40 minutes for partnerships and corporations. Additional time is always available, but might incur consultation fees.

 

Modifications, Changes

If changes are required to your tax returns, we might have to charge additional fees for time spent. Please understand if the changes are simple such as more charitable donations, or auto registrations, or some other quick change, your fee will usually remain the same.

 

However, extra tax forms or reworked worksheets such as small businesses or rental properties will typically incur an additional fee. We are not here to penalize you for ensuring accuracy of your tax returns- but at the same time, additional preparation time beyond what would be normal or typical incurs additional costs.

 

Jason, Tony, Tina, John Lo Res

Financial Advisor and Estate Planning

The Watson CPA Group is expanding its depth and quality of services to our clients. We were concerned about our clients only having access to individual silos of quality advice from tax modeling to small business consultation to retirement planning to estate strategies. Picture a drive through Wisconsin farmlands. Each silo individually doing the right thing, but collectively missing the mark.

 

Therefore, we have connected with professionals who are independent of the Watson CPA Group, yet work collaboratively to form a financial team under one roof, quite literally. Tax and Small Business Consultants. Financial Advisors. Biz Law Attorney. Estate Planning Attorney. Mortgage Broker.

 

One Call • One Team • Working in Concert

 

With the One Call Team, you have quality advice from-

 

  • Certified Public Accountants
  • Small Business Consultants
  • Estate Planning Attorneys
  • Financial Advisors
  • Insurance Specialists

Hardcopies

Paper copies of your tax returns are not automatically sent to you. If you would like a hardcopy, we must charge additional fees for printing, binding and mailing.

 

One suggestion is to download your tax returns to a thumb or flash drive, or use a backup or cloud service such as Carbonite or Google. If you really feel old school, burn a CD.

 

Also, your tax returns are always available 24 hours a day, 7 days a week via your Client Portal. Clicking on the blue button in the upper right hand corner will bring up your client portal login. Everything in the Client Portal is backed up three times daily.

 

If a third party, such as a lender, needs copies of your tax returns, we can securely send this information and your source documentation. And we prefer to provide the filing copy versus the ‘full’ version. Just let us know!

 

Recordkeeping

If your tax returns are examined, requests may be made for supporting documentation. Audit rates are about 1% to 4% depending on your income, and over 75% of all audits are performed by mail. Therefore, we recommend that you retain all pertinent records for at least seven years. You can review our tax article on recordkeeping at-

 

www.watsoncpagroup.com/kb/15

 

In order to properly and accurately advise you of tax considerations, please keep us informed of any significant changes in your financial affairs or correspondence received from taxing authorities.

 

Shameless Self-Promotion

Your tax team at the Watson CPA Group appreciates your business and continued trust. If you like how we treated you please submit a review-

 

yelp google-reviews

And if you think we could use some improvement, please let us know. We are continuously trying to improve our service, and we appreciate your comments.

LineTax Item
Line 4Medical Expense Deduction (must go over 7.5% or 10% of income threshold)
Line 6Real Estate Taxes
Line 7Personal Property Taxes (tax on auto registrations?)
Line 10Mortgage Interest
Line 12Mortgage Points
Line 13Private Mortgage Insurance, PMI (income phaseouts start at $100,000)
Line 19Charitable Donations and Contributions
Line 21Job Related Expenses, such as Pilot, Flight Attendant, Nurse
Line 22Tax Preparation Fees you paid for last year’s tax return
Line 23Investment Expenses (custodial fees, safe deposit box, advisory fees)
Line 29Total Itemized Deductions, same as Line 40 of Form 1040

 

LineTax Item
Line 6cDependents (only children 16 and younger qualify for child tax credit)
Line 7Salaries and Wages (did you forget to send a W2?)
Line 8,9Investment Income (missing a 1099?)
Line 12Business Income
Line 17Rental Income (if $0, phased out due to high income?)
Line 17S Corp, Partnership or Trust Income
Line 26Moving Expenses
Line 33Student Loan Interest (max $2,500, phased out due to income?)
Line 40Itemized or Standard Deductions (Schedule A is discussed later)
Line 45Alternative Minimum Tax (AMT is discussed later)
Line 61Affordable Car Act tax or penalty for health care coverage
Line 65Estimated Tax Payments (did you make some, and forget to tell us?)
Line 76Tax Refund
Line 76b,dRouting and Account Numbers for Direct Deposit
Line 78Tax Due

 

The Two Year Comparison follows your Tax Return Summary, and is right before the start of Form 1040 (your tax return). In true comparison fashion, these two pages have three columns- where you were, where you are, and the difference. Review these pages, and pay particular attention to these lines-

 

LineTax Item
Line 1Salaries and Wages (did you forget to send a W2?)
Line 2,4Investment Income (missing a 1099?)
Line 8Business Income
Line 13Rental Income (if $0, then perhaps you are phased out due to high income
Line 14, 15S Corp, Partnership or Trust Income
Line 21Moving Expenses
Line 28Student Loan Interest (max $2,500, might phase out due to income.
Line 34Charitable Donations and Contributions
Line 39Itemized or Standard Deductions (Schedule A is discussed later)
Line 59Estimated Tax Payments (did you make some, and forget to tell us?)
Line 67Tax Due or Refund (negative signs are good signs.. refunds)
Line 70, 71Effective and Marginal Tax Rates