Accountant Tax Advisor Services Q &A
With Marcelino Dodge, EA
Cash Tracks Financial, Inc.
Tax Advisor Podcast From 10/07/2021 Continuation . . . Part 3
This tax advisor information is Part 3 from the podcast transcript originally recorded Tax Answers Advisoron VoiceAmerica on October 7, 2021. This program is presented by Marcelino Dodge, Enrolled Agent, owner of Cash Tracks Financial, Inc. Cash Tracks Financial is a tax advisor, tax services, financial advisory, retirement planning, business planning, and insurance company with corporate headquarters located in Lamar, Colorado.
Child Tax Credit
Marcelino:
Because what we do when we talk to you as the taxpayer here, whether it be through video conference, or you’re in the office, we’re going to ask these questions because it’s, it’s vital to know these things because we are subject to penalties as preparers. If we don’t do this, right, Sure, I’m not in we don’t risk and I don’t risk myself. I don’t risk, my assistant, we don’t risk we don’t take those risks. And so if it all depends, I answer the questions. And see here we got that that’s trying to think of something else on head of household. But those are the major things on, on head of household. Now there is one more provision on the head of household, which I’ve also done over the years, is that sometimes you’ll have in especially in a divorce situation, you’ll have a case where a mom has the son living with her, but she allows the father to claim the son as a dependent on the tax return.
Or, or in this case, Child Tax Credit anyway, it keeps changing they, they eliminated exemptions a few years ago, but anyway, can claim the son as a dependent for like Child Tax Credit, those kinds of deals? Well, but even though in that in that situation, though, the mom that has the son living with a can still claim head of household, because that’s on lives with her. Okay, so she’s still eligible for that filing, that’d be true. In all situations like that, and then of course, there’s another discussion regarding children and, and who can claim children based on court orders, but that’s a whole different discussion there. But anyway, for head of household, that’s, that’s kind of how a household fits in there, which is, can be very, can be a lot.
Tiff:
Right.
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Marcelino:
But these but we got, we got to muddle through that. And we have to make sure you as a taxpayer know, we’re asking these questions; you want to make sure you do it right there. So, okay, that’s let’s, let’s move on. Okay, what’s next?
When Should Married Couple File Joint Or Separate Tax Returns?
Tiff:
So I guess this kind of stems into that, if, if you’re, if you are married, technically married? Why? Is there a reason? Can you or would you ever file separately as close to married? Or what is the benefit? Or how does that work?
Marcelino:
When it comes to married filing separately that is truly a case by case basis. I very seldom do a married filing separate return because with the people we do business we’ve done business with over the years that usually hasn’t been advantageous. Now, there are circumstances where one spouse may decide, you know, I don’t want to file with my, with, with my husband or wife or whatever. And sometimes where that happens, is, especially if there’s a small business involved. Okay, so as a sole proprietorship, because what happens when you file a joint tax return is that even if the husband has a business and pays self and has self-employment tax due on the profit on a sole proprietorship, where there could be an issue is that when the wife signs that tax return, essentially, she becomes liable for that tax as well. Right.
Now, there’s other provisions, which we won’t get into that can that can help in that situation, but still, oh, but overall, she becomes liable. Okay, that means they either become jointly liable, and sometimes, they’ll, they’ll file separately for just because they don’t want to be responsible for each other’s taxes as well. Usually, there’s, and depending on, a lot of it depends on income, sometimes at income. Depending on income level, it may be more advantageous to file separately, but you’re talking usually several $100,000 of income before that happens, but it’s possible there could be as well as the fact like, if one has a lot of medical bills, or they want to do certain or do certain itemizations, there may be an off there may be an advantage to doing so. And what’s nice about when we work with people, and I get that question, actually a lot during tax season. Well, what happens if we file separately? It’s really nice angle the tax software, I press a button they say well, okay, well, and right now you’re saving $1,000 by filing jointly.
Tiff:
Sure.
Marcelino:
As well as in filing separately, there are certain tax credits and certain tax benefits that are lost file separately as well. So it’s not always advantageous. So it’s case by case and in some cases, it can work. So just depends.
Tax Documents For For Tax Returns
Tiff:
Okay. Fair enough. Um, one question in this, basically, what documents are you needed? Or do you need should you show up to your tax tax professional with? I always find my filing cabinet full of receipts and statements and this and that, and I always wonder, what, what really do I need? What do I need to keep? What do I need to present to them? And what’s the best way to go about that?
Marcelino:
Yes, that is an excellent, excellent question. And then which is why when clients ask that question, we will provide a checklist essentially, this is what you need to bring. Because, like you there’s, there’s a lot of unnecessary stuff brought most of the time, which, you know, I think everybody’s, and everybody means well, they really do. And you just want to make sure they’re prepared. But we get that we get this stack of information or papers come in, it’s like, you know, we really didn’t need this, this, this or this. And sometimes we can say, we can figure that out. Initially, when we get the paperwork, we can say, Okay, well, we look at it, we don’t need this, sometimes, we can send it back home with them.
Yes, if they bring it in live, or even if they upload it, at least if they upload, it’s all electronic, we can just kind of skip through it. Now, of course, if you come in and file taxes, of course of your if you have an employment, you use a W2 from wherever your employer is, the other the deal is 1099. Now there’s various 1099, which is as you get to know here, tip, there’ll be several of them, there’s a one for interest, one for dividends, one for stock sales, there’s ones for self-employed people, there’s a, an M, or an NEC, there’s all kinds of and you need all of those. Now, if you’re dealing with business records and your small business, usually, people really need to work on organizing those before they bring them in here, especially by category and by date is would really be advisable in your small business.
Because the bottom line, if we have to go through that, we’re going to charge it for sure. And in fact, that’s where we want to help people avoid even having to do those such those services. I mean, that’s why we provide year round services to help people stay organized. Because too many people in small businesses, they just kind of go by what’s in the checking account, they don’t really know if they’re making money or not. They just go I got X amount in the checking account. I don’t even know what my business is making. But I got this much in my checking account. So I’m okay. A lot of people do. So yeah. So definitely, if you’re doing any type of sole proprietorship, I mean, we got reasonable, reasonable rates to help one to be able to keep track of that stuff and use some cloud based software that we use. So yeah, but yeah, we usually provide will provide a checklist to help us to get organized, those are on our website in our client resources area for them. So.
Tax Advisor Services
When you need professional expert IRS tax services, call Cash Tracks Financial Services, Inc. at our office phone number (719) 336-8739 or via our website Contact Us form at Contact Cash Tracks Financial
Our Tax Advisor And Tax Accountant Services Office
Cash Tracks Financial Inc.
117 W Beech St
Lamar, CO 81052
(719) 336-8739
https://cashtracksfinancial.com
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