Facts & Questions

Potts' Taxes

Facts & Questions

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Your place for help with tax problems and tax filings.

Are there really that many tax changes each year that might affect me?

Yes, filing your taxes is getting so complicated that even the Commissioner of the Internal Revenue Service hires somebody to do it. "I use a preparer," Doug Shulman said in an interview on C-SPAN last weekend. "I find it convenient and I find the tax code complex, so I use a preparer." (Star-Telegram 1/14/10)

The tax code and regulations are very complex and Congress is continually changing the tax laws. Enrolled Agents take continuing education courses each year to keep up with the changes and also have research tools at their disposal to constantly monitor the updates. Most taxpayers do not have the time or the research tools to read the volumes of material that are added to or deleted from the tax code each year. That is why it is important to choose a tax professional, such as an enrolled agent, who keeps up with the rules and regulations and uses this expertise to do the best job possible for every taxpayer.

What are the differences between Enrolled Agents (EA) and other tax preparers?

Only enrolled agents demonstrate their competence in matters of taxation and report their hours of continuing education to the IRS. An EA is the only taxpayer representative who receive his right to practice directly from the U.S. government [certified public accountants and lawyers are licensed by states and their licenses are state specific]. Unlike attorneys and certified public accountant, who may or may not choose to focus on taxes, all enrolled agents specialize in taxation.

Who else thinks there is a problem with tax preparers and the tax code?

"We note that in some respects petitioners may have been misguided by their return preparer’s advice because he is not an attorney, a certified public accountant, an accountant, an enrolled agent, or a tax professional.”

This is a footnote from Rosser v Commissioner TCM 2010-6 (January 6, 2010)and note the fact that the unenrolled tax preparer (who testified at the trial) was not even considered a tax professional.

Steven is an Enrolled Agent and is licensed to practice law in front of the U.S. Tax Court.

You can get a Savings Bond for your Refund

You can now get U.S. Savings Bonds for all or part of your Refund!

Starting in January 2010, you can buy Series I U.S. Savings Bonds with a portion or all of your tax refund. Issued by the Department of the Treasury, Series I bonds are low-risk bonds that grow in value for up to 30 years. While you own them they earn interest and protect you from inflation.

Buying savings bonds with your tax refund is simple and easy
Just tell your tax preparer you want to buy savings bonds with part or all of your refund! If you prepare your own return, file Form 8888, Direct Deposit of Refund to More Than One Account. The instructions explain what you need to do.In any single calendar year, you can purchase up to $5,000 of I bonds under this program. If you purchase bonds with your tax refund, the amount you request must be divisible by 50. If you don’t buy I bonds with 100 percent of your refund, you will need to have another account in which to deposit the remaining amount of your refund. For example, if your refund is $280; you can direct $250 to I bonds and the $30 balance to your savings account.

Paper bonds will be issued in your name
When you purchase savings bonds with your tax refund, you will receive paper bonds, issued in your name. If you are married and filed a joint return, the bonds will be issued in your’s and your spouse’s name. You cannot designate a beneficiary under this option.

Your request will be processed in two parts

Part 1: Generally, you will receive the bonds after you receive the remainder of your tax refund from the IRS. The IRS will process the portion of your refund that you are not using to buy savings bonds. This amount will be deposited into the account you designate. Go to Where’s My Refund? or call 1-800-829-1954 to see if Part 1 is complete.

Part 2: The IRS will forward your request for Savings Bonds to the Treasury Retail Securities Site. It will take them up to three weeks to issue and send your bonds to you at the address on your tax return. You can call the Treasury Retail Securities Site at 1-800-245-2804 to check on the status of your bond issuance.

More about savings bonds
Series I bonds pay interest based on a combination of a fixed rate (currently .30%), which remains the same throughout the life of the Savings Bond, plus a semiannual inflation rate - currently 3.06%, which is updated each May and November.The interest earned by purchasing and holding savings bonds is subject to federal tax at the time the bonds are redeemed. However, interest earned on savings bonds is not taxable at the state or local level.

Potts' Taxes - Steven E Potts, JD EA USTCP - 2024 McGarvey St - Fullerton, CA 92833-5095