FAQ

	FAQ: Does filing at any particular time or manner increase my odds for an audit? If you call attention to your return, it probably will be noticed. Whether by writing in red across your return a "tax protestor" slogan, by not signing your return, or by not filling in all required lines, you will get your return noticed and at the very least you'll get a letter asking to further explain your position. Absent such blatant attention-getting behavior, however, your chances of audit depends upon the numerical amounts you place on your return and how they compare to certain norms determined by IRS computers (and kept secret from the public). Some audit selection is also done randomly, although those odds are less than a fraction of one percent under current practice.		January Tax Compliance Calendar As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses, and other taxpayers for the month of January 2007
	Recordkeeping Basics: Individual Taxpayers After your tax returns have been filed, several questions arise: What do you do with the stack of paperwork? What should you keep? What should you throw away? Will you ever need any of these documents again? Fortunately, recent tax provisions have made it easier for you to part with some of your tax-related clutter.		Recordkeeping basics: Business Taxpayers Maintaining good financial records is an important, but often neglected, part of running a successful business. Not only will good records help you identify strengths and weaknesses in your business' operations, but they will also help out tremendously if the IRS comes knocking on your door.
	Client FAQ: Hiring your spouse Q. I have a professional services firm and am considering hiring my wife to help out with some of the administrative tasks in the office. I don't think we'll have a problem working together but I would like to have more information about the tax aspects of such an arrangement before I make the leap. What are some of the tax advantages of hiring my spouse?		Managing your business' cash flow While one of the most important keys to financial success of any business is its ability to properly manage its cash flow, few businesses devote adequate attention to this process. By continually monitoring your business cycle, and making some basic decisions up-front, the amount of time you spend managing this part of your business can be significantly reduced.
	How Do I?... Compute financial ratios How quickly could you convert your assets to cash if necessary? Do you have a quantitative way to evaluate management's effectiveness? Knowing your business' key financial ratios can provide valuable insight into the effectiveness of your operations and your ability to meet your financial obligations as well as help you chart your company's future.		Tracking the tax basis of a partnership interest For partnerships and entities taxed like partnerships (e.g., limited liability companies), each partner must compute the basis of his/her partnership interest separately from the basis of each asset owned by the partnership. Because the basis of this interest is critical to determining the tax consequences resulting from any number of transactions (e.g., distributions, sale of your interest, etc..), if your business is taxed as a partnership, it is important that you understand the concept of tax basis as well as how to keep track of that basis for tax purposes.
	How do I?... Implement basic internal controls As you open the doors of your new business, the last thing on your mind may be the potential for the loss of profits through employee oversight or theft - especially if you are the only employee. However, setting up some basic internal controls to guard against future loss before you hire others can save you headaches in the future.		Keep an 'arms length' when transacting with family members Although the old adage warns against doing business with friends or relatives, many of us do, especially where personal or real property is involved. While the IRS generally takes a very discerning look at most financial transactions between family members, you can avoid some of the common tax traps if you play by a few simple rules.
	Business interruption insurance can be a real life saver Losses incurred by a small business due to a catastrophe or natural disaster can not only be a major inconvenience but many times can cripple the business’ ability to produce income and ultimately meet its obligations. While your commercial property insurance policy can help replace damaged assets, you may want to consider business interruption insurance to protect yourself from the potential loss of income in the event of an unexpected disaster.		Get the IRS’ “seal of approval” for your small business retirement plan – at no charge Retirement plans can be costly for employers but the IRS has cut some important fees so if you haven’t set up a plan, or want to change your plan, now is the time to act. The IRS will waive “user fees” for determination letters for qualifying small businesses.
	How do I…? Protect my 401(k) assets Enron employees learned the hard way about the perils of not diversifying their investments. Many of them had their entire retirement savings tied-up in Enron stock and when share prices went south, so did their retirement funds. Unfortunately, this situation wasn’t an isolated case -- many people have 401(k) plans heavy with company stock. Here are some tips to help you safeguard your 401(k) assets.		Developing an emergency safety plan for your new business If you’re starting a new business, much of your time is consumed by raising capital, getting your product or service off the ground and hiring people. Don’t forget about workplace health and safety. It’s your legal duty to evacuate your employees and keep them safe in the event of an emergency. They’ll be looking to you for leadership and, in today’s world, you have to plan for every possible disaster.
	How do I?…Pay my payroll taxes electronically The Electronic Federal Tax Payment System (EFTPS) allows individuals and businesses to make tax payments by telephone, personal computer or through the Internet.		Small businesses getting extra help to sponsor retirement plans Among many issues a small business owner faces in these days of tight money is whether to establish or continue a company-wide retirement plan. The IRS has launched a major campaign --with new incentives-- to convince more small business owners that it is in their best interest to sponsor a retirement plan, or expand the one that they have. What are the new pros and cons of doing so?
	Tax penalties: How much can a mistake, or worse, cost? You should beware of fancy footwork when it comes to estimating, filing, and paying federal taxes. One misstep can lead to harsh penalties. Willful or fraudulent mistakes can generate criminal sanctions as well.		Frenzy of interest expected in designated Roth contributions to 401(k) plans Employers are gearing-up to sponsor a new retirement savings option: designated Roth contributions to 401(k) plans. Starting immediately in 2006, employees will be able to designate all or part of their contributions to their 401(k)s on an after-tax basis. The change will make most distributions tax free. Although the change will mean more complexity for employers, most are expected to offer the option because of the big benefit that workers can enjoy from tax-free buildup in their 401(k)s.
	Get ready for the new Roth IRA conversion opportunity The just-signed Tax Increase Prevention and Reconciliation Act eliminates the $100,000 adjusted gross income ceiling for converting a traditional IRA into a Roth IRA. While this provision doesn't start to apply until after 2009, now is not too early to make plans to maximize this almost-too-good-to-believe opportunity. The Roth IRA has benefits that are especially useful to high-income taxpayers, yet as a group they have been denied those advantages up until now.		FAQ: What does the change in the "kiddie tax" do for college savings? The recently-passed tax law raises the age for which the "kiddie tax" applies from under 14 to under 18 years of age. That means that investment income for children ages 14 through 17 are now suddenly taxed at their parent's tax bracket. Without planning, this can wreck havoc to a college savings plan.
	How do I?...Compute gain in a like-kind exchange when some cash is received When you receive cash other than the like-kind property in a like-kind exchange, the cash is treated as "boot." Boot does not render the transaction ineligible for non-recognition treatment but it does require you to recognize gain to the extent of the cash received. The same is true for other non-like-kind property. In other words, anything you receive in addition to the like-kind property, such as relief from debt from a mortgage or additional property that is not like-kind will force you to recognize the gain realized.