“Your W2 Is Missing, And What You Should Do” Ellicott Accountant Advises
"Until you make peace with who you are, you’ll never be content with what you have." -Doris Mortman
I’ve put together a primer on automating and leveraging tools in order to get out of debt but, before I get there, today, as I write on Monday, it’s the second-to-last day which organizations can mail W-2′s without facing consequences (you might not *receive* all of them by tomorrow, just so you understand).
Unfortunately, these consequences don’t often carry much teeth for employers and sometimes HR departments or very small businesses don’t get their act together (probably because someone competent isn’t helping them! –ahem–), and … the W-2′s take a while.
(Here’s a link to concise information about what happens on the business owner side of things: http://smallbusiness.chron.com/happens-dont-make-w2-deadline-employees-15702.html)
If you haven’t gotten your W-2 by the end of next week, here are some basic steps for you (you might want to print out or save this post, by the way):
1) Contact your payroll department/boss. Be nice about it — after all, they’re just as burdened by the paperwork junk as you are!
2) If, however, the days roll by and the form is indeed lost or your employer is inordinately slow in issuing a replacement, or you worked for a company that went out of business and there’s no one to bug about getting a W-2 … what then?
"Make" your own! Well, actually, you contact the IRS at this number: (800) 829-1040 with the following info from your last paystub handy:
- Year’s wages.
- Payroll taxes withheld.
- Federal and state income taxes withheld.
- Contributions to your company retirement/401(k) plan.
- Employer’s tax identification number.
Wait on hold, and ask for Form 4852. Basically, this will inform your employer "officially" that they’re delinquent, and you can even use this form in a pinch, if your employer never gets their act together.
*** Want the BEST solution? Let us handle all that junk for you in the first place … which is part of what we do!
Well, I’ve gotten this far in this post and I realize that I’ve run out of space to go into my debt-defeating strategies for you. You’ll have to tune in next week, when I break it down in the "Real World", as they say.
Until then: please feel free to call [(410) 203-2201] or email me and my staff. Just because we’re busy, doesn’t mean we don’t care!
“Those Little Mistakes Will Be Your Undoing” Ellicott Accountant Warns
"Failure doesn’t kill you … it increases your desire to make something happen." – Kevin Costner
As I write this on Monday morning, there are a bunch of tears in Baltimore and San Francisco.
If you’re not a football fan — let me briefly tell you why: yesterday, in Baltimore, a game-tying "gimme" field goal went wide left, and in San Francisco a fumble and another small error (the ball grazing the leg of a player) were largely responsible for an overtime loss. So New England and New York (Giants) are headed to Indy for the Super Bowl.
Little hinges swing big doors, as they say.
Our offices are starting to get pretty busy. Last week, the IRS began accepting e-filed returns (for which they save $3.10 each, which adds up) and we’re getting a bunch of emails and phone calls (410-203-2201, by the way) with little questions.
It’s smart to ask the little questions. Because this year, the IRS will be scrutinizing returns in unprecedented ways — and they pay careful attention to those "little" things.
As you know, I don’t always write about taxes in my weekly Notes — in fact, I make a point to put these together differently than all those other accountants who spit out pre-heated leftovers to their clients in the form of canned "tax tips" and useless content. But this time of year is when many of my clients and contacts are figuring out exactly how they’ll be pulling together their tax file … and, well, it’s a pretty important decision. I want to speak to it while there’s time to help.
So, here’s what I mean…
John Curtin’s
"Real World" Personal Strategy
The IRS is Paying Close Attention
Think tax evasion is a small problem? The Tax Justice Network released a report at the end of 2011 which showed that tax evasion amounts to $337.3 billion per year in the US. Yes, that’s billion with a "B".
This was based on numbers from 1999 to 2006, and is probably even higher in recent years, as the weak economy may have led more people to hide money from the government. As an example, the average tax refund decreased by $100 in 2011 — perhaps people are reporting less income in order to keep more of their money.
Now, it’s hard for us wrap our heads around how much money that really is. Here’s a way to do so: Recently, Congress was unable to agree on a plan which would reduce the national deficit by $1 trillion over 10 years. Over that same time period, tax evasion will cost us well over $3.3 trillion.
Given my profession, perhaps it’s obvious that I’m a big proponent of everyone following the tax rules. When we don’t, it means that everyone else has to pick up the slack. And the consequences of all of this reporting about tax fraud is greater scrutiny on honest taxpayers, and higher tax rates.
The IRS is Catching More Tax Evaders
The "good" news is that the IRS is doing a better job of catching people who aren’t paying their fair share of taxes. Fraud investigations increased by 14% in 2010, while prosecution recommendations (cases that the IRS thinks should be brought to court) increased 18% and convictions increased by 4%.
Again, it’s possible that some of these increases are due to the economic situation of the past few years, but the fact that the IRS decreased its investigation time by nearly 40 days is a sign that the IRS is doing a better job.
Don’t Give In To The Pressure; Avoid Taxes — LEGALLY
Here’s what you should understand — the rise in tax evasion means that the IRS is continuing to increase its scrutiny on every return. But that doesn’t mean you have to give up the fight! There are innumerable LEGAL ways to avoid paying too much in taxes. And, unfortunately, software programs and fly-by-night tax shops don’t do a very good job of proactively seeking them out for you.
But perhaps you know someone who does?
“This Is Self-Serving, But It Needs To Be Said” Ellicott Accountant Explains
"The most important thing in communication is hearing what isn’t said." – Peter F. Drucker
As I wrote a couple weeks ago, the start of the year is pretty important, in my opinion. And the LAST thing you need is to be stressed over finances.
Yet that’s, unfortunately, how many families start their year, this year.
So, is there anything we can do to help? Yes, we live to help you with your taxes, but what truly animates me and my staff is the fact that assisting real families (like yours) can make a difference — not just in your "bottom line", but in the peace by which you operate. That’s, really, why we do what we do.
So, do let us know if there’s anything at all we can help you with: (410) 203-2201
Indeed — we’re getting very close to the point where we begin to see many folks walk through our doors with their tax information in hand. Last week, I posted a mostly-complete list of what you will need to get your taxes done.
Well, today my message runs a significant risk of being extremely self-serving. I get that, but I want you to know that isn’t why I’m writing it. Sure — I want my business to do well, and that happens when our clients keep using our services and refer their family and friends our way.
But I’m writing this today to give you a warning about some new options available to taxpayers, which haven’t always been there. I hope you hear what I have to say, and that you take it to heart.
John Curtin’s
"Real World" Personal Strategy
Hidden Problems In Popular Tax Filing Options
For various liability issues, I’m loathe to actually mention this company by name, but let’s say (for the purposes of this conversation) that there’s a big, popular company who made its fortune on the backs of lower-income taxpayers called H&P Black (a name picked completely at random). This company is flooding the airwaves with a brand new program offering "free" tax preparation.
Maybe you’ve heard about it? Well, like many such things, there are, shall we say … strings.
First of all, here are the restrictions: it only covers those filing the 1040EZ federal form, which covers only the very simplest tax issues. It can’t be used by anyone who has dependents, makes more than $100,000 per year, is age 65 or older, claims adjustment to income like alimony or tuition deductions, or itemizes deductions. Thus, homeowners who deduct mortgage interest or people with large charitable contributions can’t use the 1040EZ.
Plus, filers have to pay fees for state tax preparation and any other fees incurred — which have a tendency to pile up.
Asked by stock investors why [said company] was doing this, an executive replied: "Our ability to monetize this program means a minimal impact on our net average charge," [said company] Retail Tax President Phil Mazzini told analysts on Dec. 7. (source)
It’s always enlightening to look at executive interactions with stock analysts to see why public companies do what they do, I’ve found.
So — in summary: don’t be seduced by the siren call of getting something for nothing. You usually end up paying for it, in a whole host of ways.
In fact, one of OUR revenue centers over the years has always been in fixing the mistakes made by these "big box" retail tax outfits and off-the-shelf software programs, and discovering loads of missed opportunities and overpayments.
(Because, speaking of software: do you remember when our current Treasury Secretary used the leading tax software to do HIS taxes, unintentionally created a bunch of errors with it, and then blamed it for all of his tax problems in front of the Senate? Not an uncommon issue, I’m afraid.)
The old adage *is* an adage because it’s so often true: you get what you pay for. It’s the foundation for a stable economic system because it’s almost always true.
This List Will Help You
“A daily routine built on good habits and disciplines separates the most successful among us from everyone else.” – Darren Hardy
Last week I wrote about financial resolutions — and, well, John Tierney of the New York Times must be a reader!
The columnist devoted a fantastic column to the keeping of resolutions and though he didn’t name me directly, he made a bunch of great points. I read this in the paper version, but I wanted you to see it online. In my opinion, here’s the key bit (my emphasis):
The study, led by Wilhelm Hofmann of the University of Chicago, showed that the people with the best self-control, paradoxically, are the ones who use their willpower less often. Instead of fending off one urge after another, these people set up their lives to minimize temptations. They play offense, not defense, using their willpower in advance so that they avoid crises, conserve their energy and outsource as much self-control as they can.
Alright — so perhaps he’s not talking about the automation and financial resolutions which I discussed! But I do hope you noticed what I emphasized there: sometimes our best method to stick to our resolutions is to not rely on our simple willpower — but to outsource it.
I’m running down some tools for you on this for next week, which I hope will help.
In the meantime (and speaking of outsourcing)… I truly do pity those who attempt to wade through all of the different tax codes and forms on their own, and not devote a week’s labor to the transaction. It really doesn’t pay to “go it alone” for certain tasks.
So, for those of you who want our help (and that’s the vast majority of our email contacts), I’ve got a special incentive for you at the end of this email … AND, I’ve put together a handy little list of what you’ll need to bring in. There may be certain situations where we’ll need other documentation to get you even more deductions. But, of course, we’ll let you know about that, should the situation arise!
Let me know your thoughts … and, of course, if you’d like to talk this over with us we’re here for you!
John Curtin’s
“Real World” Personal Strategy
Curtin’s Tax Time Document Chase List
Yes, this is a long list — but it’s the unfortunate reality of our tax code that it’s not even comprehensive! But these items will cover 95% of our clients. Really, this is for ensuring that we’re able to help you keep everything you deserve to keep under our tax code.
Even if for some strange reason you won’t be using our cost-effective services this year, feel free to use this list as a handy guide…
Personal Data
Social Security Numbers (including spouse and children)
Child care provider tax I.D. or Social Security Number
Employment & Income Data
W-2 forms for this year
Tax refunds and unemployment compensation: Form 1099-G
Miscellaneous income including rent: Form 1099-MISC
Partnership and trust income
Pensions and annuities
Alimony received
Jury duty pay
Gambling and lottery winnings
Prizes and awards
Scholarships and fellowships
State and local income tax refunds
Unemployment compensation
Homeowner/Renter Data
Residential address(es) for this year
Mortgage interest: Form 1098
Sale of your home or other real estate: Form 1099-S
Second mortgage interest paid
Real estate taxes paid
Rent paid during tax year
Moving expenses
Financial Assets
Interest income statements: Form 1099-INT & 1099-OID
Dividend income statements: Form 1099-DIV
Proceeds from broker transactions: Form 1099-B
Retirement plan distribution: Form 1099-R
Capital gains or losses
Financial Liabilities
Auto loans and leases (account numbers and car value) if vehicle used for business
Student loan interest paid
Early withdrawal penalties on CDs and other fixed time deposits
Automobiles
Personal property tax information
Department of Motor Vehicles fees
Expenses
Gifts to charity (receipts for any single donations of $250 or more)
Unreimbursed expenses related to volunteer work
Unreimbursed expenses related to your job (travel expenses, entertainment, uniforms, union dues, subscriptions)
Investment expenses
Job-hunting expenses
Education expenses (tuition and fees)
Child care expenses
Medical Savings Accounts
Adoption expenses
Alimony paid
Tax return preparation expenses and fees
Self-Employment Data
Estimated tax vouchers for the current year
Self-employment tax
Self-employment SEP plans
Self-employed health insurance
K-1s on all partnerships
Receipts or documentation for business-related expenses
Farm income
Deduction Documents
State and local income taxes
IRA, Keogh and other retirement plan contributions
Medical expenses
Casualty or theft losses
Other miscellaneous deductions
We hope this helps, and we really look forward to seeing you this year!
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To your family’s financial and emotional peace…