Carrie C. Susz, EA

IRS released guidelines to help taxpayers determine if their businesses were, in fact, hobbies. Why does this make a difference? Well, you can’t deduct the expenses for a hobby beyond the amount that you earned from the hobby. It’s incentive to make your hobbies break even.  Here’s a link on how to determine for yourself if your business is a hobby.  We’ll see Tax Court’s input tomorrow.  (For that matter…the next few days.)

In the last few weeks I’ve participated in the Susan G. Komen  Breast Cancer 3-day walk and attended the IRS Tax Forum in Las Vegas.  Sorry blogging has been light–I hope to rectify the situation soon.

I came across this site. I love the recently released CPA exam questions. Those are pretty neat–and remember, no where does it say those questions are retired–study them because you never know!

I’ll admit, I took this section before. I needed a 75 to pass and got a 74. What a bummer! Darn that Financial Management–it was the only component that I missed getting a passing score on. Here’s how BEC (Business Enviornments and Concepts) breaks down:
Business Structures: 17-23%
Financial Management: 17-23%
Information Technology: 22-28%
Planning and Measurement: 22-28%
Economics: 8-12%
I did really well in the IT component of the exam, which proves that I actually listen to my husband when he discusses his work. I took this a week ago, and unlike the last time, when I felt really confident, now I have to admit, I wouldn’t be surprised if I passed or didn’t. Results will be out in about 6 weeks.

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.

Posting will most likely be higher than normal–I’m trying to study for the Auditing section of the CPA exam and find myself wanting to do anything other than study.

Luckily, I have Bisk software and DVDs to keep me company as well as a Becker book. I think overall, Becker is more comprehensive, but Bisk throws in random tidbits that will probably help me pass. On that note, this is how the Auditing exam breaks down:

• Planning: 22-28%
• Internal Control: 12-18%
• Information: 32-38%
• Review: 8-12%
• Communications: 12-18%

Communications is the audit letters, letters to underwriters, review and attestation letters. It was my worst section last time I took the exam. I actually think that failing to memorize things in this component is why I missed it. Well, that and the average passing score being an 81%, which they scaled down to a 75%…so, yes, my score was scaled down by 6 points…that would have allowed me to pass. Talk about disappointment.

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!

Since we’ve started with the “vs.” theme in my “EA vs. CPA” post, let’s continue! We’ll go through a list of pros and cons for having an on-site bookkeeper compared to a remote or contract bookkeeper. There are a couple of things that need clarification. By onsite bookkeeper, I’m talking about a full or part-time bookkeeper who is a regular employee of your business. The remote or contract bookkeeper is a bookkeeper where you send your information and they prepare your books and give you the finished product (remote) or when the bookkeeper comes to your place of business on a regular basis and prepares your books (contract). continue reading this article »