Frequently Asked Questions
If your questions aren’t answered below, please contact us and we will gladly answer them!
If your questions aren’t answered below, please contact us and we will gladly answer them!
How do I fill out the W-4? What number do I claim on the W-4? What is the difference in my paycheck if I change my allowances/exemptions?
You’ve probably seen the IRS Form W-4. It’s one of the many forms employers give you to fill out once you get hired. The purpose of this form is to let your employer know how much income tax for the Feds and State you want taken out of each paycheck.
The general rule behind the amount of allowances/exemptions you claim on your IRS Form W-4 or equivalent is this: The lower the number you claim (zero being the lowest), the more tax the payroll department at your job will take out of your paycheck, and the lower the amount you will owe at the end of the year. Therefore, if you want to stay on the safe side of IRS, claim single 0 on your W-4. If you end up paying more tax on your paycheck than what was owed, you will get a refund on your tax return at the end of the year.
You may prefer having more money in your paycheck than getting a refund or owing at the end of the year, but that is a more complicated issue, as you will need all the facts to get the most accurate answer. Not only that, but usually Congress and the IRS do not determine the tax rates until the end of the year, so payroll may not have been accounting for the different tax rates.
If you want to know the exact amount of allowances or exemptions to claim, and what the various allowances or exemptions will do to your paycheck, give us a call for a consultation.
E-filed tax returns: Once the return is accepted, most IRS gov refunds are issued in less than 21 calendar days.
Paper filed returns: IRS gov refunds can take anywhere from 6-8 weeks from the date the IRS receives your tax return to issue a refund.
You can now check the status of your refund on Where’s My Refund? Check within 24 to 48 hours after e-filed tax returns, and four weeks for paper filed returns.
When the IRS begins processing your tax return, the Where’s My Refund? tool will show “Return Received” status. You will not see a refund date until the IRS finishes processing your tax return and approves your tax refund.
Once the IRS finishes processing your tax return and confirms your tax refund is approved, your status will change from “Return Received” to “Refund Approved”. Sometimes the change in status can take a few days, but it could take longer — and a date will not be provided in Where’s My Refund? until your tax return is processed and your IRS gov tax refund is approved.
The IRS will provide a personalized refund date once your status moves to “Refund Approved”. If the status in Where’s My Refund? shows “Refund Sent”, the IRS has sent your tax refund to your financial institution for direct deposit. It can take one to five days for your financial institution to deposit funds into your account. If you requested that your tax refund be mailed, it could take several weeks for your check to arrive.
Some tax returns take longer than others to process depending upon the situation. Some of the reasons it may take longer include incomplete information, an error, or further review. The sooner you e-file your return, the sooner you’ll get your tax refund.
The answer depends on the amount you owe.
Owe over $1,000 – Yes, you will need to make a payment when you file your tax return. The amount of the payment needs to be at least enough to get the balance down below $1,000. The reason for this is because you will be getting hit with the underpayment of estimated tax penalty. To stop the penalty from continuing to accrue, you will need to get the balance below $1,000.
Owe under $1,000 – No, you will not need to make a payment when you file.
Keep in mind that any outstanding tax balance is due by April 15th. If you have the means to pay for your tax balance, save yourself the headache, and pay as soon as possible.
You can make and IRS payemnt when you file, online, smartphone app, by mail or by phone.
IRS Payment when filing: If you e-file, you can make an IRS payment using your bank account with the IRS Electronic Funds withdrawal. You can choose the date and amount to be withdrawn; however, note that all tax liabilities are due by April 15. Some e-filing softwares also allow the use of debit or credit cards, just be aware that there may be a processing fee.
If you paper file your return, you can make an IRS payment by sending a check or money order along with the return through the mail. Be sure to make the check or money order out to the United States Treasury, and write down your Social Security Number (SSN), as well as the year and form number, in the memo line or at the top of the check
Online using bank account information: IRS Direct Pay is the website to use when making an IRS payment online. You can use your checking or savings account to make a payment or schedule a payment. You will need a copy of your tax return or (or tax ID for businesses) handy to reference information that will be asked. This is a free, secure, and fast way to make a payment with instant confirmation after payments have been made.
Online using debit or credit card: Use this link to choose from various websites that offer the service of making an IRS payment with a debit or credit card. You will need a copy of your tax return or (or tax ID for businesses) handy to reference information that will be asked. Be aware there are processing fees associated with every transaction.
Smartphone App – IRS2Go is the IRS’s app which can be used to make an IRS payment with a bank account or debit and credit cards.
IRS payment by Phone: Individuals – 800-829-1040
IRS Payment Mail: The IRS address you mail a check or money order to depends on your location as well as the reason for payments. Check the link to find out where to send your IRS tax payments to. Be sure to make the check out to the United States Treasury, and write down your Social Security Number (SSN), as well as the year and form number, in the memo line or at the top of the check.
If you’re a sole proprietor (as in, you’re the only one running the business and you are not legally incorporated), simulate withholding by putting aside 25 to 30% of your income into a savings account. You should pay your estimated taxes quarterly to the IRS and any relevant state revenue agency to avoid fines. The amount that needs to be paid according to the IRS is either 100% of last year’s taxes or 90% of your current estimated tax bill. However, the safest bet is to pay 30% of your income to the IRS every quarter, as your income will change.
Estimated quarterly tax payments are due April 15, June 15, September 15, and January 15 of the following year. (These quarters are not equal in length so don’t let the June deadline surprise you!) Make payments by mail, phone or online. Use the form 1040-ES to mail your estimated payment. Pay online using the Electronic Federal Tax Payment System (EFTPS), or pay by phone at 1-800-829-1040.
Simply put, the difference between the Internal Revenue Service (IRS) and the California Franchise Tax Board (FTB), is that the IRS collects tax for the Federal Government and the FTB collects income tax for the State of California.
California Residents: When filing your income taxes, you will need to file both a federal AND a state income tax return. These are two separate government agencies, so it is possible you could owe one agency and receive a refund from the other or vice versa. Do not assume that the refund due from one agency will pay for the tax you owe to another agency. The IRS and FTB do not communicate with each other; they are separate and should be treated as such. Just because you have a payment agreement with the IRS does not mean you have a payment agreement with the FTB.
No. Nearly all the business we do is via phone, email, internet or fax. With our secure client portal as a means of sharing files such as tax documents, as well as our e-sign program, all our work can be seen and done via the internet.
As IRS Enrolled Agents, we are licensed to practice in all 50 states. We handle all of the following via electronic communication with the IRS:
The only time we would need to meet in person would be a local field audit, for which the IRS requires a face-to-face meeting.
For 1) individuals who travel for their employment and do not get reimbursed or 2) self employed taxpayers, keeping track of your business mileage when it comes to tax time can be very beneficial. First, note the mileage that is allowed to count towards a deduction on the tax return. It does NOT include your commute to and from your regular workplace or office. What can be counted is any other mileage conducted for business purposes, including but not limited to travel to clients or customers or traveling among several offices within a region.
The easiest way to keep track of your business mileage is to use one of several mobile mileage apps. The apps use the GPS on your phone to track your trips, and ask you either daily or weekly to classify the trips as business or personal. At the end of the year the app will provide you with a report summing up the amount of mileage for business and personal, which will be used on your tax return.
The “old school way” to keep track of mileage is to keep a notebook inside your car and write down the starting mileage and ending mileage of each business trip with a date. At the end of the year you will need to go through your notebook and calculate the total mileage.
First of all, no need to panic — but you will need to address it as soon as possible. If you made a basic mathematical mistake, there is no need to worry as the IRS will fix that simple problem. However, if you made a mistake to the filing status, number of dependents, tax credits taken or left out, or the total income, you have the option to file an amended return.
The amended tax return is filed with the Form 1040X. This will need to be mailed to the IRS as they do not accept e-filed amended tax returns. Include copies of any forms and/or schedules that you are changing or did not include with your original return.
To avoid delays, file Form 1040X only after you’ve filed your original return. Generally, for a credit or refund, you must file Form 1040X within three years after the date you timely filed your original return or within two years after the date you paid the tax, whichever is later. Allow the IRS up to 16 weeks to process the amended return.
Most tax resolution companies base their fees not on the work that they have to perform, but on the amount of debt you owe. We don’t.
A doctor doesn’t charge you based on the severity of your injury, but rather on the particular services they provide to you. Likewise, tax resolution companies should not charge based on the amount of tax you owe the government. At EA Tax Resolutions, our fees are based on the tax forms we will prepare and file for you. All our service fees are itemized so you always know exactly what you are paying for.
Most tax resolution companies will give a hypothetical timeline on how long a case like yours will take given the amount they are going to charge you. This “timeline” can end up being costly as IRS interest and payments will continue to add up regardless of whether you have a professional on your case.
The affordability aspect is a factor for most people, and it is legitimate to not file all the forms until the company gets paid; however, you need to know that if you pay for the fees up front the work should get done faster.
At EA Tax we will work with you. If you need to get on a payment plan we will be more than happy to do so, however the work will not get done until 80% of the bill gets paid. If you pay everything upfront, we can guarantee your case will be given priority and that all resources will be allocated to finishing your case as soon as possible.
The tax resolution process consists of three separate steps:
Step 1: Investigation
Step 2: Tax Compliance
Step 3: Tax Resolution
Investigation: We will file a Power of Attorney on your behalf, contact the IRS to understand all the work that needs to be done, and analyze the IRS transcripts to utilize all the possible options to lower your tax liability. We will also gather all necessary wage and income transcripts the IRS has on file for the tax years that need to be filed (W2, 1099, etc.) to make sure we are not missing any income items when we go ahead and prepare your tax returns.
Compliance: Now we need to file all tax returns required for you to become compliant with the IRS. The years that need to be filed will be determined during the investigation. Also, the income information received during the investigation will be used to prepare the tax returns. Expenses or other relevant tax information will need to be obtained before finalizing the tax return to lower your tax liability.
Resolution: Once all required tax returns are filed and the accurate amount of tax liability is determined, we will explore all tax resolution options available. This includes the Offer in Compromise, Installment Agreement, Partial Pay Installment Agreement, or Currently Non-Collectible Status. A Penalty Abatement should also be considered during the process, as it can only be considered once a taxpayer is compliant (or has filed all necessary tax returns).
When you first call most tax resolution companies, you will be speaking with a salesperson. Not at EA.
At EA, from start to finish you’ll be communicating with your IRS Enrolled Agent.
Also, most companies have one person prepare your tax returns, and a different person handle the tax resolution process. At EA, the tax professional handling your resolution will also prepare your tax returns. This ensures consistency and quality control throughout the process.
We’ve had several clients leave large tax resolution firms and come to us because they weren’t getting responses from their tax professional. When you have debt with the IRS or any state revenue agency, time is of the essence. Penalties and interest accrue from the date those taxes were due, and you are responsible.
We believe delays due to unresponsiveness from your tax professional are unacceptable. We treat all our clients’ cases with urgency and respect, and will respond to all inquiries within 1-2 business days.
It is important to know if the professional you will be hiring has the experience and qualifications to handle your case. Is he or she a Certified Public Accountant (CPA)? Tax lawyer? IRS Enrolled Agent?
Here’s a breakdown:
CPA: Certified by the state to act as a public accountant. To become a CPA there are significant educational requirements along with having to pass a series of exams. CPAs can provide a wide range of services including accounting, auditing, financial planning, technology consulting and business valuation.
Tax Lawyer: A JD is a law degree. An LLM is a Masters in Law. (One could earn an LLM in taxation, but other areas of the law also offer an LLM.)
Having a law degree or two doesn’t necessarily mean that an attorney prepares tax returns. Keep in mind, lawyers do not have to demonstrate competence in tax law to pass the bar exam in most states.
IRS Enrolled Agent: An IRS Enrolled Agent is a tax professional who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee.
Enrolled Agent status is the highest credential the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete 72 hours of continuing education courses every three years.
Enrolled Agents, like attorneys and CPAs, have unlimited practice rights. This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and to which IRS offices they can represent clients.
At EA Tax Resolutions, we are all IRS Enrolled Agents. See our individual bios for more information on our personal experience and credentials.
In a time when scams and identity theft have become rampant, it is important to ensure your tax professional keeps your personal information safe and secure. The private and sensitive information contained in your tax documents are the stuff of an identity thief’s dreams: names, addresses, Social Security numbers, banking information, and so on.
The most secure way to send information is the old school way of a physical handoff; however, in the digital age this can be inconvenient. If you are to send your documents over the internet be sure it is secure. Secure methods of sending files over the internet include encrypted file sharing services and encrypted or password protected email. Ask your tax professional if your files will be encrypted when sending those through a file sharing service, as you wouldn’t want your identity to be compromised.
At EA Tax Resolutions we use the highest security standards in the industry to keep your information private. Whether that be storage of your personal information, or online file sharing, we use the most up to date encryption software to make sure your privacy is not compromised.