IR-2013-22: Parents and Students: Check Out College Tax Benefits for 2012 and Years Ahead

Posted on February 22, 2013 by Stacie Clifford Kitts

WASHINGTON — The Internal Revenue Service today reminded parents and students that now is a good time to see if they qualify for either of two college education tax credits or any of several other education-related tax benefits.

In general, the American opportunity tax credit, lifetime learning credit and tuition and fees deduction are available to taxpayers who pay qualifying expenses for an eligible student. Eligible students include the primary taxpayer, the taxpayer’s spouse or a dependent of the taxpayer.

Though a taxpayer often qualifies for more than one of these benefits, he or she can only claim one of them for a particular student in a particular year. The benefits are available to all taxpayers – both those who itemize their deductions on Schedule A and those who claim a standard deduction. The credits are claimed on Form 8863 and the tuition and fees deduction is claimed on Form 8917.

The American Taxpayer Relief Act, enacted Jan. 2, 2013, extended the American opportunity tax credit for another five years until the end of 2017. The new law also retroactively extended the tuition and fees deduction, which had expired at the end of 2011, through 2013. The lifetime learning credit did not need to be extended because it was already a permanent part of the tax code.

For those eligible, including most undergraduate students, the American opportunity tax credit will yield the greatest tax savings.  Alternatively, the lifetime learning credit should be considered by part-time students and those attending graduate school. For others, especially those who don’t qualify for either credit, the tuition and fees deduction may be the right choice.

All three benefits are available for students enrolled in an eligible college, university or vocational school, including both nonprofit and for-profit institutions. None of them can be claimed by a nonresident alien or married person filing a separate return. In most cases, dependents cannot claim these education benefits.

Normally, a student will receive a Form 1098-T from their institution by the end of January of the following year. This form will show information about tuition paid or billed along with other information. However, amounts shown on this form may differ from amounts taxpayers are eligible to claim for these tax benefits. Taxpayers should see the instructions to Forms 8863 and 8917 and Publication 970 for details on properly figuring allowable tax benefits.

Many of those eligible for the American opportunity tax credit qualify for the maximum annual credit of $2,500 per student. Here are some key features of the credit:

  • The credit targets the first four years of post-secondary education, and a student must be enrolled at least half time. This means that expenses paid for a student who, as of the beginning of the tax year, has already completed the first four years of college do not qualify. Any student with a felony drug conviction also does not qualify.
  • Tuition, required enrollment fees, books and other required course materials generally qualify. Other expenses, such as room and board, do not.
  • The credit equals 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.
  • The full credit can only be claimed by taxpayers whose modified adjusted gross income (MAGI) is $80,000 or less. For married couples filing a joint return, the limit is $160,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $180,000 or more and singles, heads of household and some widows and widowers whose MAGI is $90,000 or more.
  • Forty percent of the American opportunity tax credit is refundable. This means that even people who owe no tax can get an annual payment of up to $1,000 for each eligible student. Other education-related credits and deductions do not provide a benefit to people who owe no tax.

The lifetime learning credit of up to $2,000 per tax return is available for both graduate and undergraduate students. Unlike the American opportunity tax credit, the limit on the lifetime learning credit applies to each tax return, rather than to each student. Though the half-time student requirement does not apply, the course of study must be either part of a post-secondary degree program or taken by the student to maintain or improve job skills. Other features of the credit include:

  • Tuition and fees required for enrollment or attendance qualify as do other fees required for the course. Additional expenses do not.
  • The credit equals 20 percent of the amount spent on eligible expenses across all students on the return. That means the full $2,000 credit is only available to a taxpayer who pays $10,000 or more in qualifying tuition and fees and has sufficient tax liability.
  • Income limits are lower than under the American opportunity tax credit. For 2012, the full credit can be claimed by taxpayers whose MAGI is $52,000 or less. For married couples filing a joint return, the limit is $104,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $124,000 or more and singles, heads of household and some widows and widowers whose MAGI is $62,000 or more.

Like the lifetime learning credit, the tuition and fees deduction is available for all levels of post-secondary education, and the cost of one or more courses can qualify. The annual deduction limit is $4,000 for joint filers whose MAGI is $130,000 or less and other taxpayers whose MAGI is $65,000 or less. The deduction limit drops to $2,000 for couples whose MAGI exceeds $130,000 but is no more than $160,000, and other taxpayers whose MAGI exceeds $65,000 but is no more than $80,000.

Eligible parents and students can get the benefit of these provisions during the year by having less tax taken out of their paychecks. They can do this by filling out a new Form W-4, claiming additional withholding allowances, and giving it to their employer.

There are a variety of other education-related tax benefits that can help many taxpayers. They include:

  • Scholarship and fellowship grants—generally tax-free if used to pay for tuition, required enrollment fees, books and other course materials, but taxable if used for room, board, research, travel or other expenses.
  • Student loan interest deduction of up to $2,500 per year.
  • Savings bonds used to pay for college—though income limits apply, interest is usually tax-free if bonds were purchased after 1989 by a taxpayer who, at time of purchase, was at least 24 years old.
  • Qualified tuition programs, also called 529 plans, used by many families to prepay or save for a child’s college education.

Taxpayers with qualifying children who are students up to age 24 may be able to claim a dependent exemption and the earned income tax credit.

The general comparison table in Publication 970 can be a useful guide to taxpayers in determining eligibility for these benefits. Details can also be found in the Tax Benefits for Education Information Center on IRS.gov.

 

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This is Pretty Cool – The IRS Will Help With Your FAFSA Application

Posted on September 11, 2012 by Stacie Clifford Kitts

Automated IRS System Helps College-Bound Students with Financial Aid Application Process

College-bound students and their parents sometimes face last minute requests to complete or provide additional information for financial aid applications.

The Internal Revenue wants to help by minimizing time spent on the completion of the Department of Education’s Free Application for Federal Student Aid (FAFSA). By using the IRS Data Retrieval Tool, applicants can automatically transfer required tax data from their federal tax returns directly to their FAFSA form.

This IRS tool is a free, easy and secure way to access and transfer tax return information onto the FAFSA form. Using the tool saves time, improves accuracy and may reduce the likelihood of the school’s financial aid office requesting that you verify the information.

Here are some tips on using the IRS DRT:

Eligibility Criteria To use the IRS DRT to complete their 2012 -2013 FAFSA form, taxpayers must:
o have filed a federal 2011 tax return,
o possess a valid Social Security Number,
o have a Federal Student Aid PIN (individuals who don’t have a PIN will be given the option to apply for one through the FAFSA application process), and
o have not changed marital status since Dec. 31, 2011.

Exceptions If any of the following conditions apply to the student or parents, the IRS Data Retrieval Tool cannot be used for the 2012 FAFSA application:
o an amended tax return was filed for 2011,
o no federal tax return was filed for 2011,
o the federal tax filing status on the 2011 return is married filing separately or
o a Puerto Rican or other foreign tax return has been filed.

Applicants who cannot use the IRS DRT to meet college requests for verification, may need to obtain an official transcript from the IRS. Transcripts are not available until the IRS has processed the related tax return. To order tax return or tax account transcripts, visit IRS.gov and select “Order a Transcript” or call the toll-free Transcript line at 1-800-908-9946.

In addition, the IRS offers money-saving information for college students and their parents about tax credits and deductions for qualifying tuition, materials and fees.

Links:

Student’s Page – College Bound
Order a Transcript
IRS Tax Benefits for Education: Information Center
IRS Publication 970, Tax Benefits for Education

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Recovering Bubblehead- Unfortunately, There is No 12 Step Program

Posted on May 23, 2011 by Stacie Clifford Kitts

Ally McBeal the unrecovered Bubblehead

By Stacie Kitts, CPA

I like to think of myself as a recovering recovered bubblehead.  You might know the type, she was portrayed by Calista Flockhart in the late 90′s as Ally McBeal.  The character was described as “annoying and demeaning to women (specially professional women) because of her perceived flightiness, lack of  [knowledge], short skirts“, and….. well you get the point.

As ridiculous as it sounds, there was a time – a long time ago in a galaxy far far away – when I thought I had found the right combo.   Often sporting an outfit that only Ally McBeal (an imaginary made up TV person, so like no real person should have tried to pull this off) would wear, I was, sadly, the “sexy” CPA.

Ludicrous, I know!

This style choice did not endear me to my female colleagues. And had you met me in those days, you might not have noticed that I had a brain at all.  This, of course, is not the impression you want to make when your brain is what you are selling.

Flash forward ……. now we are visiting my solo “stay home” tax practice period.  This quarter decade represented my relaxed period, where comfort was my style of choice.  My old warn out sweats and stylish jammie sets worn around the home office probably earned me the label of “comfy” accountant.   Also, NOT the serious accountant image you want to project, particularly when you are trying to convince a person who has amassed a considerable amount of wealth that you are the advisor who is going to help them keep it.

Interestingly, of these two periods, the comfy accountant was/is the hardest to overcome – a few enlightening moments, and some mentored wisdom eradicated the “sexy” CPA fairly quickly.  But taking the comfy out of accounting was like a slow excruciating death.

Even so, it’s done.  These days I work in an office building and I look forward to casual Fridays where I can throw on some jeans with my conservative cardigan.  I might even spice it up with some colorful shoes or fun jewelry.  But for the most part, first impressions are my main concern and my style choices scream I’m confident, educated, serious and professional.

~~~~~~~~~~~~~~~~~~~~~~~~~~

The Blouse

Your fashion choices actually play a large part in selling you and my own fashion history is testament to this.

Being a recovered fashion bubble head probably explains why I recently had a slight meltdown when my assistant commented on how cute my suit was but added, “Your top makes you look like a big orange pumpkin.”

Let me explain.

That morning I had arrived at work wearing a conservative black suit over a cute orange top with cute orange shoes carrying my cute salmon colored purse.  Just the right  >pop<  of color.  I felt completely prepared for my big pitch to a large potential client.  I was clear on the tax issues and confident in my ability to sell it.  But that was before I realized that my clothing choice looked like a Halloween inspired disaster.

I hurried to the bathroom where I stood in front of the full-length mirror and thought, Oh-My-God, she’s right.  Why did I pick orange and black?  I look ridiculous.

Now my confidence is waning.  I can’t get the pumpkin image out of my head.  How was I going to sell ME and MY skills when I looked like “that” lady.  You know, the one that can’t possibly own a mirror because if she did she wouldn’t be wearing that!!!!!!

My head starts to fill with possible solutions:  go home and change – nope not enough time, swap blouses with a co-worker, nope not an option, run to the mall – yes there might be enough time for that there’s one right across the street.  I gathered all the paraphernalia I needed for the meeting, business cards, portfolio, flyer about the company etc. and head out.

I found parking rather quickly and felt the relief flooding through my system.  I ran toward the door and pull on the handle. Locked!!!  It’s locked.  I look at the hours – “OPEN 10am”

10AM?

10AM, what? …..Shut down by my lack of knowledge about mall hours.

I pulled out my cell phone and click a button so I could see the time.  9:30 – No time to wait until it opens, find an appropriate blouse and still get to the meeting on time.

I’m screwed, I’m screwed, I’m screwed.

Despondent, I slowly slink back to my car and try to convince myself that,  it’s no big deal, you can still sell it, it’s not that bad, forget it.  Ya right,  I was a wreck.  So as I headed toward certain rejection,  I resolved myself  to make my pitch just the same.

But miracle of miracles, not only did I arrive early to the meeting, but by some grace of god, the meeting was across the street from a mall.  A mall that was open!

It wasn’t too late, I might pull it off.  I am elated, rather giddy in fact.  I top the escalator and see just the perfect thing.  How wonderful.  I try it on and it looks great.  Stepping out of the dressing room, I spot a manned sales register.

Hello, I’m in a hurry can you ring this up for me really fast?

I am sorry dear, but we just opened and it will take some time to get the registers up.

HUH, really, what?  There’s noo time?  NooooTime!

At this point, I’m thinking run, run with the cute blouse, go ahead make a dash for it…..it’s your only hope….It was amazing the amount of thoughts that flowed through my mind in those few seconds.  Could I get away with it, I would come back later and pay, maybe she would hold onto my wedding ring for collateral.

And then…..

She must have read the desperation in my expression because she says, “Wait, I think the register over here is up.  Let’s see.”  And glorious day, it was.

Sporting my new blouse with renewed confidence and relieved that I wasn’t a fugitive from justice, I arrived in time, made my pitch and yes, landed the client.

Hurray, disaster averted- thanks to the right first impression and my cute new blouse!

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For My Student Followers – an Explanation of IRS Guidance Sent Out Into The Cosmos

Posted on March 18, 2011 by Stacie Clifford Kitts

Are you looking for some information that will explain all the available IRS guidance sent out into the cosmos?

The following is a list of explanations/definitions should you be interested, need some reading material, or want something to put you to sleep at night.

 

For anyone not familiar with the inner workings of tax administration, the array of IRS guidance may seem, well, a little puzzling at first glance. To take a little of the mystery away, here’s a brief look at seven of the most common forms of guidance.

In its role in administering the tax laws enacted by the Congress, the IRS must take the specifics of these laws and translate them into detailed regulations, rules and procedures. The Office of Chief Counsel fills this crucial role by producing several different kinds of documents and publications that provide guidance to taxpayers, firms and charitable groups.

Regulation

A regulation is issued by the Internal Revenue Service and Treasury Department to provide guidance for new legislation or to address issues that arise with respect to existing Internal Revenue Code sections. Regulations interpret and give directions on complying with the law. Regulations are published in the Federal Register. Generally, regulations are first published in proposed form in a Notice of Proposed Rulemaking (NPRM). After public input is fully considered through written comments and even a public hearing, a final regulation or a temporary regulation is published as a Treasury Decision (TD), again, in the Federal Register.

Revenue Ruling

A revenue ruling is an official interpretation by the IRS of the Internal Revenue Code, related statutes, tax treaties and regulations. It is the conclusion of the IRS on how the law is applied to a specific set of facts. Revenue rulings are published in the Internal Revenue Bulletin for the information of and guidance to taxpayers, IRS personnel and tax professionals. For example, a revenue ruling may hold that taxpayers can deduct certain automobile expenses.

Revenue Procedure

A revenue procedure is an official statement of a procedure that affects the rights or duties of taxpayers or other members of the public under the Internal Revenue Code, related statutes, tax treaties and regulations and that should be a matter of public knowledge. It is also published in the Internal Revenue Bulletin. While a revenue ruling generally states an IRS position, a revenue procedure provides return filing or other instructions concerning an IRS position. For example, a revenue procedure might specify how those entitled to deduct certain automobile expenses should compute them by applying a certain mileage rate in lieu of calculating actual operating expenses.

Private Letter Ruling

A private letter ruling, or PLR, is a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer’s specific set of facts. A PLR is issued to establish with certainty the federal tax consequences of a particular transaction before the transaction is consummated or before the taxpayer’s return is filed. A PLR is issued in response to a written request submitted by a taxpayer and is binding on the IRS if the taxpayer fully and accurately described the proposed transaction in the request and carries out the transaction as described. A PLR may not be relied on as precedent by other taxpayers or IRS personnel. PLRs are generally made public after all information has been removed that could identify the taxpayer to whom it was issued.

Technical Advice Memorandum

A technical advice memorandum, or TAM, is guidance furnished by the Office of Chief Counsel upon the request of an IRS director or an area director, appeals, in response to technical or procedural questions that develop during a proceeding. A request for a TAM generally stems from an examination of a taxpayer’s return, a consideration of a taxpayer’s claim for a refund or credit, or any other matter involving a specific taxpayer under the jurisdiction of the territory manager or the area director, appeals. Technical Advice Memoranda are issued only on closed transactions and provide the interpretation of proper application of tax laws, tax treaties, regulations, revenue rulings or other precedents. The advice rendered represents a final determination of the position of the IRS, but only with respect to the specific issue in the specific case in which the advice is issued. Technical Advice Memoranda are generally made public after all information has been removed that could identify the taxpayer whose circumstances triggered a specific memorandum.

Notice

A notice is a public pronouncement that may contain guidance that involves substantive interpretations of the Internal Revenue Code or other provisions of the law. For example, notices can be used to relate what regulations will say in situations where the regulations may not be published in the immediate future.

Announcement

An announcement is a public pronouncement that has only immediate or short-term value. For example, announcements can be used to summarize the law or regulations without making any substantive interpretation; to state what regulations will say when they are certain to be published in the immediate future; or to notify taxpayers of the existence of an approaching deadline.

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Stacie’s More Tax Tips Makes a Top Something or Other List

Posted on February 13, 2011 by Stacie Clifford Kitts

By Stacie Clifford Kitts, CPA

Seems like I am always reading someones top something… tax/accounting/business  list and it always makes me wonder – just how does someone get on this list anyway?????

Like for example take  Accounting Today/Tomorrow/WebCPA.  This group publishes a top 100 most influential people in the accounting industry list.  Every year I read it over and wonder -  how do they decide who is “most influential” anyway?  I mean really, is this a scientific thing?  Are there compliance criteria – like a PPC guide “How to Determine the Most Influential People in Accounting” – we are talking about accountants here – I assume there’s a checklist?

I do hope its more scientific than just a bunch of journalists sitting around a conference table, sipping coffee and munching on donuts while someone writes names on a white board.   Just picture it, a bunch of bored staff writers some twisting slightly in their chairs, some lounging about, others lazily calling out names.  Then someone says, “hey cross off Sally Johnson, she was rude to me at blah blah conference. she doesn’t make it this year.” Yowser,I hope it doesn’t work like that!!!

Recently, I’ve been contacted by a “.com site” or two.  These sites were letting me know that I could be listed on a top something list….so –be sure to mention it at Stacie’s More Tax Tips- wont you?

While I get how this whole quid pro quo thingy works, I have declined 100% of the “link to us, we’ll link to you” offers.  I’ve even turned down click for payment offers because I didn’t think the link topics where appropriate for my my site.

But you know what, I’ve decided that gosh darn my blog is interesting.. And yes siree, I deserve to be on a top anything list.. And, it has absolutely nothing to do with quid pro quo.  Nope, they of course see the genius that is my blog and feel compelled to share. So thanks to bschool.com for naming Stacie’s More Tax Tips in the 50 best Blogs to Get You Through Tax Season.

Oh by the way, the picture is of me and the grandbaby enjoying Christmas day with the family!

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Happy Valentines! A Gift of Tax Filing For Your Sweetheart

Posted on January 20, 2011 by Stacie Clifford Kitts

By Stacie Clifford Kitts, CPA

Feb. 14 is the magic filing date.

Well, I guess the IRS finally figured it out and reprogrammed their computer system to accommodate the new tax changes..  If  you file Schedule A that is you itemize, or you will take the hirer education tuition and fees deduction on Form 8917, or even the educator expenses deduction, you will be able to file your tax return (hopefully) starting on Valentines Day.  How romantic, a gift of tax filing for your sweetheart.

Read on for more info:

WASHINGTON — The Internal Revenue Service plans a Feb. 14 start date for processing tax returns delayed by last month’s tax law changes. The IRS reminded taxpayers affected by the delay they can begin preparing their tax returns immediately because many software providers are ready now to accept these returns.

Beginning Feb. 14, the IRS will start processing both paper and e-filed returns claiming itemized deductions on Schedule A, the higher education tuition and fees deduction on Form 8917 and the educator expenses deduction. Based on filings last year, about nine million tax returns claimed any of these deductions on returns received by the IRS before Feb. 14.

People using e-file for these delayed forms can get a head start because many major software providers have announced they will accept these impacted returns immediately. The software providers will hold onto the returns and then electronically submit them after the IRS systems open on Feb. 14 for the delayed forms.

Taxpayers using commercial software can check with their providers for specific instructions. Those who use a paid tax preparer should check with their preparer, who also may be holding returns until the updates are complete.

Most other returns, including those claiming the Earned Income Tax Credit (EITC), education tax credits, child tax credit and other popular tax breaks, can be filed as normal, immediately.

The IRS needed the extra time to update its systems to accommodate the tax law changes without disrupting other operations tied to the filing season. The delay followed the Dec. 17 enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which extended a number of expiring provisions including the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.

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HERE’S A LESSON IN QUESTIONABLE CUSTOMER SERVICE – DON’T MESS WITH SOMEONE WHO HAS A BLOG THAT PEOPLE ACTUALLY READ

Posted on January 13, 2011 by Stacie Clifford Kitts

By Stacie Clifford Kitts CPA

I just can’t help myself.  I need to tell you because you are not going to believe what I am doing right now.

If you are familiar with popular tax and write-up software companies, i.e. you’re a CPA or tax professional, then you might recognize the number that’s showing on my phone in this picture.

Let me break down what you are looking at.

The 800 number showing on the screen represents the “customer service” number for my tax software provider.  The bottom right hand number represents the time that has passed since I have been on the phone trying to resolve an issue with the software.

Now the first hour of time that is depicted reflects the time I spent with a technician who was trying to get my custom letterhead to work properly.  The idea of adding your letterhead to the software is to save time.  That is, when I print a tax return, the transmittal letter and filing instructions will print on my letterhead eliminating a processing step.  Yeah for everyone because the less time I spend on a return theoretically the more savings I can pass onto my clients.  Very cool – if it worked!

Anyway, the tech was very nice and told me he would call me back tomorrow when he had more time to figure out why it wasn’t working.

This is when I made my fatal mistake and asked to be transferred to a different department so I could resolve yet another problem with the software.  The person who took this call was unable to assist me and asked if she could put me on hold to research the issue.  As of the writing of this blog, I have been on hold for over 65 additional minutes (a total of 2 hours and 5 minutes of time on the phone with you know who).

What do you think?  Is my friendly customer service rep who had no idea how to answer my question heading home, or maybe she’s already home getting ready for bed spending time with her family – while I languish on hold like a spurned desperate lover hoping someone will come back to the phone and resolve my problem.

That’s right loyal readers, she forgot about me.  ***Ugh*** I feel like such a loser. :-(

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2010 in Review – The Health of Stacie’s More Tax Tips – I Feel Like Doing The Snoopy Dance!

Posted on January 2, 2011 by Stacie Clifford Kitts

I think the stats presented below provide interesting insight into my blog, so I thought – what – the – heck – why not share.

so let’s  see -  25,000 visitors (like I said see below) may seem like a drop in the bucket to tax bloggers the likes of the Tax Prof, but you know what – I am absolutely thrilled!  I have 117 Facebook fan’s and a whole bunch of subscribers.  I am turning cartwheels (well in my head) at this very moment.

Other exciting things have happened this last year as well (which unfortunately have affected my ability to post as much as I would like – but you can’t have everything :-) ).

I have a new partnership, Katherman Kitts & Co. LLP – the offices are located in a high-rise across from the Irvine Spectrum (a huge shopping center) – so the fact that I have moved my stay home tax practice to an actual office doesn’t suck!

I am having the time of my life finding just the right staff and of course decorating the office space.

How do you know when you have finally “made” it?  Well, my litmus test – the flat screen tv and lovely sofa enhancing the awesome view from my corner office.  *heavy sigh*

I truly wish the same level of success and happiness for all my family, friends, clients and loyal readers this coming year.

Now I think this calls for a Snoopy Dance, care to join me?

The stats helper monkeys at WordPress.com mulled over how my blog did in 2010, and here’s a high level summary of its overall blog health:

Healthy blog!

The Blog-Health-o-Meter™ reads Wow.

Crunchy numbers

Featured image

This blog was viewed about 25,000 times in 2010.

In 2010, there were 181 new posts, growing the total archive of this blog to 464 posts.

The busiest day of the year was December 9th with 709 views. The most popular post that day was Watch Out Mortgage Debt Forgiveness Act is A Federal Provision. Does Your State Comply?.

Where did they come from?

The top referring sites in 2010 were tax-debtrelief.com , facebook.com, Google Reader, and search.aol.com.

Some visitors came searching, mostly for 990 instructions, form 990 instructions, form 8941, debt forgiveness act, and mortgage debt forgiveness act.

Attractions in 2010

These are the posts and pages that got the most views in 2010.

1

Watch Out Mortgage Debt Forgiveness Act is A Federal Provision. Does Your State Comply? March 2010

2

About Stacie’s More Tax Tips December 2009
2 comments

3

IRS Patrol: Form 990 Schedules and Instructions for filing in 2010-11 February 2010

4

Outline of Health Care Act – Tax Provisions of HR 3590 March 2010

5

Seven Things Your Accountant Should Have Told You – a Good Post From the Past January 2010
3 comments

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Are You All a Twitter About Tax News? Now You Can Follow The IRS @IRSnews

Posted on December 7, 2010 by Stacie Clifford Kitts

By Stacie Clifford Kitts, CPA

Oh Yippee, the IRS has joined the Twitter fray.  The social media storm has engulfed the treasury.

But maybe – do you think – someone might have given Timmy Geithner a copy of  Social Media Strategies for Professionals and Their Firms by Michelle Golden also named by Accounting Tomorrow as one of the top 100 most influential people in the accounting industry today.

Who knows – this book is on my Christmas list anyway!

The Internal Revenue Service is using Twitter and other social media tools to share information with taxpayers and the tax professional community.

The IRS Twitter news feed, @IRSnews, provides the latest federal tax news and information for taxpayers. The focus of the IRS Twitter messages will be on easy-to-use information, including tax tips, tax law changes, and important IRS programs such as e-file, the Earned Income Tax Credit and “Where’s My Refund.” Anyone with a Twitter account can follow @IRSnews by going to http://twitter.com/IRSnews

Another important IRS Twitter feed, @IRStaxpros, is designed for the tax professional community. Follow @IRStaxpros by going to http://twitter.com/IRStaxpros.

The IRS also tweets tax news and information in Spanish at @IRSenEspanol. Follow this Twitter feed by going to http://twitter.com/IRSenEspanol.

The IRS Twitter feeds will work in conjunction with http://www.irs.gov and the IRS YouTube channels to bring IRS information direct to taxpayers. Since August of 2009, there have been more than 1 million views of videos on the IRSvideos ( http://www.youtube.com/irsvideo), IRS Multilingual (http://www.youtube.com/user/IRSvideosmultilingua) and IRS American Sign Language (ASL) ( http://www.youtube.com/IRSvideosASL) channels.

In addition to Twitter and YouTube, the IRS provides additional social media tools to inform and assist taxpayers.

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Jason Blumer CPA, He’s a Funny Guy

Posted on November 3, 2010 by Stacie Clifford Kitts

Jason Blumer CPA, the managing shareholder of Blumer & Associates is a funny guy.  No really.  It’s true. There is proof.

I also really like his website:

We believe your numbers are simply telling stories about the relationships, processes and knowledge running deeply through your business and life. The production of numbers is not the end goal of our firm.  We are here to bring clarity to the reasons why your numbers are what they are. We are a next-generation firm, and we are doing this all over the dang world!

That’s some nice copy – wish I had written it!  AND according to Accounting Tomorrow – Jason is the second place winner in the Atom’s Got Talent Video. Congratulations Jason!

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Happily Trudging Along Enjoying My New Adventure – Katherman Kitts & Co. LLP

Posted on October 30, 2010 by Stacie Clifford Kitts
Santa Claus with a little girl

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By Stacie Clifford Kitts, CPA

From my vantage point on the soft old sofa, I marvel at my husband’s large Italian family as they come together for mom and pops’ 80th birthday party. The cousins, now grown hug, kiss, and laugh about the passage of time and their numerous adventures. My brother in-law snores softly in mama Kitts’ comfy recliner, and from the kitchen, a boisterous aunt tells stories of family members long since past while mama sets out endless supplies of goodies and encourages everyone to eat-eat-eat.

And me, I’m peering at this comforting scene over the top of my laptop as I answer emails and work on a tax return. Such is my life. But I am content, happily trudging along enjoying my own adventure. Because today readers, I want to introduce you to Katherman Kitts & Co. LLP, my new firm.

Oh loyal readers, I have been anxiously awaiting this exciting announcement like a little kid anticipating Christmas morning.

Every day I run through my “how to open your own firm” checklist, you know the one I created the second my adventure started,  (Accountants love checklists)  and  as I tick-off each completed item I feel satisfied – as accountants do.

My website, for which I am very proud, is still a work in progress. But I encourage you to take a peek. Here you will find more captivating information about Katherman Kitts including the services we provide, our experience, and a little bit about our clients.

Oh  well I do anticipate that I will be commenting on my new adventure from time to time so if you’re interested stay tuned.

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Music Video – Los Bank Auditors- I’m on an Audit – Fantastic

Posted on October 29, 2010 by Stacie Clifford Kitts

Do you think auditors aren’t cool?  Well, think again.  Los Bank Auditors got it going on.  Enjoy a quick break from work and watch this video.  It wont disappoint.

Thanks to Accounting Tomorrow for giving me a heads up about this video

Filed under: ACCOUNTANT, COMMENTARY, FUN VIDEO, STUDENTS, TIPS FOR ACCOUNTANTS, WEBCPA | Leave a Comment »

Preparer Terror – It’s Real – How to Prevent It

Posted on September 14, 2010 by Stacie Clifford Kitts
Figure 20 from Charles Darwin's The Expression...

Image via Wikipedia

By Stacie Clifford Kitts CPA

A phenomenon affecting tax return preparers often proceeded by recurrent nightmares centered around tax return preparation. People experiencing Preparer Terror may exhibit the following symptoms:

  1. Extreme anxiety  and temporary inability to remember simple tasks such as how to spell your name
  2. Being jolted from sleep accompanied by an overriding desire to run to the office
  3. Weight gain or if you’re lucky weight loss
  4. Constant fear that you are forgetting something  - like what return was I working on, where did I put that piece of paper, who am I – ya know stuff like that.

Ways to prevent Preparer Terror:

  • Set the proper level of client expectations.

Let your clients know the drop dead due date for receiving 100% of their tax documents. If I receive tax documents after my due date, I let the client know that I might not be able to file the return on time. I will try my best. I’ll even stay up all night. But there are only so many hours in a day. If your stuff arrives late so might your tax return.

  • Evaluate your level of staffing.

If you have a tax practice, the notion is that you have some idea how long it takes to prepare a tax return. Um maybe not. Sometimes partners are so far removed from the daily prep grind that they have NO idea how long it should take a staff to prepare a return. The general rule for me is if I can prepare a return in 8 hours, a new staff may take 3 to 4 times that amount of time. So partners, listen to your staff when evaluating your staffing levels.

  • Be organized.

Well duh, you say. Well ya this is a duh moment. When your mind isn’t working and you are on the verge of losing it, knowing how and where to find the information you need might save you. So if your administrative staff is responsible for filing stuff away, you had better make darn sure your processes, and procedures are being followed like their lives depend on it!

  • Set clear expectations of your staff.

The other day I was visiting a CPA firm, it was pretty late at night, and there were partners and staff in the office working away. Then an extraordinary thing happened, the staff up and left before the partners.

In my day, leaving the office before the partners created a clear and present career danger. It just wasn’t done. I am all about work life balance, heck my kids grew up in my office. However, if you want to have some sort of lasting career in this industry – might I suggest that you get permission before leaving the office during busy time?

Making sure your staff understands what it really means to OWN a project and take responsibility for its completion is an important part of not only managing your firm but also helping to prevent Preparer Terror.

Related Articles

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More Reader Questions – “I was wondering what I should do in the next year to help my chances in getting a job out of college”

Posted on June 2, 2010 by Stacie Clifford Kitts

Recently I received this email from a reader.  I am convinced getting and retaining employment is a hot topic, so I thought, why not included my response in a post.
Stacie Kitts,
My name is Ryan and I am currently a rising junior at East Carolina University. I read your blog and I thought you did a phenomenal job with the blog. I enjoy reading your blogs about Accounting and have used some of your tips to help me in the internship process. I have a couple questions regarding the accounting job process.
Since I [am a] rising junior, I still have a couple more years of college but I was wondering what I should do in the next year to help my chances in getting a job out of college? I’ve tried going around to local CPA firms for any type of volunteer work and they all turned me down. Most local CPA firms have interns in graduate school and aren’t willing to mentor a student. If you have any advice for me, please feel free to contact me.
Thank you,
Ryan

Dear Ryan:

You know, I can remember a time when accounting students were only concerned with choosing the right job offer. That was true for almost everyone who wasn’t sporting a 2.0 GPA and had like – no personality. Otherwise, most people were assured a job.

Today though with the downturn in the economy and accountants losing their jobs in public and industry, a guaranteed job appears to be something of the past.

So Ryan, what can I tell you that will help you in this job search process? I guess if I had a surefire answer, I could sell my secrets- you know like some sort of accounting job guru and make like a gazillion dollars.

Frankly, almost every day I am reminded how lucky I am that I am not dependent on someone else for a paycheck. In this type of job market, about the only people who can feel some comfort are the “rainmakers.” These people generate their own revenue by attracting clients to their firms.

I do hate to be a downer. Nevertheless, we need to face facts. In order to get and keep a job, you must present yourself as the ideal employee.

Now that I have totally depressed you – I guess I should at least try to give some tips that might help. Maybe you can try these out and report as to your progress…

I have been known to write posts intended to share the stuff I have learned working in the accounting industry. You may have seen some of these already:

ACCOUNTING STUDENTS -Don’t put yourself at the bottom of the potential hire list

An Accountants Search For The Bat Cave – A Story About Networking – A Tax Season Rerun

How To Be a Partner

What Does An Accountant Really Do? Fave Rerun

I think the most relevant post in regards to your question is this one:  Accounting Students – don’t put yourself at the bottom of the potential hire list. So let’s dissect the tips I provide here.

In this post I talk about working an internship

1)      Work an internship during college. An internship is a vital part of the learning process. It gives the accounting student the opportunity to learn skills and office processes that are not taught in a classroom environment. It can help new accountants determine the size of firm they feel comfortable working for. It also provides an opportunity for students to narrow career focus by providing opportunities to try out their real world skills in areas such as tax return preparation or income statement audits.

Now, your question is:  how do I get this internship. Well, that relates to item number two of the post:

2)      Attend the career events or “Meet the Firm” events hosted by the accounting associations at your college. Many firms send a representative sample of partners, managers, and staff to these events. Firms are often looking for students who are outgoing and display personality traits that will meld easily into their firm culture. Firm members who attend these functions often gather resumes and discus which students they believe should be offered an opportunity to interview for an internship or for a permanent position.

Based on the current job market, I suggest that you step this advice up a bit. Rather than just attending the functions, you should consider running for a position within your accounting association and working on the committee’s that are arranging firm events. This will give you more exposure in front of potential employers and provide some experience coordinating and managing the events – besides there is nothing like some management skills to add to your resume.

Remember, the time to look for an internship is busy season.  This typically starts around February and lasts until April 15.  You can start your inquiry process now by asking firms if they hire interns during busy season.  If they do, follow up with questions about the hiring process.

Also, don’t discount the friends you make in college as sources of potential jobs. Many of these people will be moving on to take jobs at accounting firms. Stay in touch with these people. Let them know you would like an internship. There’s nothing like having an insider championing your cause.  My first public accounting job was the direct result of knowing someone on the inside.  For that matter, I was referred to my second public accounting employer by a friend I had met in college.

That leads me to item number three.

3)      Maintain a higher than average GPA. The closer [your GPA is] to 4.0 the better your chances of standing out from other candidates. Although there is some debate regarding the relationship between a low grade point average and work performance, a low grade point average does tell a potential employer several things about the student.

The idea here is not to damage your chances by blending into the crowd or setting yourself up to be portrayed as a slacker. In the post, I say:

Here are some examples of what a low GPA may convey to potential employers:

a. The student may not understand the material or may not be able to grasp accounting concepts. Students who have difficulty grasping basic accounting concepts in a college setting will most likely need to learn them on the job. Firm managers and partners are busy running engagements and managing clients. This leaves little time to teach concepts that should have been learned in school. Firms are becoming less and less tolerant of students who enter the workforce without having learned the basic concepts of accounting.

b. The student doesn’t test well. This concept is based on the theory that the testing process is not representative of a student’s actual ability. The problem with this philosophy is that the nature of public accounting is similar to test taking. As public accountants, we are often handed a set of facts and based on those facts we are expected to dissect, analyze, and conclude. Basically, this is the same process one goes through when taking a test. Therefore, public accounting may be unsuitable for someone who doesn’t “test” well.

c. The student didn’t have time to focus on school. For accounting students, college is an essential step towards moving your career in a positive direction. College provides you with the basic technical skills, the basic organizational skills, and the basic social skills necessary to survive in this demanding field. Students who are unable to maintain an acceptable GPA because of other commitments may not be able to perform at his or her highest level in a work environment for similar reasons. Maintaining a “good” GPA even when you have outside life commitments demonstrates good management skills and a commitment to your career choice.

Now is also the time to work on your networking skills. In my post An Accountants Search For The Bat Cave – A Story About Networking – A Tax Season Rerun I talk about the different ways you can improve or develop your networking skills. Again, the idea is to stand out from the crowd. Get yourself noticed. Make friends with the people in the firms that you are interested in working for. When you are at firm events, you should be networking. If you want a job offer, these people need to remember you and be interested in talking to you more or requesting your resume.

I know how hard this is. I am not a natural marketer. In fact, in social situations I often need to force myself to talk to people. Otherwise I can find myself standing in the corner watching all the socializing while I peer over the rim of my cocktail glass like some pathetic wallflower. To help curb this, before you go, think of questions that are fairly generic that you can ask people, and try to keep them talking. This avoids the need to find things to say which contributes to those awkward silences that I dread.

Here are some networking tips I offer in the post:

1) Begin your quest by sharpening you craft. In order to sell your services, you need some services to sell. Have your “elevator speech” ready. Practice what you will say when people ask you questions about your profession, your employer, and your background. Treat it like an interview process because that is what it is – a five second interview meant to grab someone’s attention just long enough for them to find you interesting.

2) Socialize Socialize Socialize. Okay, so networking is directed socializing – meaning it’s about meeting people, in a particular profession, with a particular goal in mind. But as intimidating as that might sound, all it really is, is dating… In fact, networking for referral sources has many of the same elements as relationship dating. Don’t think so -Let’s explore the typical referral dating scenario:

First you attend a social event, you meet someone who interests you, you exchange phone numbers, you call the next day and set up a “referral date”, typically coffee, breakfast, lunch or dinner, you explore whether this person is someone who is going to help you get what you want, and then you consider if a more committed relationship is warranted.

Ummm sounds like a typical date to me. So sharpen your dating skills, be sure to follow up [you know, call the next day], be engaging, have fun, and for heaven’s sake, act as if you want to be there.

Now the question is – how to find people to “referral date.” Here are some ideas:

a. Join a business-networking group – this can help you to focus your energy towards people who have the same business goals.

b. Volunteer your time – besides just being a rewarding experience, you will undoubtedly broaden your social horizon.

c. Join social clubs that interest you such as a running club, bicycling club, softball team, the girl scouts… well you get the point – again the more people you know…

d. Tell people you are looking for clients – hey, it doesn’t hurt to ask – and if you don’t ask – frankly people might not realize that you are looking.

e. Get on the internet – write a blog, create a web site, join online social networking groups, send out email reminders with handy tidbits of info to people in your network – the point is to remind people you are around so when someone needs a service, your name is on their mind.

3) Be fearless in your quest. And I mean just that. Don’t be afraid – get out into the world and tell people what you do. Ask for business. Hand out your card – and do it over and over and over again until you find the right, group, network, or formula that works for you. Keep in mind that your partner’s journey may be different from yours. As networkers, we each have our own styles. So don’t get discouraged if someone else’s journey isn’t for you.

Lastly, one other avenue to consider is to work an industry job while you are going to school.  Look for a job in an accounting department.  Anything in the accounting department is good –  such as a clerk or even data entry.  You would be surprised how many firms are interested in accountants with real world experience outside of public accounting.  If you checkout my bio, you will see that I started my career in industry working full-time while I attended college full-time.  The experience and knowledge I gained helped me to progress in my career and provided insight that many of my peers just didn’t have.

Well Ryan, I hope that these tips are useful in your job search.  Don’t give up and be sure to let us know how you are coming along.

Stacie

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A CPA’s Take on Extreme Customer Service

Posted on March 15, 2010 by Stacie Clifford Kitts

By Stacie Clifford Kitts CPA

Ya that’s right.  I am a CPA and I’m in the customer service business.

In fact, I’m in the – work all night into the next day and then into the next night if that’s what it takes to meet customer expectations – business.  Frankly and as a general rule, the IRS just doesn’t give a good gosh darn if I have the flu or my child is missing his Easter pageant.  The work must be done and since I have committed to doing it accurately and on time – well duh that is what I am going to do even if I need to miss a few nights of sleep.  And yes as unfortunate as it is, over the years I have had to disappoint a pageant participant or two.

But I think I can take this even further, because  it’s fair to say that as far as customer services goes,  I am in the “extreme” customer service business.  And just like other extreme activities, like skydiving or base-jumping, I’ve experienced my fair share of adrenalin heightened heart pounding moments where I thought I might not make it. 

Oh the rush – can you feel it- a major tax deadline is fast approaching – will – YOU- make – it? 

The nature of a CPA’s work requires courageous customer service.  However, there’s also that smidgen of trepidation weaved in.  It is this combination of emotion that truly makes the level of customer service provided by a CPA extreme.   

However, maybe it’s also that investment of conflicting emotion that makes me so frustrated by businesses that can’t seem to pull off even a moderate level of good customer service.  Believe me; high-quality customer service can be done.  All you have to do is do it.

Today is March 15, our first major tax filing deadline and I’ve strapped on my tax knowledge safety-chute and jumped.  And as I hurdle toward the end of the day, I know that at least this time I am going to make it. For now, it’s time to pull the ripcord and float smoothly in for a soft landing.

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