Frequently Asked Questions

Tax law is constantly changing. Every time Congress acts to “simplify” tax law, it ironically becomes more complex. A CPA will help you sort through it all and find deductions you might have missed doing your own return. In addition, a professional tax preparer can offer advice to help you plan your finances in such a way as to reduce your tax liability.

Yes! Although I am naturally most familiar with California, I have the resources available to prepare out-of-state returns. I can also help clients who need to file in more than one state.

Yes, I do. Depending on your specific situation, I can either offer bookkeeping in-house or recruit the help of a trusted bookkeeping partner. Of course, some clients already have their own bookkeepers, and I can work with them as well.

Not in-house. I refer all payroll work to a payroll service, as they tend to be more geared toward efficiently and affordably providing this specialized service. I have a long-trusted contact person I can refer you to for this service.

My fees are based on the amount of work that goes into preparing your tax return. The basic fee for an individual return is $600, and $800 for a business return (partnership, LLC, or corporation). If your return is unusually complex, or an inordinate amount of time is needed to prepare it, your fee will be somewhat more. At no time do I ever charge a client based on the amount of their income or the size of their refund or balance owing.

Effective in 2023, I will charge late fees for clients who supply their information to me after August 15 ($250 for business returns) or September 15 ($100 for personal returns). This will compensate me for the additional stress I encounter as a result of working too close to the deadline and, hopefully, encourage clients to get me their information sooner. For clients who supply their information to me after August 31 (business) or September 30 (personal), the late fees will be doubled.

When your tax return has been completed, I will include a bill for my services with your tax return package. It is due and payable upon delivery of your return. I generally expect to be paid within 30 days of delivery.

No matter how good it is, no tax software is able to effectively ascertain a taxpayer’s unique situation. If a client doesn’t even know that a deduction exists, he won’t be able to enter the information into any tax program, no matter how sophisticated it might be. In addition, the software won’t be able to advise you what to do when you receive a letter from the IRS.

Use my calendar to schedule an appointment to either meet in person or speak on the phone. 

We can work together in one of two ways:

1. In person – The traditional way of dealing with your taxes would be to have you come to my office for an appointment. We would sit down and go through your tax documents and related information. Meeting in person, especially for new clients, gives us a chance to acquaint ourselves with each other as we review your income and deductions.

2. Remotely – The alternate way to deal with your taxes would be remotely. Email your documents and related information to frank@fpskinnercpa.com. Alternatively, you can drop off or mail your documents to: 

Frank P. Skinner, CPA
2235 Faraday Ave., Ste N
Carlsbad CA 92008

1. If you are a new client, a complete copy of your tax return for the previous year. If you are a business client, this would include your corporate, partnership, or LLC return. This gives me a starting point in determining your situation.
2. Your official tax documents, such as W-2s, all 1099s, mortgage interest statements, Health Savings Account statements, tuition statements, and year-end brokerage tax statements.
3. Other relevant information such as other sources of income, deductions, and credits.
4. For new clients, other relevant information such as your occupation, spouse’s occupation, and names, birth dates, and social security numbers for yourself, spouse, and all dependents.

You can either mail, hand deliver, or email your documents to me. If you choose to email them, scan them and please attach them as PDF attachments, do not embed them within the body of your email. (These are difficult to read and don’t print well.) If you decide to send the information to me password-protected, make sure to provide the password so I can easily access the file. Either way, I will review your information to begin preparing your tax return.

In the course of preparing your tax return, I will undoubtedly have questions or will need additional information. I will prepare a “homework assignment” and email it to you. I would appreciate a timely response so that I can continue work on your return while it is fresh in my mind. If it is an extensive list, I prefer to have you provide all the answers at one time, rather than receiving them piecemeal.

Once I have completed your tax return, I will call you to inform you of the outcome. If you have any questions, I will answer them at that time. If any changes need to be made to your return, I will do so before finalizing it. I will then process your return and either email it to you as a PDF file, mail you a paper package, or set up an appointment with you to pick it up at my office.

1. E-File (Electronic File) forms – These need to be signed and dated and returned to me. You can either mail the original forms back to me, or scan and email them back. Once I receive the forms back, I will then electronically file your return. Please note that you have the option of filing your tax return on paper, rather than having it E-Filed. If this is the option you prefer, please let me know up front.
2. Payment vouchers for any amounts owing on the current year’s taxes, as well as estimates for the following year (if applicable). Please send these with your payment in accordance with the schedule outlined on the letter attached to your copy of the return. The mailing address may be found on each voucher.
3. A complete copy of each tax return for your files. If it comes as a PDF file, it will be password protected. The password for a business return is the last four digits of the federal tax ID number, plus the five-digit zip code on the return. The password for your personal return is the last four digits of the primary taxpayer’s Social Security number, plus the five-digit zip code on the return.
4. A bill for my services. Payment may be made at the time of your appointment (if your return is finished and ready to go) or when it is ready to be E-filed. I expect to be paid no later than 30 days after the return is ready. Late payments will be subject to a late payment fee. I accept payment by cash, check, or credit card. For credit card payments, I charge a convenience fee of $25 for each tax return.

Once your return has been filed, it is out of my hands. I have no control over when you will get your refund. If it has been a while since your return was filed and you’ve received no refund, you can inquire on the IRS website concerning your refund by clicking on “Where’s My Refund?” You will need to provide the primary taxpayer’s social security number, the filing status on the return, and the exact amount of your expected refund. The IRS is taking longer these days, as many of their staff have been working from home. If you file on paper, it may take as long as six months to get your refund!

I do not routinely notify my clients that their tax return has been accepted after it has been E-Filed. If you don’t hear from me, you may assume that it went through okay. If there is a problem with E-Filing, however, I will contact you immediately and work with you to resolve the issue.

1. Respond to my inquiries as soon as possible.
   I make it a priority to return all phone calls and emails from clients the same or next day. On rare occasions it might take a little longer, such as when I am on a road trip. I appreciate the same courtesy from my clients. If you delay responding to my queries, it becomes difficult to provide my best service to you, and your tax return preparation may be in danger of having to be filed late, which will accrue late charges by the IRS. Let’s avoid that!
2. Provide your tax information to me well in advance of the tax deadlines.
   Ideally, you will provide your documents to me no later than two weeks prior to a tax deadline. Business returns must be filed on or before March 15 (get me your info by Feb 28). Personal returns must be filed on or before April 15 (get me your info by March 31).

   
   If we are approaching the deadline and you haven’t yet provided me with your documents, I can file an extension. However, when approaching the extension deadlines (September 15 for business returns and October 15 for personal), filing for another extension is not an option. 

   Sending me your tax information (or coming in for an appointment) well before the tax deadlines has advantages for both of us. Doing so allows for contingencies that require things to be postponed – sickness, family emergencies, work issues, for example. So, by meeting two to four months before the tax deadline and something comes up, there is plenty of time to reschedule your appointment so that you can deal with the situation at hand. In addition, if you need to provide more information to complete your return, coming to see me early allows more time to obtain whatever we need to file your taxes. Having your information well before the deadline allows me to give your tax situation the attention it merits. 

   Effective in 2023, I will charge late fees for clients who supply their information to me after August 15 ($250 for business returns) or September 15 ($100 for personal returns). This will compensate me for the additional stress I encounter as a result of working too close to the deadline and, hopefully, encourage clients to get me their information sooner. For clients who supply their information to me after August 31 (business) or September 30 (personal), the late fees will be doubled.

File your return anyway. The IRS imposes a stiff penalty for late filing, so don’t put it off. If you cannot pay, the IRS will be willing to work with you to set up a payment plan.

File all past returns as soon as possible. I am able to assist clients in preparing tax returns for past years, as well as for the current year.

The short answer is No. If you refuse to file your return and pay what you owe, you run the risk of being penalized, or even criminally prosecuted.

Many taxpayers receive letters from the IRS. If you receive such a letter, there are two things you should NOT do. First of all, don’t panic. Most letters are routine, and the issue involved is easily addressed. Second, don’t ignore the letter. The IRS sent it for a reason, and ignoring it might make things worse. Please forward the letter to me and we can discuss what course of action needs to be taken.

If you receive a letter, it could be for one of several possible reasons:

1. You show a balance owing on your return and have not paid it. If this is the case, simply pay what you owe. If you cannot do so, please contact the IRS to arrange a payment plan.

2. There is a problem with your tax return and the IRS is writing to obtain further information. This is most often the case where income has been left off the return. Most sources of income are independently reported to the IRS, and it matches this information to what you show on your return. If something is missing, it generates a letter. The most common missing item concerns income showing on a year-end brokerage statement. Other missing items may be distributions from retirement plans, which are reported on Form 1099-R. Another common item concerns taxpayers who are subsidized for their health insurance under Obamacare. Such taxpayers receive a Form 1095-A (and possibly the California equivalent Form 3895). The best way to avoid hearing from the IRS is to make sure you provide all of your tax information at the time I prepare your return. If you do get such a letter, please forward it to me. I will review it and request more information. Once I get this, I can respond to the IRS on your behalf. Most of the time, that will be the end of the inquiry.

3. If the letter refers to Form 940, Form 941, or Form 944, this concerns your payroll taxes. If this is the case, please send the letter on to your payroll service provider, so that they can deal with it. This is also the case if you hear from the Social Security Administration regarding Forms W-2 and W-3, or from the California Employment Development Department.

4. Occasionally, a taxpayer may receive a letter from the IRS concerning an unusual situation that does not have an obvious solution. If this is the case, please send the letter to me. A  tax lawyer works in my office and can help resolve situations that are beyond my area of expertise. I purposely work with a tax lawyer for audits and questions about unusual situations because he specializes in dealing with the IRS, Franchise Tax Board, and other taxing agencies. 

5. Although it is highly unlikely, your tax return may be selected to be audited. If this is the case, please notify me. I will arrange with the tax lawyer mentioned above to handle it for you. 

The IRS never initiates first contact with a taxpayer by telephone or email. If someone contacts you this way claiming to be from the IRS (unless it’s someone you’re already working with on a particular issue), it is a scam. Do not give them any of your information! I recommend getting as much information as you can from this fraudulent caller, then contact the IRS to alert them about the scam. 

I will refer you to the tax attorney who works in my office. He will provide expert assistance if you are audited, or if you have any trouble with the IRS, Franchise Tax Board, or any other taxing agencies, as this is his specialty. 

Welfare benefits, worker’s compensation payments, state and local government bond interest, certain disability pensions, and combat pay for military personnel. At least 15 percent of your Social Security benefit is also free of tax. In addition, only investment income is taxed – you are not taxed on the portion of your proceeds that represents your initial investment.

Generally, any type of compensation you receive for performing services or selling products is taxable. In addition, you are required to report earnings from almost any type of investment. You should be aware that different states have different definitions of what constitutes taxable income for state tax purposes.

A foreclosure is considered a disposition of property, and the normal rules for selling a personal residence apply. If you qualify, up to $250,000 of capital gain ($500,000 for married couples filing jointly) is excluded. A loss from selling a personal residence is not deductible. If all or any portion of the mortgage is forgiven, it would normally constitute taxable income, but if it is your personal residence, the tax may be waived.

You get to deduct your traditional IRA contributions when you make them, but all distributions become taxable when taken, even when you retire. A Roth IRA is just the opposite – you don’t deduct your contributions, but when you retire and start drawing on it, all distributions are tax-free.

If it has been 72 hours since your return was electronically filed and received by the IRS, or four weeks after you mailed in a paper return, then you may go to the IRS website (irs.gov) and click the “Get Your Refund Status” link on their homepage. Be ready to provide your social security number, filing status, and exact dollar amount of your refund.

It is. A foreign (i.e., out of state) corporation doing business in, say, California, is required to register with the Secretary of State and file a California return. It will still be subject to any filing requirement in the state of incorporation as well. You might as well keep it simple by just incorporating in the state where you live. The only exception to this is if you are doing business exclusively in another state from the one where you live, or if you are forming an entity to hold and lease real estate located in the other state.

No! People have been trying for years to file frivolous claims about this, and the courts have consistently shut them down. The federal income tax has been legal and constitutional since 1913. The sixteenth amendment was properly passed and ratified; therefore, Congress is fully empowered to impose tax on income.

As it turns out, the Feds were never able to convict Capone of racketeering, bootlegging, or murder. The only crime they were able to make stick was income tax evasion. Capone’s biggest mistake was to not report and pay tax on all of the income he made from his activities. Income earned illegally is still considered to be income by the IRS, and is fully taxable.

Tax Avoidance is defined as the practice of using every LEGAL means to reduce or eliminate your income tax liability. As your CPA, I can help you to do this. Tax Evasion, on the other hand, is defined as going beyond this and refusing to pay tax that you are legally obligated to pay. This includes such practices as omitting or underreporting your income, taking phony deductions or exemptions, and simply refusing to file a return. Tax evasion is a federal crime; committing it may land you in prison, so I strongly recommend against this.

It depends on your situation. There are definite tax savings to be had from running your business as a corporation if it makes more than a nominal profit. If you are or become a client, I can provide a consultation to discuss your particular situation.

Usually, the income is first taxable to the state where it originates. In most cases, your home state will allow an “other state” tax credit for tax you pay there to alleviate the double taxation that would otherwise apply.

Yes. U.S. citizens and lawful permanent residents living overseas must file, even if they have no income from U.S. sources. They must report their worldwide income using the same rules as for domestic source earnings. You may elect to exclude all or a portion of your foreign EARNED income from U.S. tax if you meet the criteria for doing so. This election must be made on a properly filed return – it is not automatic.

Residents of most provinces and territories of Canada file their federal and provincial taxes together on the same form, attaching a schedule for their particular province of residence. Quebec has its own provincial tax system, with which I am not familiar. Also, Canadian taxpayers file their returns for the province where they are resident on December 31, as if they had lived there for the entire year. Thus, if you lived in Quebec at the beginning of the year, but established residence in another province before December 31, I will be able to help you with your taxes (but not the other way around).