Here are answers to some of the most Frequently Asked Questions our CPA Firm receives.
Q. How long should I keep my tax records?
A. Our CPA Firm recommends that the receipts supporting items on your tax returns should be kept for four years after the return due date. However, we feel you should retain copy of all past tax returns forever. We also feel that all documents in support of loans and mortgages should be kept at least until disposition. Because there can always be mistakes, it is an even better idea to keep all items relating to property and loans forever, in case a lien question ever arises.
Q. What does it mean to be a community property state?
A. In community property states, most property acquired during the marriage (except for gifts and inheritances) is owned jointly by both spouses and is divided upon divorce, annulment or death. Joint ownership is presumed by law in the absence of specific evidence that would point to a contrary conclusion.
In the United States there are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If property is held as community property, each spouse technically owns an undivided one-half interest in the property.
In Arizona, the tax law states that all income is split 50/50 no matter who earns it. Also, if one person itemizes, they both must itemize.
Q. How can I contact the IRS about my tax return?
A. You can call the IRS at its toll-free line at 800-829-1040. To be ready to respond, you should have your Social Security number, your filing status and your refund or payment due amounts. Allow between 4 to 6 weeks after filing before you contact the IRS.
Q. How can I obtain a copy of my tax return?
A. Our CPA Firm will supply you with a copy and if you lose it. If we did not prepare the return, and for some reason you do not have a copy in your possession, you will need to file Form 4506, Request for Copy or Transcript of Tax Forms, with the IRS Service Center where you originally filed your missing return.
Q. What records do I need for an accountant to file my tax return?
A. Our CPA Firm will provide a data collection form for your convenience that is a checklist containing most of the items that you will need. However, a detailed record of your income and expense items will be required to support our entries as will a record of any other items reported on your tax return. Since totals of each category of income and expense will help us save time and cost, it is the preferred method of information submission. We will also need your last year’s return.
Q. Can I deduct child support payments?
A. No. Child support payments are not deductible because they represent a pre-existing legal obligation to support your children.
Q. In a divorce, who is entitled to the child dependency exemption?
A. The parent who had custody of the child for the greater part of the year is generally treated as the parent who provided over one-half of the child’s support and will claim the exemption if other tests are met. The divorce, separate maintenance or custody decree or agreement usually determines custody. If no decree or agreement establishes custody, then the parent who had physical custody for the greater part of the year is entitled to the exemption.
Q. Do you service clients outside of Arizona?
A. Yes. Due to available technology, distance is no longer a problem. We service clients in all states. For example, our tax preparation software includes every state, and the internet allows us to service clients more effectively from distant locations.