Frequently Asked Questions

  1. Do I need a CPA to prepare my financials?
  2. How much can I pay my children before they owe taxes?
  3. How long should it take to get a tax refund?
  4. Does it ever make sense for a married couple to file separate tax returns?
  5. What happens to "passive losses" that I can't claim?
  6. How often do I pay the employment taxes for my household employees?
  7. Do I have to withhold taxes from my household employees?
  8. Do I have to pay income taxes when I win a lawsuit?
  9. How do I report my income from stock options?
  10. Can I sell stocks at a loss and offset gains on my stock options?
  11. What sort of investments provide tax-free income?
  12. I chose direct deposit for my 2010 tax refund but also requested a Refund Anticipation Loan (RAL) from my preparer. How does that affect my stimulus payment?
  13. Will my information be kept confidential?
  14. Do you provide Year-Round Service?
  15. How can your firm help me as a business owner?
  16. How much should I have withheld out of my paycheck?
  17. Should I consult a CPA if I am starting a new business?
  18. Why should I choose My Accounting Center?
  19. What types of industries does My Accounting Center have as clients?
  20. Does My Accounting Center provide QuickBooks™ installation, setup, and client training?

  1. Do I need a CPA to prepare my financials?
    Small businesses generally do not specifically require the services of a CPA. However, most entrepreneurs need an accountant to rely on for tax and financial advice. An entrepreneur may hire a CPA or a non-CPA accountant. Also, if a bank or regulatory authorities require audited (or reviewed) financial statements, then a CPA will be required to do the audit.
  2. How much can I pay my children before they owe taxes?
    If you employ your children, they can earn up to the amount of their personal exemption and the standard deduction before they have to pay income taxes. Earned income is treated differently than investment income because earned income can be offset by the standard deduction even when the child is claimed as your dependent.
  3. How long should it take to get a tax refund?
    If you filed a complete and accurate return, with no errors or computer mismatches, you should receive your Federal refund within 6 weeks. If you file electronically, your refund should be issued within 3 weeks after your acknowledgement.
  4. Does it ever make sense for a married couple to file separate tax returns?
    The tax rates are such that in most cases, couples will be better off filing a joint return. There are circumstances, however, when it makes sense to file separately. These include situations where one spouse has especially large medical expenses or casualty losses which might be disallowed on a joint return. There are also personal reasons why one spouse might wish to file separately. Most computerized tax preparation software will do the joint vs. separate comparison for you.
  5. What happens to "passive losses" that I can't claim?
    Disallowed passive losses are carried forward indefinitely and can be used to offset passive income in the future. The IRS worksheets help with the allocation of disallowed losses among the passive activities. If one of the activities is disposed of in a particular year, then any losses related to that activity, which have not been taken, are allowed in the year of disposition.
  6. How often do I pay the employment taxes for my household employees?
    Federal taxes on household employees are reported on Schedule H of Form 1040. The taxes are to be paid along with the other taxes on Form 1040. If you are required to make quarterly estimated tax payments, these taxes should be taken into account. State taxes may be payable monthly or quarterly, depending on state law.
  7. Do I have to withhold taxes from my household employees?
    Federal income tax withholding is not required with respect to household employees, unless requested by the employee. Social Security and Medicare taxes can be withheld, or at the discretion of the employer, they can be paid totally by the employer.
  8. Do I have to pay income taxes when I win a lawsuit?
    If the payment you receive is for personal injury, then it is not subject to income tax. If it relates to a dispute over your employment income or revenue for a self-employed person, then the recovery retains the same taxable nature as the income would have. Damages to your character, alienation of affection or punitive damages are also taxable.
  9. How do I report my income from stock options?
    In most instances, stock is purchased and sold within a very short period. In these cases, the gain to the point of exercise is considered to be compensation and is reported on the W-2 or 1099 along with other income from the employer. Gain after the time of exercise is considered to be capital gain. There are exceptions for Incentive Stock Options when the employee holds the stock rather than selling the stock right away. With an ISO the gain can be deferred until the stock is sold and if held for the required period can all be capital gain.
  10. Can I sell stocks at a loss and offset gains on my stock options?
    Gains on stock options up through the exercise date are reported as ordinary income and cannot be offset by capital losses. Capital losses are allowed in full against capital gains, but only up to the $3,000 limit against other taxable income.
  11. What sort of investments provide tax-free income?
    State and municipal bonds pay interest that is exempt from Federal income tax. The interest is also exempt from most state income tax when the bond is issued by a governmental unit within that state.
  12. I chose direct deposit for my 2010 tax refund but also requested a Refund Anticipation Loan (RAL) from my preparer. How does that affect my stimulus payment?
    Taxpayers who use RALs or enter into any other loan or financial agreement with their tax professional cannot receive their stimulus payments by direct deposit and instead will get a paper check.
  13. Will my information be kept confidential?
    We maintain a policy of the strictest confidence concerning our clients’ affairs. You can rest assured that no one will learn about your business or tax status – even relatives, associates or friends who might have referred you to us.
  14. Do you provide Year-Round Service?
    We are here to help you twelve months a year, not just during the tax season. Whether it’s a simple tax question, bookkeeping or payroll services, or you might need advice on tax implications of a business decision, rest assured, we are here to help you.
  15. How can your firm help me as a business owner?
    We can help…
    • Set up accounting systems
    • Analyze operating results
    • File all required local & State permits & licenses
    • Develop budgets and business plans and forecasts
    • Prepare tax returns
    • Audit, review, or compile financial statements
    • Assess benefit and compensation plans
    • Payroll services
  16. How much should I have withheld out of my paycheck?
    It depends on your financial personality. Do you prefer to have more withheld today so that you can get a refund next year? Or are you disciplined enough to set aside some of your paycheck today and save it to pay your taxes next year?
  17. Should I consult a CPA if I am starting a new business?
    It is imperative that you contact a CPA. You will need to discuss the organization of your company for tax purposes as well as numerous other issues relating to operations, not the least of which will be setting your target pricing and gross profit margins. Don't wait until the year-end to have this discussion.
  18. Why should I choose My Accounting Center?
    If you live or own a business in the Greater Los Angeles area, we are a perfect fit for all your tax and financial needs. Our strong community ties give us a solid understanding of California’s tax climate and competitive business landscape. Beyond that, we have the expertise and diversity to back up our exceptional service.
  19. What types of industries does My Accounting Center have as clients?
    My Accounting Center has clients in the industries of auto services, health care services, manufacturing, engineering firms, insurance agencies, restaurants, nonprofit organizations, construction, and real estate entities.
  20. Does My Accounting Center provide QuickBooks™ installation, setup, and client training?
    Yes, we provide a client specific approach to QuickBooks™ training and setup. We will evaluate each client to determine the best approach and the necessary level of required training.
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