Carrie C. Susz, EA

I have a lot of clients who used to do their own taxes.  I don’t mind.  It’s always fun to talk with folks who have an interest in my field, where they are professional tax folks or are simply interested in knowing a little bit about how taxes work.

However, I think that tax-prep software does a disservice to people, especially freelancers and folks who own their own businesses.  I’m not talking about how it prepares the forms. (Although, I have seen people mis-interpret questions and then get a love letter from the IRS.) continue reading this article »

This is the one question that I hate to answer. I’ll admit it: the first time I heard the answer to this, I hated it. To this day, I hate replying to the inevitable “deadbeat client” question. So here we go…the dreaded answer, but first, the question that gets you there:

“My client didn’t pay me, can I claim a loss?” continue reading this article »

Let me start by saying that no tax preparer has a crystal ball and knows exactly what triggers an audit.  In fact, if you asked several experienced preparers what counted as an audit “red flag” you’d get several different replies, including a response or two about how red flags don’t exist.

So what’s the deal?  Why are people so convinced that audit red flags exist?

continue reading this article »

In an article posted on the Tax Foundation’s Tax Policy Blog I found some interesting facts about tax prep. The post itself is a comment about how Timothy Geithner (Obama’s nominee for Secretary of the Treasury) himself was caught owing back taxes due to the complexity of the tax code.

• According to the U.S. Treasury Department, the compliance costs of the income tax system amounts to about $140 billion each year—$100 billion for individuals and another $40 billion for businesses. This is roughly 10 percent of individual and corporate income tax revenues.
• The compliance burden also works out to about $1,000 per family every year.
• On average, Americans spent more than half a work week—26 hours—on their taxes each year.
• About 60 percent of taxpayers don’t even prepare returns themselves, but pay tax preparers to complete returns on their behalf.  Another roughly 15 percent of taxpayers use tax preparation software.  That is, only about a quarter of taxpayers do their own taxes.
• According to the IRS, individual taxpayers (including sole proprietors) spent roughly 3.5 billion hours to comply with the tax system.  This is equivalent to hiring almost two and one-half million ”hidden” IRS employees and 20 times the agency’s current work force.
• Businesses spent over 3 billion hours complying with the tax system at a total cost of roughly $40 billion annually.

It will be interesting to see, if confirmed, whether Mr. Geithner will be able to make any significant changes to simplify the tax code.

You can imagine my surprise when reading through my weekly NAEA E@lert and finding my own name and a link to my blog! Wow! Thanks, NAEA–and welcome to my peers visiting my site for the first time.

I was asked an interesting question the other day: “So once you have your CPA, you’re going to let the EA designation go?”

The short answer to this is, “No.”

“Why?” continue reading this article »

Well, if they’re anything like me, they read about taxes and do research. (Woo! We’re a crazy bunch!) My favorite sites?

• If I’m in a pinch for time and just want tax-related amusement, I go and read Russ’s Taxable Talk blog. He has great info on tax fraud and evasion cases. It’s a fun read.
• When I want some info on current events, along with fun that compliments Russ’s blog perfectly, I go see Joe over at Roth Tax Updates.
• At times, I get really tax-geeky, and I read Paul’s Tax Prof blog.When he goes into law-related items, I do glaze over, but the following article is usually some more juicy tax happenings!
• As for research, I like CCH (paid service). However, Tax Almanac has some great discussion forums which can provide some pretty lively debates about tax issues.

So there you have it—what I do for fun. I’m sure you wish you didn’t know.

If you’ve considered getting the Enrolled Agent designation, go for it! But then, your first question is probably going to be, “How do I study for this darn thing?”

Let me tell you what I did: I took a class. Not just any class–H&R Block’s class. You see, at the time that I was working for Block, I had a mostly free summer (besides my college classes) where I was able to study.   Taking the course through Block was only $20, too–what a deal!  It was after my second year in taxes that I took the Block class and passed the exam. At the time that I took the exam, there were four sections. Now, on the other hand, there are three, since two of them were consolidated. (See my previous post on EA vs. CPA.)

But looking back, the question is: do you really have to take a class? No, I don’t think so. If you have experience in all types of taxes–both business and personal–it is possible to pass. So here’s how I would approach it if I were taking it today…

1. Look at the questions on the IRS website from prior years to see if you really want to do this. Luckily, there are six years of exams on the site. Keep in mind that the questions from each of the exams are specific to the year they were tested.
2. Submit your form 2587 so you can sit for the exam.
3. Find a book full of updated questions for the SEE (Special Enrollment Examination). If your local bookstore doesn’t have one, look online for a current one.
4. Work through the questions. Repeatedly. Seriously, this is how I passed with minimal of instruction. I worked the questions, looked up answers I didn’t understand, and took notes. I didn’t feel really comfortable with it until I was getting an 87% on all the practice sections. For some of the sections, it was easy, for others, I spent a lot of time on it. For two weeks before I took the test, I studied 8-10 hours a day. (Remember, I took all 4 sections in two days.)
5. Read Circular 230. I’m not kidding. Read it over and over. Take notes.
6. Learn about various penalties. Failure to file, late payment, fraud, all of the penalties–business, fiduciary, and individual.

Ready? Well, here’s some info to get you started, courtesy of the IRS. Good luck!

I’ve gotten questions about the difference between the EA (Enrolled Agent) and the CPA (Certified Public Accountant) and I’d like to answer those now.

Is an EA the same as a CPA?

The short answer to this is no. However, it really depends what characteristics you’re looking at. continue reading this article »

Every year we have clients that need tax estimates so that they don’t have to pay an underpayment penalty when they file their taxes. It’s not a difficult thing to prepare, but if you’re self-employed and your income varies from year to year, the form can be a little confusing. There are a couple of options for figuring out how much to pay. continue reading this article »