CPA Letter to Clients

Newsletter 2013/2014
CPA Letter to Clients
Dear Clients,
In the past, returns of some clients were
prepared and presented to the Internal Revenue
Service (IRS) with deductions /credits that you
did not provide to me in the preparation of your
federal tax return.
As a result I have been accused by the Internal
Revenue Service (IRS) of willfully aiding and
assisting in the preparation and presentation of
false income tax returns via the U.S. Department
of Justice (U.S.D.J). After carefully considering
all the facts and circumstances of the accusation,
I have agreed to enter into a guilty plea
agreement with the United States Department
of Justice; which includes restitution to the IRS
for tax revenue lost by the government. Per
the agreement, I accept the guilty judgment on
one count of willfully aiding and assisting in the
preparation and presentation of false income
tax returns for tax years 2007-2012.
With immediate effect Fraser CPA/Taxko will
be moving in a new direction.
Carlos Fraser, EA will be the new CEO who
will head the company in its new direction and
endeavors.
This new direction is centered on efficiency
functions and the use of technology to retain
client records, to meet opportunities, and any
challenges ahead. We implemented a new
document management system immediately
after we learned of the IRS allegation. With the
high level of professional skepticism, there will
be more questioning and critical assessment of
documents to fully avoid any of the practices
that were done in the past. We have revised
our worksheets for clients to submit their
deductions for Schedule A, C, D and E.
This is an emotional and difficult thing for me
to do. I take this step in the best interests of the
company I love; it is the thing outside of my
family and closest friends that matters to me
most. If my past actions have affected you in
any way I would like to take this time to say I
am truly remorseful and sorry. As the principal
of this company I have created steps to help any
client, free of charge, who believe they have been
affected by my actions from 2007-2012.
This company has all its best days ahead. Please
know you are part of a company in the tax
industry that has the right technological assets
and your best interest in mind. We cannot
and will not miss a beat in this transition. This
public declaration of my acceptance is my way
of showing our integrity.
Sincerely,
Carlyle Fraser, CPA
Keeping In Touch With Our Clients
Client Development
As we migrate our clients’ source documents
and worksheets, it’s important to maintain a
human element to tax preparation.
For 2014 and beyond, we will increase our
function to our clients.
With today’s technology of emailing documents
to us, it’s entirely possible to process a return
without having to come in to the office.
Unfortunately, you miss opportunities to spot
things and, over time, we become a commodity
provider rather than a value provider.
During the tax season, our time is limited and
our goal is to use our time as efficiently and
effectively as possible. We urge our clients to
make use of all of the applicable worksheets
located on our website.
Review your entries carefully to avoid
miscalculations or omitted deductions.
We at Fraser CPA/ Taxko inc. recommend the
following to build value:
We want our clients to take advantage of our
professional knowledge. This will be achieved
by doing the following:
1. Call us before you make important
financial decisions: Important financial
decisions can affect your taxes in a positive
and negative way. It is best to be aware
of the cause and effects of your actions
beforehand to avoid any surprises.
2. Do not be afraid to consult us regarding
your financial problems: With today’s
economic environment, financial problems
have increased. Most clients wait until tax
season to discuss prior financial problems.
For example, early distribution of retirement
accounts should be communicated at date
of distribution to project your tax liability.
1. Early booking of a 30-60 minute in-person
meeting. Be fully prepared for the meeting
with your questions and concerns. This is
not a tax preparation meeting, it is the free
consultation before tax preparation.
2. Schedule a 30 minute phone call to go over
faxed, emailed, and dropped off documents.
Also have a list of questions and concerns.
“The hardest thing to understand in the
world is the income tax”
-Albert Einstein
Facer CPA/Taxko, Inc
Newsletter 2013/2014
2013/2014 Tax Rate Changes
Other Changes for 2013/2014
For 2013, federal tax rates took a rollercoaster ride.
The Bush tax cuts of 2001, which had been extended
for two years, were to expire on December 31, 2012.
However, on January 1, 2013 the American taxpayer
relief act of 2012 was enacted to avoid fiscal cliff.
The following are the main changes:
1. The tax rates on ordinary income and shortterm capital gains stayed the same from 2012 to
2013; except for joint/ (Single) taxpayer(s) with
income over $450,001/ ($400,001). Their new
rates are 39.6% rather than 35%.
2. Ordinary and qualified dividends income tax
rates for joint/ (single) taxpayer(s) have a two
part increase.
a. The maximum ordinary dividend tax
rate increase from 35% to 39.6%. And
the maximum qualified dividend rate
increased from 15% to 20%.
b. There is an additional 3.8% rate increase
if the joint/ (single) taxpayer income is
over $250,000/($200,000).
Taxpayers will face some limitations on deductions
based on their income, and an increase in
deductions due to inflation. The main limitations
and increases are:
3. The tax rates on long-term capital gains stayed
the same from 2012 to 2013; except for joint/
(Single) taxpayer(s) with income over $450,001/
($400,001). Their new rates are 20% rather than
15%.
Most taxpayers will not be affected by the tax rate
changes but if you can, use the tax rates to your
benefit. By increasing your deduction, the taxpayer
in the higher tax bracket will save more money. A
taxpayer in the 28% tax bracket, for example, will
save 28% on every dollar spent on a tax-deduction
expenses, such as charity and mortgage interest.
1. Your total itemized deductions will be reduced by
3% if your income is over $300,000/ ($250,000) for
joint/(single) taxpayer(s). The head of household
limit will start at $275,000.
2.
In 2013/2014 the maximum social security tax
on wages is at 6.2% {$7,049.40}. However, the
Medicare tax on wages of 1.45% has no maximum,
in addition, joint/ (single) taxpayers with income
above $250,000/ ($200,000) will incur an additional
.09% on income over the $250k/$200k, creating a
2.35% Medicare tax.
3. Personal exemptions for yourself and dependents
will phase out for joint/(single) taxpayer(s) if your
income is over $300,000/($250,000).The head of
household limit will start at $275,000.
4. Mileage rates have increased to:
a. Business- $0.565 per mile.
b. Charitable-$0.14 per mile.
c. Medical & Moving- $0.24 per mile.
5. Medical Expenses deduction floor increase from
7.5% of your adjusted gross income to 10%. The
7.5% will remain if you are 65 years or older.
6. The standard deduction increases:
a. Single/Married filing separate-$6,100
b. Married/(Head household)- $12,200/($8,950).
7. For small business owners, the main tax change is the
reduction of the so called 179 deduction that allows
you to expense the purchase of equipment and other
business assets. The maximum allowable for expenses
will drop from $139,000 to $25,000. In addition,
computer software cannot be expensed for 2014.
The government shutdown in October of 2013 has
affected the start date of the tax season in 2014. The
IRS website projects that they would start accepting
and processing 2013 individual tax returns no
earlier than Jan. 28 and no later than Feb. 4, 2014.
Organize Your Tax Paperwork
1733 Springfield Avenue
Maplewood, NJ 07040
Phone:
(973)762-7299
Fax:
(973)762-7292
E-Mail:
[email protected]
“We do taxes right”
We’re on the Web!
Visit us at:
www.frasercpa.com
1733 Springfield Avenue
Maplewood, NJ 07040
With 2014 ahead of us and 2013 coming to an end, this is the
best time to get organized for the tax season. The following
is our guideline about what to gather:
1. Individuals – We recommend collecting all “important
tax documents” in a folder; keep your last paystub to compare
to your W2 and annual social security statement. Gather all
the related documents required to complete the Schedule A
worksheet we have available online under FORMS. Keep the
source documents for 3 years in a safe place.
2. Rental Property Owners – We recommend that you also
gather documents to support the deductions listed on the
Schedule E worksheet. This includes utility bills, cancelled
checks, credit card/cash receipts, and other documents that
support the deductions on your return. Keep the source
documents for 3 years in a safe place.
3. Small Business Owners- Business owners have the
daunting task of compiling their income and expenses for
the year. If you have not yet started, do so now. Review the
Schedule C worksheet carefully. Look back at your calendar
and create travel logs of your business miles. If you do not
use an accounting software, focus on purchases over $75 on
your bank statements. Include those totals on the worksheet
you provide our office. Keep the source documents for 3
years in a safe place.