FAQs

What is Tax Preparation?

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Tax preparation is the process of preparing and filing a tax return. Generally, it is a one-time event that culminates in signing your return and finding out whether you owe the IRS money or will be receiving a refund.

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What is Tax Planning?

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Tax planning is a year-round process (as opposed to a seasonal event) and is a separate service from tax preparation. Both individuals and business owners can take advantage of tax planning services, which are typically performed by a CPA and accounting firm or an Enrolled Agent (EA) with in-depth experience and knowledge of tax law, rather than a tax preparer.

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What is an Identity Protection PIN?

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An identity protection personal identification number (IP PIN) is a six-digit number assigned to eligible taxpayers to help prevent their Social Security number from being used to file fraudulent federal income tax returns. This number helps the IRS verify a taxpayer's identity and accept their tax return. Taxpayers with either a Social Security Number or Individual Tax Identification Number who can verify their identity are eligible for the program, and the number is valid for one year. Each January, the taxpayer must get a new one.

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What Else Taxpayers Need To Know Before Applying:

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• The IP PIN must be entered correctly on electronic and paper tax returns to avoid rejections and delays.

• Any primary or secondary taxpayer or dependent can get an IP PIN if they can prove their identity.

• Taxpayers who want to voluntarily opt into the IP PIN program don't need to file a Form 14039, Identity Theft Affidavit.

• The IRS plans to offer an opt-out feature to the IP PIN program in 2022.

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Credit Evaluation Factors

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Many factors are used in determining credit decisions. Here are some of them:

• Payment history/late payments

• Bankruptcy

• Charge-offs (Forgiven debt)

• Closed accounts and inactive accounts

• Recent loans

• Cosigning an account

• Credit limits

• Credit reports

• Debt/income ratios

• Mortgages

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Standard Mileage Rates for 2023

 

Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

•  65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.

•  22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.

•  14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.

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These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.

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The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

 

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

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Why Using the Correct Filing Status Matters

 

As taxpayers get ready for the upcoming filing season, one needs to know their correct filing status. A taxpayer's filing status defines the type of tax return form they should use when filing their taxes. Filing status can affect the amount of tax they owe, and it may even determine if they have to file a tax return at all.

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There are five IRS filing statuses. They generally depend on the taxpayer's marital status as of Dec.31. However, more than one filing status may apply in certain situations. If this is the case, taxpayers can usually choose the filing status that allows them to pay the least amount of tax.

 

When preparing and filing a tax return, the filing status affects:

• If the taxpayer is required to file a federal tax return

• If they should file a return to receive a refund

• Their standard deduction amount

• If they can claim certain credits

• The amount of tax they should pay

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Here are the five filing statuses:

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• Single. Normally this status is for taxpayers who are unmarried, divorced or legally separated under a divorce or separate maintenance decree governed by state law.

• Married filing jointly. If a taxpayer is married, they can file a joint tax return with their spouse. When a spouse passes away, the widowed spouse can usually file a joint return for that year.

• Married filing separately. Married couples can choose to file separate tax returns. When doing so it may result in less tax owed than filing a joint tax return.

• Head of household. Unmarried taxpayers may be able to file using this status, but special rules apply. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person living in the home for half the year.

• Qualifying widow(er) with dependent child. This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.

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