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March 14, 2001     Beverly Hills Weekly
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March 14, 2001
 

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stakes How to avoid the nasty April surprise. By Mark Lowen, E.A. 1. Mistake: Not looking at your whole financial situation. Smart Rule: Be thorough. It's still not too late to beat the April 16 deadline. Consider hiring a professional to help you with your record-keeping if you feel that you don't have time to be thorough. Also, Quickbooks and Quicken are wonderful financial software packages for this purpose 2. Mistake: Having inaccurate numbers. The IRS is made up of people, and if you feed them very faulty numbers, you may annoy them, which might make them less likely to be willing to work out an available payment plan with you, should you require one. This is not a good idea. Smart Rule: Be precise. If you do file your own return, and this is not highly recommended, have a professional review it. 3. Mistake: Leaving money on the table because you're not sure if it's allowed. Smart Rule: Grab every deduction you can. Use a pro to help you find them. Why allow the IRS or Franchise Tax Board to spend money you have already legitimately spent? 4. Mistake: Lying. If you get caught you could go to jail or pay a stiff penalty. That's how they caught AI Capone. Smart Rule: Be honest. Why take the chance when there are so many legitimate ways to save on taxes that take so little effort. If you are unsure, ask a CPA, Enrolled Agent (E.A.) or a bookkeeper. 5. Mistake: Having no idea what your finances really are. Smart Rule: Be organized (and if you aren't, hire someone-- we're out there.) Know your spending categories, track them, learn which are tax-deductible and which are not, and keep only the important receipts. This is where the big savings happen. 6. Mistake: Not filing. People who don't communicate may be the real ones at fault, not the IRS. Smart Rule: Don't be afraid of extensions. There are two available at the l~ederal level, until Aug. 15, and then, for a valid specific reason, until Oct. 15. The State automatically grants a six-month Extension to File, The Federal extension request does need to be sent in by April 16, but is almost always granted. It is also good to have a pro- fessional help you estimate if you will owe anything before April 16, and send a check for the estimated amount if you can. 7. Mistake: Being late, not filing, not paying, because it's not the right amount. Smart Rule: Refer to point number 7. Even if you can't pay by the due.date, at least file a time- ly extension, or ask for an Installment Agreement, which allows you to pay in monthly installments, with a small amount of interest. 8. Mistake: Not trying out a deduction. Smart Rule: Sometimes it's OK to guess. Vehat's the worst that can happen? You might have to pay the fee in a few years. Like With stocks, most preparers, and some well-trained bookkeepers can help you decide YOur appropriate risk level. 9. Mistake: Not paying the quarterlids, or Estimated Tax Payments or declaring too ~any exemptions and ending up with a big year-end bill. Smart Rule: Get enough taken out, or claim enough even if you're an employee. Again~ a professional can help you keep your receipts properly categorized, and help you determine the proper employee business expenses to take. 10. Mistake: Living "outside the system." You're too far gone, you might think. Smart Rule: No one really is. You can come in from the cold. If you have past years to file, feel the tear, and just do it anyway. It has been my experience that clients who finally file for Past Years owe far less than they or the IRS thought they would. (The IRS is noticeably ~ore User friendly nowadays...) I blark Lowen is an enrolled agent with a tax and bookkeeping service in the Beverly Hills arec~ ty You Can Trust. When your family's health is foremost, you can rely on YOSEMITE WATERS to provide quality drinking water. Enjoy good tasting water that is completely.free of chemicals, unfriendly bacteria like cryptosproridium and unwanted matter such as lead, which is found in most household plumbing systems. YOSEMITE WATERS... Convenient, Reliable & Affordable. We're the purity you can trust! | Serving Beverly Hills since 1988 0 Voice Mail Service 0 Doctor's Service o Local and Long Distance Phone Service o "Follow Me" and Conference Call Service R March. 8 - 14, 2001 15