An Oakland Calfornia based Tax Return Preparation Firm - Company Message
Tax Tips

Phillip Morris stock

I have held this for years.. and made quite a bit on it..

a few months ago I wrote an option against the stock.. collected the premium on the option which expired on 1/19 ..

I will be selling the stock .. I think it will still be a decent dividend earner, but with the pressure on tobacco companies, even this top quality stock may find it more and more difficult to earn more, this would lead to no dividend increases as well as their losing some ability to buy back stock.

I will be looking at some other high dividend areas..

some Business Development companies (BDCs) and Master Llmited Partnerships (MLPs

you can get decent returns on these.. maybe never any quick doubles, but steady growth.. using dividend reinvestment plans (DRIPs) can result in very good long term results .. These are especially good for retirement accounts, but be careful with MLPs as they can have non related business income which can create tax problems in retirement accounts .. the amount of this that you can have is limited .. if you exceed the limit, you can end up with owing taxes

2012 tax changes

I have posted a summary of the 2012 tax changes on the main website
tab is tax changes 2012 summary

The IRS will not accept any returns until Jan 30th

In addition if your return includes some forms you may not be able to file until late Fed at the earliest .. people most affected are those with depreciation .. usually rentals or small businesses have this form

2013 update

I have been remiss in not posting more often here.

I have been spending a lot of time on investing .. doing a lot more reading and research about the area .. it is amazing even after many years of investing that there are changes that need to be learned.

an area that has gotten my attention lately has been Business Development companies .. these are good dividend payers plus have the opportunity for capital gains if the economy does well.

I am more optimistic about the economy than I was a year ago .. mostly due to being down so long, the bottom looks like up (thanks BS&T for that line)

The politicians continue to make a mess of things, but eventually the market has more power than they do, so things start to look better.. unfortunately, even with improvement we will continue to see high unemployment rates here .. until DC gets out of the way and lets business do more to grow.

Dividend paying stocks have always been a favorite of mine, often they don't get the high growth opps that smaller stocks get, but they also don't have the downside risk as in a low interest rate environment the dividend yield helps to put a floor.

That said, look for stocks that can grow their dividends.. these are the best types as you get capital gains as well as dividends.

I posted a summary of the tax changes (see menu).. capital gains still get preferential treatment, but not as good for high income people as in the past.

Financial Fitness

This was on Yahoo... a pretty good read for a refresher in keeping your finances under control

You don't have to be an expert to manage your money and prepare for life's unexpected twists and turns.

If you're like most people, your New Years Resolutions have already expired. You haven't lost 10 pounds, you're not going to the gym five days a week, and when was the last time you called your mother?
Chances are, your financial goals have fallen by the wayside too. I don't want to discourage you from paying down debt, saving a down payment for a house, or any of those big goals that you may have set for yourself at the beginning of the year. But if you sort of tuckered out on the big things (or even if you're still going strong -- go you!), maybe it's time to set some more achievable goals. Here are 10 things you can do in an hour or less apiece to make yourself -- or your household -- more financially sound.

1. Join Mint

I'm an unabashed fan of the site, and not just because they do some great data-mining on their blog. (Don't worry, all at the very aggregate level). It will track and aggregate your spending for you, showing you where the money is going, and what's happening to your net worth over time. If you have sort of complicated finances -- as I do, living in a two-journalist household -- then it's an absolute godsend at tax and expense time. And in the last year they've added goals, allowing you to set your spending, saving, and debt-reduction goals and then track how you're doing with a thermometer. It's surprisingly motivating, and it's free.

I probably spend 20 minutes a week in Mint, categorizing our expenses and monitoring our financial position. But even if you don't put in that kind of time (and most of you don't have to keep track of which meals are tax-deductible), it's still incredibly helpful at tracking the broad outlines of your spending.

2. Get Your Papers Together

If you die, someone is going to have to clean up the financial aftermath. Make it easy on them by putting everything in one place where they can find it. Dave Ramsey calls this a "Legacy Drawer," and suggests putting in a cover letter and letters to your loved ones as well as the financial papers. But we're trying to keep this under an hour, so the notes are optional. Here's what it should contain:

• Insurance papers.
• Loan documents.
• A list of every financial account: loans, bank accounts, investment accounts, 401(k)s, whatever. Security experts will kill me for saying this, but I'd say this list should have the account numbers, the PINs, and the passwords.
• Deeds and titles to any property you own (cars, land, etc).
• Birth certificate and social security card, if you have them.
• Information about your will/estate plans: who has them, who the executor is.
• Funeral instructions (if any; mine are "cheapest coffin you can find").
• Tax returns.
• A list of your major recurring expenses (so people know which bills to pay).
Start by putting this in a drawer; eventually, you should move this to a safe-deposit box, and tell whoever's likely to be taking care of your final details where to find the key. This should only take you an hour -- if it takes you longer than that, well, you really needed to get these documents while you could find them anyway.

3. Buy Life Insurance

If you're single, you don't need this unless you have a kid or someone else depending on you -- your job usually offers you enough to bury you. If you're married, I think you do need a little, even if you don't have kids. Married life is usually built on the expectation of two incomes: a mortgage (or lease), the cars, all sorts of other recurring expenses. At a minimum, make sure your partner will have enough to bury you and pay off any outstanding debt -- including not only mortgages and cars, but credit cards and student loans in their name alone, if you own property. You don't want to have to hassle with someone coming after their half of the house or car to pay off their unsecured debt. Obviously, if your partner is at home, or makes very little money, you're also going to want to replace some of your income.

You do not want "whole life" insurance, "return of premium" or any other product that promises you to give you some or all of your money back -- all this is is a savings vehicle with bad rates of return, bundled with expensive term life insurance. Buy a simple term life policy for 20 or 30 years -- long enough for you to accumulate enough assets to take care of your partner if you die. You can compare rates online or mosey down to your local insurance office, but either way, this shouldn't take you too long provided that you resist the blandishments of insurance agents who will attempt to upsell you "features" you don't need. Stand firm, buy term.

4. Cancel Stupid Recurring Expenses

Remember when you thought you'd try How about that credit monitoring service you signed up for eighteen months ago? The dual subscriptions to Netflix left over from before you moved in together? For many of you, I am sad to say, your gym membership also falls into this category.

Whatever it is, if you haven't used it in three months, cancel it. Cancel it whether or not you think you should be using it. You can always rejoin the gym after you've developed a burning desire to actually go. With the hundreds of dollars you will save between now and then, you will easily be able to afford any re-initiation fees.

5. Ramp Up for Retirement

Unless you are already at the legal maximum, increase your 401(k) contribution by 1% of your income. Unless you are already pinching pennies so hard that Abraham Lincoln is actually screaming in pain, you can afford to put an extra 1% of your pre-tax income into your 401(k). Then every time you get a raise, you increase your contribution by another 1% until you hit the legal limit ($16,500) or 15-20% of your income. Almost painless, and you'll feel a lot safer in retirement. (Of course, if you want to save faster, you can -- try 2% or 3%).

6. Start Saving

If you don't have an emergency fund, you need one. Here's how to do it so that you almost won't notice: set up an automatic transfer into your savings account from every paycheck. Figure out how much can you afford, but even if it's only $25, transfer it from every paycheck, and resolve not to touch that money unless it's an actual emergency. (Emergency: my car won't start. Not an emergency: I really need a break, so I'm going to the beach for a week.)

The ideal way to handle this is to have a separate account that isn't linked to your other bank accounts, and to have the transfer done as part of your auto-deposit. That way, you never see the money -- and I think you'll be surprised to find that you don't much miss it. But if you don't want to go to the trouble, you can do this with your regular savings account, as long as you're resolved not to touch the money in that account for anything but an emergency: just use online banking to do a recurring transfer on the same day as your paycheck hits the account.

Over time, increase the amount that you're saving. Eventually you'll have a tidy nest egg, and because the money was never in your checking account, you won't have been tempted to spend it on incidentals.

7. Re-balance Your Portfolio

If you already have substantial assets, it's time to make sure they're correctly structured for your priorities. Are your mutual funds allocated the way that you want them, or over time, has one grown faster than the others, leaving your portfolio lopsided (many companies now automatically re-balance, but you should check.) You should also be thinking about your portfolio's life-cycle. If you're in your fifties, you should already be transitioning some of your money to bonds.

I know what you're going to say: you'll never be able to retire at those kinds of returns. My response is a piece of wisdom that I picked up from my driving instructor: "If you left late, you're going to get there late." Trying to flout that simple equation only gets you in trouble. Just as it's a bad idea to race through red lights in the hopes of making up the lost time, it's a bad idea to leave your assets in 100% equity because you're hoping that higher returns will still let you retire in comfort at 65. Risking destitution now is just compounding your earlier planning errors.

8. Make a Will

If your finances are pretty simple, you can do this in half an hour with something like Quicken Willmaker, which took Lifehacker half an hour. LegalZoom will also do it for you for a pretty modest fee. If your finances are complicated -- well, OK, this won't take under an hour, and you need a lawyer. But if your finances are complicated, you really need a will. If it freaks you out too much to meditate upon your own death, pretend that you are preparing this will so you can drop out of sight and assume your new identity as Agent 007 of Her Majesty's Secret Service.

9. Fix Your Withholding

Are you looking forward to a nice big refund from the IRS this year? Don't look so happy -- that refund means that you made the government an interest-free loan for most of the year. And if you're like many freelancers, and you owe the government a hefty chunk, then you may be liable for interest and penalties.
The easy way to fix either problem is to adjust your withholding. HR can help you do this. If you're getting a big refund every year, raise your exemptions; if you're having to pay, lower them. (If they're already as low as they can get, look at what you owe this year, adjust for what you'll owe next year ... and start making estimated payments every quarter.)

10. Shop for Better Deals

Can you get a better interest rate on your credit cards? How about your bank accounts? You don't have to follow through, if you decide it's not worth it. But it's worth taking 15 minutes on the web to find out. Also worth doing: threaten to cancel your cable. You don't have to actually do it -- though with Netflix and Hulu and Amazon Prime's new subscription service, it's possibly worth it. But if you call to cancel, they'll usually offer you a better deal.

I will add an 11th, something that has always helped me.. If you are in a store and see something that costs over $100 ($50 for some) that you think you might like to have, don't buy it right on the spot.. Go home, if you really want it go back and get it, but most of the time, as soon as I left the store, the urge for the item went away .. this also helps to minimize clutter as often these buys just end up in the closet or the garage.


This is a decent read .. the links are useful too.

Out of the millions of tax returns that are filed with the IRS each year, a certain percentage are inevitably flagged and chosen to be audited. In some cases, this is because the taxpayer filing the return is already being investigated for tax fraud or other crimes, while other returns are merely selected at random. The formula that the IRS uses to flag returns for random audit, known as the Discriminant Function, is a highly classified secret known only to a few. However, there are several types of returns that the IRS tends to focus on in general. Filers with returns that fall into one of these categories must accept that there is a higher probability that they will be audited than other taxpayers. Some of the types of returns that the IRS tends to scrutinize more closely include:

More from Investopedia:

Returns that Itemize Deductions

Taxpayers who include a Schedule A with their 1040 likely have a higher chance of being audited than those who don't. This is because the additional calculations invite a greater possibility of fraud or error by the taxpayer.

Self-Employed Taxpayers

Taxpayers who report income on Schedule C or E are prime targets of the IRS, because of the number of expenses that can be claimed as deductions. Those who report net losses for the year that reduce other taxable income, such as salaries or investment income are especially vulnerable to examination by the IRS.

"Cash Cow" Businesses

Many businesses have traditionally operated largely on a cash basis, such as laundry services, restaurants, casinos and gaming establishments and other similar enterprises. A substantial percentage of these businesses have traditionally underreported their income on their tax returns, due to the difficulty of proving revenue that is received in cash from thousands of separate transactions. For this reason, the mafia and other organized crime syndicates have been heavily involved with these industries for the past several decades. Of course, this has not escaped the notice of the IRS, which has collaborated with various law enforcement agencies who pursue these criminals.

Small Businesses

Even businesses such as florists, hobby store owners, construction contractors and other local enterprises are often scrutinized by the IRS. This is because even honest business owners and partners often don't understand the rules for correctly reporting their income and expenses and therefore submit erroneous returns. This is particularly true of those who are filing a business return for the first time, such as the proprietor of a new company.

Private Transactions
Taxpayers who engage in the sale of substantial pieces of real estate or hold interests in oil and gas leases or other such investment property can often realize enormous income and profits from individual buyers or small companies. The IRS knows how easy it can be to underreport the profits from these transactions, in some cases.

The Bottom Line

Remember that if the IRS does flag your return for audit, it does not mean that they suspect you of cheating. As mentioned previously, many returns are selected at random, according to a formula. As long as you have not cheated on your return, then you don't have to worry about what they find. If there is an error, the IRS will notify you in writing of the discrepancy and tell you how much more you owe. Of course, this process can work both ways; it is possible that the IRS could state that you owe less than you reported as well. Just make sure that you have all of the documentation that you need to prove your deductions, such as copies of receipts and bills. As long as you can supply what the IRS requests, your audit should be a relatively quick and painless process.

A good read on tax deductions

I would have never thought to look here. It is a pretty good summary.

OIC offer in compromise

I am sure many of you have seen the ads for solving your tax problems for "pennies on the dollar'".

These firms charge large fees and in some cases don't do people much good.

You can do these yourself .. it takes time and you have to be rational about it.

The forms are long and require that you spend some time on them. But if you figure that the firms that do these often charge at least $2,500, then it could be time well spent.

Here are urls to get to the IRS website pages on this.,,id=104593,00.html,,id=104593,00.html

I have a client that managed to do one of these herself. She said it was timeconsuming, but she got a $16K IRS debt reduced to $1,200 .. she has been making payments since last year and with this year's refund, it should pay off the debt and she and her husband can sleep better with this large burden gone.

We don't do these OIC's, but if you use a professional, make sure you check them out. Most of the outfits that advertise are legitimate, however, they are expensive, have to be to pay for all the advertising.

If you want someone to do for you, check out your local Enrolled Agents. Not all of them do these, but  if you shop around you might be able to find a good one and perhaps get a better price.

try these two locations ..

for CA

for national listings ..

or do a search for you state and entolled agents


These type of articles get published every year about this time, but if you are looking for a preparer, the advice is sound.

An error can be very minor and it still counts .. I don't know how they determine the rate, but the amount of returns that get a request from the IRS to explain what they missed or omitted is very low (at least based on my experience) .. anyone can make a typo and have that count as an error ??

The article follows .,.,.

On January 31st, Jackson Hewitt, the second largest tax prep firm in the country, sued No. 1 H&R Block over Block's claims it can find errors in two-thirds of tax returns prepared by "other" tax preparers. Jackson Hewitt obviously resents the insinuation. Whatever the outcome of the case, though, it's safe to say the entire industry isn't exactly a bastion of reliability. The Inspector General of the U.S. Treasury found a 61 percent error rate in prepared tax returns.

Just a note on this, I spent 5 years at Block and we found few errors that resulted in the client getting more money back..their double check is not a waste of time, but like all advertising it is over hyped.

But if you're looking to the Internal Revenue Service to provide some supervision and oversight of tax preparers, well, that's not going to happen until at least 2014. Last year, the IRS announced a new program that requires the estimated 1 million U.S. tax preparers to register with the IRS, be tested for competency, and agree to ongoing continuing ed classes. All good news. Yet yesterday the IRS released a report saying it needs a few more years to get its new tax preparer review system up and running.

That leaves the estimated 83 million Americans who hire a tax preparer to vet them on their own. Given the high error rate, that's no small job. And even once the IRS program is in place, it's not going to magically catch every schnook and rube. Keep in mind that any error the IRS finds that raises your tax bill is your legal responsibility. You can negotiate the matter with your tax preparer, but from the IRS's vantage point, you're the one who is on the hook. That's why it's important to do your homework.

A few of these red flags are obvious, but the IRS suggests you be especially wary of tax preparers that do any of the following:

• Guarantee you'll get a refund.
• Get paid by charging you a percentage of the refund.
• Don't ask you for supporting documents, such as your W-2 or 1099s.
• Offer to create documents to support false or exaggerated deductions.
• Ask you to sign a blank form that they will fill in later.
• Refuse to give you a photocopy of your return.
• Refuse to list his or her Social Security number and sign the return, as required by law. (most preparers have a PTIN number as they don't want their SS # on all returns)
• Aren't available year-round. (Some preparers set up shop during the mad tax rush and then sort of disappear.)

Another red flag is if a tax preparer tries to push his or her bona fides by telling you they're already part of the IRS's new oversight system. The fact is, some preparers have already been assigned their official tax-prep ID number, but that's all that has happened. No tests have been given, no education provided. Any preparer using this as a selling point is being disingenuous.

How to Find a Top-Notch Tax Pro

If you've got a somewhat complicated tax story, hiring a solid Certified Public Accountant can be a smart move. But otherwise, using a tax software program can get the job done and removes the risk of an unscrupulous preparer steering you into a too-aggressive tax dodge.

Enrolled Agents are as capable as CPAs at doing taxes and are licensed to do every state, which some CPA's are not.. that is why you might find a CPA who is also an EA.

If you're going to work with a human being, asking friends and colleagues for references is always a good place to start, but a little more legwork wouldn't hurt, either. You can check with your state board of accountancy to see if there are any known problems with a CPA you are considering. And taking a quick spin through the Better Business Bureau website will let you see if there are any complaints registered against him or her. It also can't hurt to run a check on someone you're already working with.

When you're interviewing a tax preparer, ask how many times his or her clients have been audited -- by federal and state -- and how many times the client has wound up owing more upon review. That's a fair question, and no pro should take umbrage. And while you're at it, ask how errors and audits are handled. Are you charged more for the extra time? Will the preparer cover any extra money owed? And again, it's helpful to clarify this even if you're already working with someone.

Finally, cross your fingers that maybe, just maybe, Washington will get serious about overhauling the individual tax code. President Obama gave it a passing mention in his State of the Union address. The reality is that the incredible complexity of the code is a Petri dish for errors and outright fraud. And it all comes at a huge cost: We spend $163 billion a year on tax prep.


If you are having trouble communicating with the IRS then get in touch with the local taxpayer advocate. You can reach them by phone or thru

They can be very helpful

The state of CA also has an advocate service too.

Taxpayer Advocacy Panel Members Selected 
WASHINGTON — The Internal Revenue Service today announced the selection of 32 new members to serve on the nationwide Taxpayer Advocacy Panel. The TAP is a federal advisory committee charged with providing direct taxpayer feedback to the IRS.

The new TAP members will join 70 returning members to round out the panel of 102 volunteers for 2011. The new members were selected from more than 500 interested individuals from all over the country who applied during an open recruitment period last spring.

"TAP members represent the nation’s taxpayers, both in what they want and what they need," said IRS Commissioner Doug Shulman. "They provide the IRS with invaluable insights to ensure that the taxpaying public has a voice in the tax administration process. "
The TAP listens to taxpayers, identifies issues and makes suggestions for improving IRS service and customer satisfaction. Oversight and program support for the TAP are provided by the Taxpayer Advocate Service, an independent organization within the IRS that helps resolve taxpayer problems and make recommendations to avoid future problems.

"It is extremely important that the IRS consider the needs and preferences of America’s taxpayers," said Nina E. Olson, National Taxpayer Advocate. "The vital work of these citizen volunteers helps the IRS provide all taxpayers with the top quality service they deserve."

February 14 is a good date per the IRS

for those who have not been able to file their returns due to having a Schedule A, you can do this as of tomorrow, 11 a.m. in your time zone,

Should be a flood of them, I have about 20 just waiting for this ..
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