Money Matters
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Re: Tax Return: Have you filed yet?
Also those late-night "We'll fight the IRS for you!" ads are often scams. I had one case where a client used one of those companies initially, but then came to us after the original company ended up being investigated by the FBI.
Paying for an accountant to help you consolidate lots of info, unusual tax situations, or prepare for future years can be worth it IMO, especially if you aren't super familiar with how the tax system works. A good accountant should also help you with an audit, though if the stakes are high - which to me means over $25K or so - it's best to call an attorney to help.
I doubt I will ever use an accountant personally. I've done a casual poll of my practice group, and I don't think a single one of us uses an accountant. Most of us use TurboTax or HR Block, even for more complicated tax situations (for example, I have to report back-door Roth contributions, which involves reporting a nontaxable distribution from a retirement account.). The older crowd tends to use pen and paper, exhausts their extensions, and then mails the IRS a check on October 15 each year.
I think he is about $180 and at that price I may use him going forward even if we do become a little more simple. Taxes are something I do not enjoy (like cleaning) and it is worth the price to me to outsource and not do them (much like having a cleaning person). He does Federal and State...might do local too, IRC.
Our risk was rated pretty low and the only thing I may be concerned about is claiming the "Lifetime Learning Credit" since I can't remember if I used it the first time I went to grad school 5 years ago.
So DH submitted the return and then a tax form came via snail mail we had forgotten about...so now he has to file an amendment to the return.
For example, I was audited a couple years ago over the education credit I took for my final semester in law school. My school only sends out 1098-T's for the years in which they bill the student (which in my case was December 2011), but you are actually entitled to take that credit for the year in which you pay. I intentionally paid my final semester in January 2012 to get the credit for that year because I had already exhausted 2011's credit.
They audited me since my school never sent a 1098-T for 2012. I sent back a letter explaining that I was a student, I had paid my tuition in January of that year, and I backed it up with bank statements, a transcript of my grades to show I was enrolled, etc. And because the audit pissed me off, I got a little snarky and quoted their own regs back to them and sent it in on legal letterhead.
They sent a letter back to me a few months later basically saying, "Thanks, we're good. You owe $0." From start to finish, I probably spent 2 hours on it.
I'm fully expecting H to get audited for 2014 for exactly the same reason. I have his documentation ready to go lol.
Audits really aren't that big of a deal if you can substantiate everything you report and write back promptly. If you get creative on your taxes and play audit roulette with the IRS, you will probably not get caught for a very long time, but eventually you will need to pony up. On the other hand, if you are audited and honest, they tend to leave you alone for awhile after that.
Up until about an hour ago I had never met an accountant who intentionally let an audit sit (yes I literally just encountered one who did), but they understandably get very busy during certain times of the year, and things occasionally fall through the cracks. Nobody will care about your audit as much as you do, so that's why I just handle ours myself.
People seem to be really intimidated by the IRS. In reality they are not that scary, and they are not out to get you. If you get an audit letter, the first thing to do is call them, sit on hold for a couple hours, and then talk to somebody in the audit department about what sort of documentation they would like to see. Then you mail it all in and wait for a response. It takes about 60 days for them to write back. They will either accept it or they won't, in which case they usually give you an opportunity to send additional info. It's all quite fair.
You go back and forth until you reach a resolution. The whole process can take months. You don't owe them any money while it's pending, so you have plenty of time to get your finances in order if need be.
The worst thing about it is they haven't changed the music on the hold line for at least 5 years.
On the IRS not being scary and being fair (sometimes), my friend/coworker has a side business. He got audited two years in a row. He met in person each time.
The first year, he was able to back everything up and his audit was fine. The second year, the IRS auditor looked at him and said, "Weren't you here last year?" My friend said yeah and gave him a brief recount of what happened and that all had been good. The auditor started laughing and said, "We're not even going to do this, you're fine, get outta here."
EDIT: No snark intended. It's just really expensive.
Yes! And, of course, the majority of their phone lines are open are during the weekday when most people work.
While I understand that, still. There has to be a better way. I suspect they'd have a better response putting people on payment plans...so the IRS gets their money...if it didn't take hours to get in touch with them.
@hoffse, If I were fairly wealthy, paying an attorney $275/hour to sit on hold and talk to the IRS for me, would be worth every penny. I can totally understand why some of your clients go that route.
We still haven't gotten our state refund back, but it's Illinois.....
My H also adjusted his withholdings so hopefully we can stop getting a refund. Our accountant did a rough run of the numbers for next year since I'll be coming home, and we would get even more back. No thank you. I'd much rather have that in our monthly budget instead.
TTC since 1/13 DX:PCOS 5/13 (long, anovulatory cycles)
Clomid 50mg 9/13 = BFP! EDD 6/7/14 M/C 5w6d Found 11/4/13
1/14 PCOS / Gluten Free Diet to hopefully regulate my system.
Chemical Pregnancy 03/14
Surprise BFP 6/14, Beta #1: 126 Beta #2: 340 Stick baby, stick! EDD 2/17/15
Riley Elaine born 2/16/15
TTC 2.0 6/15
Chemical Pregnancy 9/15
Chemical Pregnancy 6/16
BFP 9/16 EDD 6/3/17
Beta #1: 145 Beta #2: 376 Beta #3: 2,225 Beta #4: 4,548
www.5yearstonever.blogspot.com
TTC since 1/13 DX:PCOS 5/13 (long, anovulatory cycles)
Clomid 50mg 9/13 = BFP! EDD 6/7/14 M/C 5w6d Found 11/4/13
1/14 PCOS / Gluten Free Diet to hopefully regulate my system.
Chemical Pregnancy 03/14
Surprise BFP 6/14, Beta #1: 126 Beta #2: 340 Stick baby, stick! EDD 2/17/15
Riley Elaine born 2/16/15
TTC 2.0 6/15
Chemical Pregnancy 9/15
Chemical Pregnancy 6/16
BFP 9/16 EDD 6/3/17
Beta #1: 145 Beta #2: 376 Beta #3: 2,225 Beta #4: 4,548
www.5yearstonever.blogspot.com
Owe $901 to the feds. Getting $247 from state.
I give up.....*sighs*