Kyrish Certified Public Accountants

Frequently Asked Questions (FAQ)

  • Q. Is filing tax extension okay?

    A. Filing tax extensions is okay if you need more time to finish your returns. Many people today need more time to prepare their federal tax return. However, extension of time to file a return does not grant any extension of time to pay a tax liability. If taxes are not paid, and no effort is made to pay them, the IRS can ask a taxpayer to take action to pay the taxes, such as selling or mortgaging any assets owned or getting a loan. If effort is still not made to pay the bill, or make other payment arrangements, the IRS could also take more serious enforced collection action, such as levying bank accounts, wages, or other income, or taking other assets.

  • Q. How to rectify mistakes after the returns have been filed?

    A. Returns can be amended by filing form 1040X. Generally, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.

  • Q. How to protect against Identity Theft?

    A. Identity Theft is one of the big issues facing every one of us and if we take a few simple steps we can protect ourselves from identity theft. Contact your CPA if you receive an IRS notice that states, more than one tax return for you was filed or IRS records indicate you received wages from an employer unknown to you. Don't carry your Social Security card. Check your report every 12 months. Secure your personal information and financial information.

  • Q. Do I need to pay estimated taxes?

    A. Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

  • Q. What if I did not pay enough taxes during the year?

    A. If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax.

  • Q. When does IRS charge Penalties?

    A failure-to-file penalty may apply if you did not file by the tax filing deadline. A failure-to-pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline.
    The failure-to-file penalty is generally more than the failure-to-pay penalty.
    The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late.
    If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
    The IRS’s first-time abatement (FTA) penalty waiver, remains little known and often unrequested by qualifying taxpayers. It allows a first-time noncompliant taxpayer to request abatement of certain penalties for a single tax period.
    Individual taxpayers may request an FTA of a failure-to-file or failure-to-pay penalty. Business taxpayers can request an FTA of those penalties or of a penalty for failure to deposit payroll taxes.

  • Q. How long should i keep my documents?

    A. The length of time you should keep a document depends on the action, expense, or event which the document records. As a generally rule, you must keep all records until the Period of Limitations for that tax return runs out.

  • Q. What is Period of Limitations that apply to income tax returns?

    A. Period of Limitation varies from 3 years to 7 years based on different situation. For instance, if you file a claim for a loss from worthless securities or bad debt deduction then Period of Limitation is 7 years. Keep records indefinitely if you do not file a return or file fraudulent return.

  • Q. Do we keep proof of insurance?

    A. You should keep records of your own and your family members’ health care insurance coverage, including records of employer provided coverage or premiums paid and type of coverage for private coverage, so you can show that you and your family members had and maintained required minimum essential coverage.

  • Q. Do I have to keep my employees information?

    A. If you have employees, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later.

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