Why do I need a CPA?

Not everybody needs the services of a CPA. For individuals with only W-2 income and no itemized deductions, a CPA is probably not necessary. However, for taxpayers with other income sources (such as interest, dividends, rentals, royalties, self-employment and flow-through income from other business activities), a CPA becomes more crucial in the tax calculation, including the limitations and itemized deductions that are required or available. It is even more critical for businesses to have professional accounting because of the complexities in providing accurate financial statements for owners, investors and regulators, and for employee matters.

Also remember that a CPA is your most important ally when faced with any IRS inquiries or audits. While a CPA is not responsible for your tax liabilities, he or she can interpret and explain the return preparation or other matters. Doing your own taxes or accounting work is like performing your own car repairs – if you have the time, talent and tools, it can be inexpensive and rewarding. However, if you don’t have these attributes, you may create a bigger problem than with what you started. 

Why should I use McCarthy Kaster CPAs rather than a national firm? 
There are many excellent accounting firms to choose from, both locally and nationally. National firms, such as H&R Block or Deloitte Touche, are easily recognized and internationally visible. However, they generally do not feature local ownership and direct access to the principals of the firm, as is the case at McCarthy Kaster. In addition, McCarthy Kaster practice and service parameters are determined in-house and are based on the specific character and demographics of our clients – not dictated by the policies and procedures of a headquarters office, which may be several hundred or thousands of miles away. Mr. McCarthy and Ms. Kaster-Inman are quite simply a phone call away.

When are taxes and tax returns due?

Of course, April 15th is the most commonly recognized (and sometimes dreaded) tax return filing date. This includes individual (personal) returns and partnership returns (including most LLCs). Corporations, on the other hand, must file within 2½ months after the end of their fiscal year, which may or may not be the calendar year. Every taxpayer should consult a tax professional for any exceptions, exemptions or special considerations. In addition, there are numerous extension dates for taxpayers as circumstances may dictate. However, extensions allow only for the extension of submitting final information and/or forms, but do not extend the period when taxes are due and payable on the first due date, as summarized above. Late payment of taxes is subject to IRS penalties and interest. 

How do I determine my tax bracket?

There are actually two definitions for “tax bracket” and they are distinctly different. The first definition, the “marginal” tax bracket, refers to the percentage that is taxed on the next taxable dollar of income. From the new tax tables established in 2005 (below), an individual receiving $75,000 in income would be taxed at 28%, which is the marginal rate, on any income up to $150,150. Any additional income between $150,150 and $326,450 would be taxed at 33%; all income over $326,450 would be taxed at 35%.

The second definition, the “effective” tax bracket, refers to the overall percentage of tax paid on total taxable income. Again using the above tax tables, an individual reporting a $75,000 taxable income would pay $15,634. The percentage of tax to income is 21%, which is the effective rate (taking the lower tax brackets into account).

Where is my refund?

Once a tax return is filed and a refund is expected, the question is – where is my refund? There is virtually nothing that a taxpayer can do to expedite an expected refund, although e-filing and direct deposit are ways that refunds can be processed more quickly. There are two IRS resources can help with both refund information, as well as virtually all other IRS-related matters.

1. Call the IRS at 800-829-1040 and select from the menu.
2. Go to the “Links” page of the McCarthy Kaster web site and select the “IRS – Where’s My Refund?” under the “Federal” links section.

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