Free Sample Letters for a Start-up Tax and Bookkeeping Business
posted Apr 23, 8:55 pm (1009 days ago), permalink
The following sample forms and letters are designed for a tax professional and/or bookkeeper, and may be used freely without the prior consent of the author or publisher. You may freely distribute these forms for your own use only. These forms are informational only and not a substitute for legal advice. If you have legal questions, please consult a qualified attorney.
These forms are excerpted from Christy Pinheiro's book, How to Start a Successful Home-Based Freelance Bookkeeping and Tax Preparation Business
COVID Legislation and the EA Exam
posted Apr 18, 9:23 am (1015 days ago), permalink
Congress passed three COVID-related bills in March 2020. These bills included dozens of retroactive tax law changes that will affect the 2018 and 2019 tax year (retroactively) as well as the 2020 tax year going forward. We can confirm that Prometric and the IRS will NOT be testing on any retroactive tax law changes during the May 1, 2020 - February 28, 2021 testing cycle.
Official IRS Poster: Do you Need to File?
posted Apr 6, 3:06 pm (1027 days ago), permalink
HOW to CANCEL a Scheduled IRS Payment
posted Mar 30, 3:53 pm (1033 days ago), permalink
With everyone being more careful about their spending, here is a simple guide for how to CANCEL a scheduled IRS payment. Feel free to share! And please be safe!
How to CANCEL an already-scheduled IRS payment:
(1) Direct pay: Cancel a scheduled payment by using the confirmation number, use the "Lookup Payment" feature. Cancel at least 2 days before the payment withdrawal date. (
2) EFTPS: "Click on payments" Login and click "cancel a tax payment" and follow the instructions. Must cancel at least 2 days before the withdrawal date.
(3) Direct Debit: You must contact the U.S. Treasury Financial agent directly at: 888-353-4537. You must call at least 2 days prior to the payment date.
(4) Credit card payment: a credit card payment must be canceled through the card payment processor.
Free IRS Course: An Overview of the Foreign Tax Credit
posted Jan 27, 10:06 am (1097 days ago), permalink
An Overview of the Foreign Tax Credit
Thursday, January 30, 2020
This webinar will:
- Describe the purpose of the foreign tax credit
- Describe the purpose of properly sourcing income for foreign tax credit computation purposes
- Determine the criteria that taxes must meet in order to be eligible for the foreign tax credit
- Discuss the statutory withholding rate versus the treaty rate Provide a live Q & A Closed captioning will be offered.
- Continuing Education: All participants who qualify will receive a Certificate of Completion.
Tax Professionals earn up to 2 CE Credits - Category: Federal Tax.
Registration: Please visit the registration website.
Questions: Email: firstname.lastname@example.org Sponsored By: IRS Stakeholder Liaison
Date: January 30, 2020
Time: 2 p.m. (ET), 1 p.m. (CT), 12 p.m. (MT), 11 a.m. (PT), 8 a.m. (Hawaii)
Free ETHICS Course for Enrolled Practitioners, December 3, 2019
posted Nov 29, 6:24 am (1156 days ago), permalink
Free CPE Announcement:
Presented by the Tax Practice Pro and John Sheeley, EA
Free ETHICS CPE Course!
Earn 2 CPE Credits
John Sheeley, EA and TaxPracticePro are hosting a FREE Circular 230 ETHICS course for enrolled practitioners on Tue, December 3, 2019, 1:00 PM – 2:40 PM EST. Sign up now and get your ethics credits for the year!
(NOTE: PassKey is not affiliated with TaxPracticePro, we are just sharing this information).
What are My CPE Requirements if I am an EA and Also an AFSP?
posted Nov 4, 9:20 am (1181 days ago), permalink
Question: I just became an enrolled agent this year. I would like to keep my AFSP certification, as well. What do I have to do in terms of CPE in order to meet the requirements for both the AFSP as well as my EA license? Most importantly, do I have to take 4 hours of ethics now, since the EA license requires 2 hours per year, and the AFSP also requires 2 hours per year?
Christy's Answer: Congratulations on earning your EA license! If you are fulfilling your annual CPE requirements for your EA license, you automatically will fulfill the requirements for the AFSP. Note that, once you become an EA, you don't need to maintain the AFSP credential at all, but some practitioners like to add the AFSP to their list of credentials as an additional feather in their cap. Note that the IRS' "official" position is that credentialed preparers who already possess a much higher level of qualification (such as EAs and CPAs) are not the target for the AFSP requirements, but that they may voluntarily participate in the AFSP program if they wish. You can make this election in your PTIN account.
Filing a Tax Return with an ITIN or SSN Mismatch, What do I do?
posted Nov 3, 9:49 am (1182 days ago), permalink
Question: I have a client that recently received a valid Social Security Number. He was previously filing with an ITIN. The client is considered a U.S. resident for tax purposes (even in prior years) based on substantial presence. In 2018 he received his social security number, but he has 2 different w-2 forms with 2 different socials for different. One is his "real" SSN that he was given, and the other is a "made-up" social he used for almost all year up until November. I know that will cause an issue with the IRS if I just file it with his real social so anyone can tell me how to approach this?
Christy's Answer: If a taxpayer has a valid Social Security Number, that is the number that should be used on all the taxpayer's returns (this applies even if you are preparing prior years). So, use the SSN on all returns. Some software will still allow you to e-file, even if you have a SSN mismatch.
I have heard of tax professionals having problems with this in the past, usually with the taxpayer not getting proper credit for tax withholding. So I personally do not advise e-filing when you have an SSN/ITIN mismatch. The easiest solution is to file on paper and include a copy of all the taxpayer's W-2 forms, showing the withholding amounts. I’ve done this process dozens of times with no issues. You don’t need to include any type of explanation (the IRS knows what's going on, this is a common enough issue). You will have to do the same for the state, too. The paper filed returns will generally have a longer processing time, but beyond that, there are typically no issues.
Filing a Tax Return After an E-file Rejection (Past the Filing Deadline)
posted Oct 29, 8:00 am (1187 days ago), permalink
Question: I have a client who tax return I filed on April 15, and the return was was rejected late in the evening, on April 16. No extension was filed (my bad). I resubmitted on April 17, but the client received an IRS notice with a penalty for late filing. I would like to try and have this late filing penalty abated. What should I do?
Christy's Answer: Late filing penalties are always a bummer. But in your case, you're in luck! The taxpayer qualifies for an automatic abatement because the return wasn't actually LATE! If you e-filed on the due date, and have proof of that, then the return is NOT late as long as you either
(1) resubmitted the return within 5 days, or
(2) filed it on paper within 5 days of the rejection.
This is officially called the "transmission perfection period". There is a longer "perfection period" for most entities, which is 10 days. This gives the tax practitioner more time to correct the return and submit it, without the return actually being considered late. If the IRS does send the taxpayer a notice, then you would have to respond to the notice with proof of the e-file submission (the date the return was submitted to the IRS), as well as proof of the rejection.
Note: The perfection period is not an extension. It is generally a good business practice to file an extension for each taxpayer who is close to the filing deadline. However, in the case of the extended filing deadline (October 15) the transmission perfection period STILL APPLIES. So if the taxpayer's return is e-filed on October 15, and the efile is rejected, the taxpayer still has 5 days to correct the return and resubmit it, (either on paper or via e-file) and the return will still be considered timely.
References: IRS Publication 1345, IRS efile handbook.
Using a Motorcycle for Business, What's the Tax Treatment?
posted Oct 23, 9:05 am (1193 days ago), permalink
Question: I have a self-employed business client that purchased a motorcycle for business use (to save gas). When inputting the asset into my software, I do not see an asset type for this. What asset type do I choose? I am going through the form instructions on IRS.gov, however, as we know there are nuances and specifications that I may not be aware of. Please help!
Christy's Answer: The MACRS asset class for a motorcycle is the same as any other vehicle: 5 years. There are some nuances, however. First, your professional software may not actually list "motorcycle" as a vehicle choice. But, it doesn't matter what the software says. Take, for example, a golf cart (that is used as a business vehicle on a golf course) or an ATV that is used on a farm. These are all specialty vehicles that can be business-use, depending on the taxpayer's scenario. Your software may not list any specialty vehicle like that, but a motorcycle still a vehicle with a 5-year depreciation class life. Some caveats: Motorcycles are considered "listed property". This means the taxpayer can only claim Section 179 depreciation if the asset is used at least 50 percent of the time for business. Taxpayers also have to keep records of the motorcycle's use. Motorcycles also cannot use the standard mileage rate. This requires the taxpayer to keep track of what they actually spend during the year for gas, repairs, maintenance, insurance, license and registration fees, and other expenses, such as mandatory safety gear (like a helmet). This is true of all similar vehicles, as well, such as: mopeds, scooters, or bicycles. These vehicles must use actual expenses or actual costs.