Tax Preparation FAQ

Q: How much does professional tax preparation cost?

Individual returns (1040) typically start at $350 and increase based on complexity — additional states, investment income, rental properties, and business schedules all affect pricing. Business returns start around $800 for S-Corps (1120-S) and Partnerships (1065). We provide an exact quote after reviewing your situation during your free consultation. There are no surprise fees — you'll know the cost before we start.

Q: What is the difference between a CPA and an Enrolled Agent for tax preparation?

Both CPAs and Enrolled Agents (EAs) are licensed to prepare tax returns and represent clients before the IRS. The key difference is specialization: CPAs are licensed by state boards and may focus on accounting, auditing, or financial planning in addition to taxes. Enrolled Agents are federally licensed by the IRS specifically for tax matters — it's the only credential issued directly by the IRS. EAs must pass a rigorous three-part exam covering all aspects of the tax code and complete 72 hours of continuing education every three years.

Q: What is the tax filing deadline and what happens if I miss it?

The standard federal tax filing deadline is April 15 (or the next business day if it falls on a weekend or holiday). If you need more time, you can file for an automatic 6-month extension (Form 4868), moving your deadline to October 15. Important: an extension to file is NOT an extension to pay. If you owe taxes, you must estimate and pay by April 15 to avoid the Failure to Pay penalty (0.5% per month). The Failure to File penalty is much steeper at 5% per month, up to 25%.

Q: What deductions can I take as a W-2 employee?

W-2 employees have fewer deductions than business owners, but there are still meaningful opportunities: mortgage interest and property taxes (if you itemize), charitable contributions, student loan interest (up to $2,500), educator expenses (up to $300), health savings account (HSA) contributions, traditional IRA contributions, and unreimbursed job expenses for certain professions. The standard deduction ($14,600 single / $29,200 married filing jointly in 2024) is often higher than itemized deductions for most employees.

Q: Should I file jointly or separately if I'm married?

Married Filing Jointly (MFJ) is almost always more beneficial — you get a higher standard deduction, access to more credits (Earned Income Credit, Child Tax Credit, education credits), and lower tax rates on combined income. Married Filing Separately (MFS) can occasionally be advantageous if one spouse has significant medical expenses (subject to 7.5% AGI floor), student loan income-driven repayment plans, or if you want to separate liability for tax purposes. We'll run both scenarios and recommend the filing status that minimizes your total tax.

Q: What is the Child Tax Credit and how much can I get?

The Child Tax Credit provides up to $2,000 per qualifying child under age 17. Up to $1,700 of this is refundable (Additional Child Tax Credit), meaning you can receive it even if you owe no tax. The credit begins to phase out at $200,000 AGI ($400,000 for married filing jointly). To qualify, the child must be your dependent, under 17 at year-end, have a valid Social Security number, and meet residency requirements. There are also credits for other dependents ($500 non-refundable) and the Child and Dependent Care Credit for childcare expenses.

Q: How do I report freelance or self-employment income?

Freelance and self-employment income is reported on Schedule C (Profit or Loss from Business). You'll report all income received (whether or not you received a 1099) and deduct all ordinary and necessary business expenses. Net profit is subject to both income tax and self-employment tax (15.3% on the first $168,600 in 2024). You can deduct half of SE tax from your gross income. If you expect to owe $1,000+ in taxes, you're required to make quarterly estimated tax payments.

Q: What happens if I get audited after you file my return?

We prepare every return to be audit-ready — fully documented and defensible. If you are audited, we represent you before the IRS at no additional charge for returns we prepared (for the audit year). As an Enrolled Agent, Tiffany has unlimited practice rights before the IRS and can handle all communication, document preparation, and IRS meetings on your behalf. You won't have to deal with the IRS directly.

Q: Can you file returns for prior years if I'm behind?

Yes — we handle back-year returns regularly. The IRS requires you to file the last 6 years of returns to be considered in good standing, though we can file further back if needed. We'll gather your income information (the IRS has records of all W-2s and 1099s filed), reconstruct your deductions as best as possible, and file all outstanding returns. We can also negotiate penalty abatement and set up a payment plan for any resulting balance.

Question 1

What documents do I need to file my tax return?

Answer

The documents you need depend on your situation. Common items include: W-2s from all employers, 1099s (freelance income, dividends, interest, retirement distributions), Social Security statements (SSA-1099), mortgage interest statements (1098), student loan interest (1098-E), property tax records, charitable donation receipts, business income and expense records, prior year tax return, and Social Security numbers for all dependents. We'll send you a personalized checklist after your consultation.

Question 2

How much does professional tax preparation cost?

Question 3

What is the difference between a CPA and an Enrolled Agent for tax preparation?

Question 4

What is the tax filing deadline and what happens if I miss it?

Question 5

What deductions can I take as a W-2 employee?

Question 6

Should I file jointly or separately if I'm married?

Question 7

What is the Child Tax Credit and how much can I get?

Question 8

How do I report freelance or self-employment income?

Question 9

What happens if I get audited after you file my return?

Question 10

Can you file returns for prior years if I'm behind?

Question 11

How do I report rental property income and expenses?

Question 12

What is the standard deduction vs. itemizing?

Question 13

How are capital gains taxed?

Question 14

Do I need to report cryptocurrency on my taxes?

Question 15

How long does it take to get my tax refund?

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