1. What is the difference between eFile and eSignature?

 

eFile is the process of sending your tax data via electronic means to Federal and State tax authorities.  Taxpayers sign eFile authorizations to give to their tax return preparers permission to send their tax data by electronic means. Signatures can be manually signed on paper eFile authorizations or they can be eSigned using electronic means.

 

eSignatures is a process that uses electronic means (emails and the internet) to electronically attach a signature to an electronic document.  The process is initiated by the tax preparer who sends an email invitation to the taxpayer to eSign documents.  The email contains a button or link to click that brings the taxpayer to a webpage that contains the document(s) that require signatures and dates and provides a means for typing or using a computer mouse or touch screen to attach an electronic signature.  

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eSigning tax returns does require the use of a Netclient portal.  The IRS requires tax prepares to provide a copy of the completed tax return to the client for their review before signing their eFile authorizations.  E.P. Tremblay uses the Netclient portal to present a copy of the return to be electronically filed.  Therefore, if you choose to eSign your eFile authorizations, you will also need to access your Netclient portal in order to view your returns.

 

2. What is Due Diligence? Why do I have to answer these questions? (EIC, EITC, AOTC, HoH)

 

As a taxpayer you may be eligible for certain refundable credits that directly reduces the amount of taxes you owe, filing statuses that can potentially expand your ability to receive certain credits, or have certain transactions that reduce your income subject to taxes. These advantageous situations can save taxpayers thousands on the taxes they owe. Consequently, the Internal Revenue Service (IRS) requires individuals to provide documentation to ensure that the taxpayer is eligible to receive the credits, able to file as a certain status, or deduct certain expenses. If you are eligible for any of these tax benefits, as a paid tax preparer, we will inquire for you to provide additional documentation to complete our Due Diligence. These documents will be retained to protect against IRS Audits for both the taxpayer and preparer. 

 

3. What documentation can I provide for Due Diligence Checks?

 

For tax benefits that require an eligible child or credit, a taxpayer can provide:

1. School records or statement

2. Landlord or property management statement

3. Health care provider statement

4. Medical records

5. Child or dependent care provider records

6. Placement agency statement

7. Social service records or statement

8. Place of worship statement

9. Indian tribal official statement

10. Employer statement

 

If you are claiming a disabled child, provide proof of the disability with one of these documents:

1. Doctor statement 

2. Other health care provider statement 

3. Social services agency or program statement 

 

If you are self-employed, provide proof of business ownership with one of these documents:

1. Business license 

2. 1099MISC forms 

3. Records of gross receipts 

4. Income summary 

5. Expense summary 

6. Bank statements

 

If you are claiming education credits, provide proof of qualified education expenses:

1. 1098-T

2. Loan Disbursements and Payments

3. Receipts for any qualified school-related expenses not paid to school

4. If your child was born in the current year, provide a copy of your child’s birth certificate 

 

4. I lost my tax documents how can I get new ones?

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• W2 - 🡪Contact your employer’s HR or payroll department

• Old tax return - Get a transcript from the IRS

• 1099 - Log into investment account, can also provide year end statement

• 1098 - interest statements can be received from your bank

 

5.  My child does not live with me full-time; can I still claim him/her as my dependent? 

 

No, a dependent must live with you for more than half of the tax year (6 months) to be considered your dependent. There are other qualifications that determine whether a child who lived with you for more than 6 month qualifies as your dependent. Contact your tax preparer to review the qualifications and to determine if you comply. 

 

6. Do I have to file a tax return?

 

No, if your income falls below a certain threshold, you may not have to file a tax return. However, you must file a tax return to claim a refundable tax credit or receive a refund from previously withheld income tax. It may be a good practice to still file a federal tax return even if you are not entitled to any repayments or refundable credits as it will reduce the risk of identity theft as another may not use your identity to file a false tax return. 

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7. I am over 73 years old, how do I know how much I must withdraw from my IRA, Roth IRA, and 401(k) plans to avoid any penalties? 

 

Simply, you cannot keep retirement funds in your account indefinitely- once you reach age 73 you must begin taking required minimum distributions (RMDs) from your retirement accounts except for Roth IRAs. There are no required minimum distributions for Roth IRAs if you are the original owner. Individuals must make these distributions by April 1st in the following calendar year or else they will be subject to a 25% penalty of distributions not taken. Contact your tax preparer for more information regarding penalties and calculation of your required mandatory distribution. 
 

8. I know someone in the same exact situation as me. From the amount of money we make, to our children’s ages, retirement contributions, and our filing status. Last year they received a much bigger refund than I did, why?

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Similar tax situations can have a significant difference in refund amounts. The most common explanation is a difference in how tax withholding from wages or salary is calculated which is determined by how you completed your W-4 Form.  Other reasons may include the amount of itemized deductions and/or eligibility for tax credits.  To get the best results on your tax returns, it’s best to consult your tax preparer.

 

9. EP Tremblay’s tax preparation fees are much more than my previous preparer’s. How come?

 

There are many factors that affect the pricing of tax return preparation. Some preparers are solo practitioners who operate from home and have very little overhead expenses.  Some preparers invest more money in continuing education, data security, technology and payment services that allows for client’s portals, electronic signatures, emails newsletters and electronic/credit cards payments.  Some preparers are available year-round and available to help with Federal and State tax notices and financial advice.  Some preparers charge by the form regardless of how much time it takes to prepare, and others factor in the time and expertise of the preparer working on the return.  When comparing EP Tremblay’s tax preparation fees with others, you may find it helpful to have a conversation with your tax preparer and consider whether the overall value of the service provided by EP Tremblay justifies the fee charged.  

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