Organizing Tax Information

Although collecting and organizing tax information is a "no-brainer" for us, (as it should be), we realize that for many of our clients, the very thought is overwhelming.  Don't know where to start or how to begin?  Here are a few steps to simplify the process:

1. Collect your tax data:  As W-2s, 1099s and K-1s arrive in the mail, accumulate them in one box, file, or pile.  If you receive these documents electronically, print them out when  notified of availability and do as above.  Pull out all charitable receipts. Assign values to Goodwill donations and write the value on the receipt.  To help in estimating values, go to: http://www.goodwill.org/get-involved/donate/taxes-       and-your-donation/
2. Obtain copies of any estimated tax payment checks.  Or if paid electronically, obtain verification of payment.
3. Collect and summarize out of pocket medical expenses.  This step is not worth     doing unless your total will be greater than 7.5% of AGI.  Use last year's AGI as a guide.
4. Clip (do not staple) all like documents together.
5. Get out your current year organizer (or last year's tax return) and compare that information to the documents in your box, file or pile.  Check off or highlight the documents that you have and request those that are still needed.
6. Send in organizer and documents by March 5  If you want to keep your original documents do not send them in.  Send us a copy.
7. Sit back and relax, we’ll take it from here!

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2011 Tax Organizers

It's the holiday package that nobody really wants to open.  Yes, it is almost time for your tax organizer to arrive at a mailbox near you …or not.  Before you get your hopes up, let me explain.  This year, we have the ability to e-mail you your tax organizer. Unfortunately, it cannot be filled out online.  You will need to print it and fill it out manually. You can return it to us with the back up information either by snail mail or scan and e-mail. 

If you want your organizer e-mailed this year, please send an e mail to Peggy: peggy@lkbenson.com, from the e-mail address you would like us to use.  We will be mailing organizers the first week of January, so let us know as soon as possible if you want your organizer via e-mail. If we don’t hear from you by Monday, December 19th we will mail it as we have in the past.

Also, a friendly reminder:  please check the banking information that we have on file for you as you gather your tax information.  We want to make sure that we have the correct account and routing numbers for electronic tax payments as well as tax deposits.  Please do not assume that we have your current information.  Send us a copy of a check from the account that you wish to use.  If you don't tell us, we won't know. 

And yes, there's still time to request a year-end tax projection.  Contact us for questions on how to get started.

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Year End Tax Planning 2011

How can you make sure that you're not blind-sided with a huge tax bill come April 15th?  How can you make sure that you're doing everything possible to avoid year-end surprises?  The answer is simple.  Invest in a year-end tax projection.  We need the basic information:  W-2s, YTD investment income, YTD realized capital gains, changes to itemized deductions, etc.  Don't get caught in the woulda, shoulda, coulda-s.  There's still time to do year-end tax planning.  Please contact us for more information on how to get the process started. 

Maryland Tax Credit

Sometimes it pays to complain.  You can thank Brian Wynne, a taxpayer who challenged an aspect of the Maryland tax law, for the most recent taxpayer "break" in Maryland taxes.  At issue was whether the credit for taxes paid to other states could be applied against the local income tax as well as the state income tax. 

This past June, Brian won a constitutional challenge against the Maryland State Comptroller.  A circuit court judge overturned the comptroller's practice of allowing the credit to only be applied against state income tax, but not local (county) tax.  So what does this mean to you?  If you have paid income tax to states other than Maryland since 2008, an amended return might be in order to claim a protective refund.  Generally speaking, the tax rate for the other state must be greater than the MD state rate, and ideally greater than the state and local rates combined, to make amending worth your while.  Of course the Maryland Comptroller will most likely appeal the decision so we will continue to monitor the case as it develops.  Please contact us if you're interested in exploring whether amending makes sense for you.  

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Tax Deadline Update

I have good news and I have bad news.  We'll go with the good news first:  There's still one month left to get your 2010 individual  tax return timely filed.  And now the bad:  There's only one month left to get your 2010 individual tax return timely filed.  (You probably saw that coming.)  Clients waiting for straggling K-1s have lost that excuse, as the filing deadline for partnerships is now September 15^th.  That being said, the Internal Revenue Service recently announced it is granting taxpayers whose preparers were affected by Hurricane Irene until Sept. 22 to file returns normally due Sept. 15. The taxpayer’s preparer must be located in an area that was under an evacuation order or a severe weather warning because of Hurricane Irene.  So check your mail, e-mail and faxes for your hot-off-the presses K-1s and forward them to us.  This year's "day of reckoning" for Form 1040 filers is Monday, October 17^th, since the 15^th falls on a Saturday.  We still have some clients missing additional information, so please get that in as soon as possible too.  Keep in mind that the IRS interest and penalty “meter” is still running on any unpaid balances due, so if any money is owed with your returns you should file them as soon as possible.

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