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CPA Fee Guidelines (with nat'l averages for comparison) What's needed to start and to become a client address and contact info New Gain-Loss Tax Reporting Laws Large Trader Reporting Laws (Large Trader Status) Gain/Loss Tax Reporting Software (Schedule D, Form 8949 and Form 4797 formatting software) Methods of filing your tax returns (e-file, PDF delivery, US Mail delivery) Well, you've found us!. Welcome! Standing behind this web site is a real brick & mortar CPA tax firm. When you become a client you will talk with myself, Colin M. Cody, CPA, CMA, and your work will be personally handled (and not merely "reviewed") by me. As I've always said, tax preparers
who are nothing more than form fillers do [in fact] need to worry about
competition from do-it-yourself software. [But] those of us who use our
knowledge and experience to massage the info have nothing to fear from
those programs.
When it is not appropriate to necessarily use a local tax advisor (you get what you pay for) Tax Mama's "I can do it myself, thank you!"
U.S. gov't study of "commercial tax preparation chains" shows 100% error rate in preparing and advising on business income taxes (pdf)
What's needed to get started
right away?
*
Occasionally, complications will increase the work
level and the fees charged. Such as: trading more than one of the three
normal classes (securities, futures and forex) will cause complications,
additionally there are unique issues and special tax laws when trading
some ETFs and Precious Metals.
National averages for tax year 2006 for tax return preparation excluding any tax planning throughout the year:
What's a Reasonable Price to Pay for Having My Basic Tax Return Prepared Elsewhere? In November 2005 the IRS issued national averages for professional tax return preparation
fees for individual taxpayer form 1040 work. Based on these
averages for the tax return preparation only, and considering our
fees are more inclusive and include all tax planning throughout the
year, we have been undercharging our clients for years. Estimated Average Preparation Times and Out-of-Pocket Expenses by Return Preparation Method The average time and expenses required to complete and file Form 1040, its schedules, and accompanying forms will vary depending on individual circumstances. The estimated averages are: Hours Costs Taxpayer and Form Combinations for Form 1040 Filers Business Filers * 45.1 $43 67.1 $93 47.9 $542 Form 1040, Schedule C or C-EZ, and other forms and 48.0 $19 80.2 $88 55.4 $329 schedules, but not Schedule E or F or Form 2106 or 2106-EZ Form 1040, Schedule E, and other forms and schedules, but 34.1 $72 49.0 $65 36.6 $685 not Schedule C, C-EZ, or F or Form 2106 or 2106-EZ Form 1040 and Schedule F and other forms and schedules, 44.8 $15 62.8 $102 49.7 $296 but not Schedule C, C-EZ, or E or Form 2106 or 2106-EZ Form 1040, Form 2106 or 2106-EZ, and other forms and 35.9 $17 15.9 $67 27.7 $349 schedules, but not Schedule C, C-EZ, E, or F Form 1040 and forms and schedules including more than one 66.0 $128 80.5 $177 62.4 $866 Schedule C, C-EZ, E, or F or Form 2106 or 2106-EZ * You are a "business" filer if you file one or more of the following with your Form 1040: Schedule C, C-EZ, E, or F or Form 2106 or 2106-EZ. You are a "nonbusiness" filer if you did not file any of those schedules or forms with your Form 1040. IMRS 06-0000056: Estimates of Taxpayer
Burden
All your other year 2014 tax paperwork, such as:
New Gain-Loss Tax Reporting Laws:
Note, Note: effective with 2008,
brokers are required to submit form 1099-B no later than later than
February 15th of the following calendar year.
(the prior law was January 31st) Note:
In order to bridge an income tax revenue gap cause by underreporting of
taxable gains by taxpayers - brokerage houses will be replacing the
1099-B reporting of sales of stocks,
mutual funds and
bonds with new gain-loss computations of
stocks, mutual funds, options and bonds. This new provision is
expected to raise $6.7B between 2011 and 2020.
On October 3, 2008 H.R. 1424 Emergency Economic Stabilization Act of
2008 (Act, Pub. L. No. 110-343). was passed into law. Effective with 2011, securities brokers are required to do the
trade-matching and provide the gain-loss report to the customer no
later than February 15th of the following calendar year. Pub. L.
110-343, Div. B, §403(a)(2), added this requirement. IRC §6045, §6045A & §6045B
cover special new rules for the reporting of options*,
wash sales, "versus purchase" or VSP sales,
transfers of securities into broker accounts, and corporate actions such as stock
splits and spin offs.
See
Wolters
Kluwer Financial Services Cost Basis Reporting Resource Center for
additional details. Observation: In practice, brokers are
complying on a partial-sale-by-partial-sale basis, but they are not
providing any organized summary information to traders regarding the
amounts of disallowed losses that were added to basis and also
are being deferred to the following year.
update:
On October 12th, 2010, the IRS issued final regulations for the Cost
Basis Reporting Law, enacted as part of the 2008 Emergency Economic
Stabilization Act. update: IRS Notice
2010-67 dated October 25, 2010
delays until January 1, 2012 the requirement for broker-dealers to
transfer historic cost basis information along with a "covered security"**
during a DTC transfer to another custodian. Such transfers during
2011 at the broker-dealer's determination, may result in the item being
classified as a "non-covered security" and exempt from the cost-basis
rules.
**
IRC §6045(g)(3) defines a covered security as any "specified security" purchased on or after January 1,
2011 in the case of equities (other than stock of a regulated investment company ("RIC") or stock that is part of a
dividend reinvestment plan ("DRIP"); January 1, 2012 in the case of RIC or DRIP stock; and, January 1, 2013 in the
case of any other security unless exempted by the IRS. A specified security is any share of stock in a corporation;
any note, bond, debenture, or other evidence or indebtedness; any commodity or contract on such commodity; and,
any other financial instrument determined by the IRS to be appropriate for cost basis reporting. update: re: M2M
election
§1.6045-1(d)(7)(ii) Adjustments For Wash Sales—
§1.6045-1(d)(7)(ii)(A) In General.
A broker must apply the wash sale rules
under section 1091 if both the sale and purchase
transactions are of covered securities with the same
CUSIP number or other security identifier number that
the Secretary may designate by publication in the
Federal Register or in the Internal Revenue Bulletin
(see §601.601(d)(2) of this chapter).
§1.6045-1(d)(7)(ii)(B) Securities In Different Accounts.
A broker is not required to apply paragraph
(d)(7)(ii)(A) of this section if the securities are
purchased and sold from different accounts, if the
purchased security is transferred to another account
before the wash sale, or if the securities are treated
as held in separate accounts under §1.1012-1(e). A
security is not purchased in an account if it is
purchased in another account and transferred into the
account.
§1.6045-1(d)(7)(ii)(C) Effect Of Election Under Section
475(f)(1).
A broker is not required to apply
paragraph (d)(7)(ii)(A) of this section to securities in
an account if a customer has in writing both
informed the broker that the customer has made a valid
and timely election under section 475(f)(1)
and identified the account as solely containing
securities subject to the election. For
purposes of this paragraph (d)(7)(ii)(C), a writing may
be in electronic format. If a customer subsequently
informs a broker that the election no longer applies to
the customer or the account, the broker must
prospectively apply paragraph (d)(7)(ii)(A) of this
section but is not required to apply paragraph
(d)(7)(ii)(A) of this section for the period covered by
the customer's prior instruction to the broker. A
taxpayer that is not a trader in securities within the
meaning of section 475(f)(1) does not become a trader in
securities, or create an inference that it is a trader
in securities, by notifying a broker that it has made a
valid and timely election under section 475(f)(1).
§1.6045-1(d)(7)(ii)(D) Reporting At Or Near The Time Of
Sale.
If a wash sale occurs after a broker has completed a
return or statement reporting a sale of a covered
security, the broker must redetermine whether gain or
loss on the sale is long-term or short-term under this
paragraph (d)(7)(ii) and, if the return or statement
included information inconsistent with this
redetermination, correct the return or statement by the
applicable original due date set forth in this section
for the return or statement.
§1.6045-1(d)(7)(iii) Constructive Sale And Mark-To Market
Adjustments.
A broker is not required to apply
section 1259 (regarding constructive sales), section 475
(regarding the mark-to-market method of
accounting), or section 1296 (regarding the
mark-to-market method of accounting for marketable stock
in a passive foreign investment company) when
determining whether any gain or loss on the sale of a
security is long-term or short-term.
Additional information: Write-up provided by
KPMG
pdf. IRS Notice 2010-67 pdf. Cost Basis Solution Website
html. How To Complete Form 8949, Columns (b) and (g)
Large Trader Reporting Laws (Large Trader Status): Large Trader Status, Form 13H, and LTIDs. Rule 13h-1(a)(1)(i) defines a "large trader" generally as any person who directly or indirectly (including through other controlled persons) exercises investment discretion over one or more accounts and effects transactions in NMS securities for such accounts, through one or more registered broker-dealers, in an aggregate amount equal to or greater than the "identifying activity level," defined as aggregate transactions in NMS securities* that are equal to or greater than:
A large trader must self-identify by filing
Form 13H with the
Commission through
EDGAR, providing certain information about its
operations (including a general description of trading strategies),
whereupon the Commission will issue a large trader ID number ("LTID"). A
person or entity also may become a large trader by voluntarily
registering as such, without regard to the trading thresholds above -
for example, to obviate the need to monitor its trading activity on an
ongoing basis. (Rule 13h-1(a)(1)(ii)) A large trader must disclose
its LTID to each broker-dealer that effects transactions on its behalf.
* NMS security is defined in Regulation NMS, Rule 600(b)(46) as "any
security or class of securities for which transaction reports are
collected, processed, and made available pursuant to an effective
transaction reporting plan, or an effective national market system plan
for reporting transactions in listed options." See Rule 13h-1(a)(5).
Optional: Send us a "link accounts" invite via your Ameritrade account to access your records directly (then unlink a few days later once the data has been reviewed). Go to [Home] or to [Portfolio & Accounts] then [My Profile] then [Link Accounts] then [Send A Link Request] then input the user ID which we will give to you upon request. Once we are completed, you go through the same procedure again, except select the user ID and click [Unlink Accounts]. Now available to Think or Swim clients, after being acquired by TD Ameritrade, the web based GainsKeeper® service is on-line for 2009. Now available to Banc of America Investment Services clients, this free service provides cost basis and capital gains calculations. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Select Year-to-Date Tax, then select the Tax Year. Print/save this summary page to a PDF or to paper. Then select Tax Documents, click the Brokerage 1099 and save this to your computer, preferably as a PDF (with a little work this can be directly saved as a PDF). Again select Year-to-Date Tax, then select the Tax Year. Click Cost Basis Information then select the Closed Positions tab, select the tax year, then click Download, then Open with Excel and save the file. Again select Year-to-Date Tax, then select the Tax Year. then click each [Details] item and save the results (this feature can be buggy). Note: do not use the download into Turbo Tax option, the gain/loss data is error prone and first needs to be reviewed in Excel. Now available to Merrill EDGE (Bank of America Corporation) clients, this free service provides cost basis and capital gains calculations. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Select Portfolio % Accounts, then Download. Choose Spreadsheet and Text, then Realized Gain/Loss. Then Comma-Separated Spreadsheet (.CSV). Now available to Interactive Brokers clients, this free service provides cost basis and capital gains calculations. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Select Report Management (Account Management), then select Tax Forms and go to Schedule D Gain/Loss Summary Worksheet. Open, View and then Save both a PDF and a MS Excel file. Note: do not save the Excel as the default HTML/Web, but save it as a spreadsheet *.xls. Then (2) view and print (or save) the Form 1099; (3) view and save the IRC Section 1256 Gain/Loss Summary Worksheet as both a PDF and an MS Excel file, and (4) view and save Dividend Report (Schedule B) as an MS Excel file. (5) Then go back and Select Report Management, then select Activity Statements and view and save the Yearly report. New for 2009: The IB Schedule D has inexplicably begun computing Wash Sales thereby making the report virtually worthless for M2M Traders as well as any Investor with multiple brokerage accounts - Therefore, the gain/loss needs to be done manually. Select Activity Statements, then Full Default Template, Calendar Year 2009, PDF format. View and then Save the PDF. Analysis: 1) Go to M2M Performance Summary and take the total gain/loss Stocks + the total gain/loss Equity and Index Options to use on Schedule D or Form 4797. 2) Take the total gain/loss Futures + the total gain/loss Options on Futures to use on Form 6781 3) Go to the last page of the M2M Performance Summary to prove out the above and to get net margin interest and deductible fees 4) Go to Cash Report for FOREX or Cash FX Translation gain/loss. 5) Finally, prove out the ending cash by adding the above to the Starting Cash. Now available to e*trade clients, this free service provides cost basis and capital gains calculations. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Select Portfolio, then select Gains and Losses (4th tab from the left), Change the start date and end date to "01/01/200X To 12/31/200X." View and then Save as a MS Excel file. Now available to Penson Worldwide clients, this free service provides cost basis and capital gains calculations. Many retail brokerages use Penson for their back office support. Simply request their "P & L Statement" from "01/01/200X To 12/31/200X." This is provided as a PDF of matched trades and any unmatched trades are gatherer in the last pages of the report. This report works out best for active traders who end every year with no open positions, flat, all cash. Now available to Charles Schwab clients, this free service provides cost basis and capital gains calculations. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Select Accounts, then History, then select Gain/Loss and/or go to to the Realized Gain/Loss report (Schedule D). Select the appropriate dates, then select Expand All Accounts and/or then select Export. Also select Account, then select History select (Beyond 24 months). Select Statements select Tax Forms then Search for Documents and select Year End Gain Loss Reporting 200x and save the PDF. Also select 12/31/0x Brokerage Statement and save the PDF. Alternatively: Select Account, then select History and go to the Realized Gain/Loss report, then select previous calendar year - look at the beige band at the top of the page, click "export" > a pop-up window appears, click "OK" Now available to TradeStation Securities clients, in three month blocks of data (or other date range), this service provides details on transactions cost basis. Select Account Services, Balances, Positions & Activity and click Tax Activity. Separately download long transactions into Excel or into one of the optional trade matching programs. Then separately download short transactions. Note: do not forget to go back and download all data, three months at a time, then combine the four long transaction downloads into one spreadsheet *.xls. Similarly combine the four short transition downloads into one spreadsheet *.xls Separately download year-end statements and 1099's under Account Services, Confirmations, Statements & 1099s. Now available to certain other TradeStation Securities clients, this free service provides cost basis and capital gains calculations. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Select Download Manager, then under Download Criteria select Holdings - Realized Gain/Loss for Prior Year and export to Excel Format. Then to get year-end open positions download the report again for YTD and then select Holdings - Unrealized Gain/Loss (Expanded). Note: verify that all data was downloaded, since the "claimed" maximum download is 1,000 records at a time. Separately download year-end statements and 1099's under Documents, then Statements / Tax Docs. Now available to R.J.O'Brien & Associates clients, form 1099-B. Select My Account, then View Account Information hStatements - Then Click here to access reports prior to January 1st, 20XX. Then under Report, select Account Tax info. Click PDF and then save the file. Now available to Fidelity.com clients, for only the most recent 90 days and only as a download into Quicken or MS Money. Some people believe that this data is filled with errors due to Fidelity's continual, retro-active changes made for wash sales adjustments. From the Fidelity website: Q. Are there any instances in which Fidelity data varies from the manner in which it is displayed by Fidelity? A. Yes. Some transaction types do not appear in the information displayed once you download your account. You can always refer to your account on Fidelity.com or your regular account statements for an accurate representation of your account history. Alternatively, selecting History allows screen views of the last 18 months of transactions which are displayed no more than 90 days at a time. This would require 5 screen shots for a full calendar year and this would need to be done no later than June of the following year. "Detect and eliminate wash sells before tax year ends" $0.00 (free) "Converts transactions from Interactive Brokers stmts to Sch D" $0.00 (free) "Create IRS Schedule D with or without Wash Sale computations" $0.00 (free) to $50 "Mark-to-market profit/loss accounting" $12 "Helps you prepare the set of matched trades for Schedule D" $34.95 "They will do as a service on your data - price per account:" $34.95 "Generate your own Schedule D!" $39.95 "Capture, organize and report transactions" $49.95 "Schedule D-1 Generation" $49.99 "They will do as a service on your data - price per account:" $49.99 "NESTTM TMT: Match your trades and generate a schedule D" $85 "StockTax does not process Wash Sales" $30 to $165 "Generate your own Schedule D using this software" $45 & $55 "Generate your own Schedule D using this software" $45 & $55 "Imports data direct from many brokers" $145 & $345 "Manually enter trades throughout the year or import QIF file" $189 "Enter/import trades and generate your own Schedule D / 4797" $199 "Sells within the last 31 days view - to avoid trading into wash sales" $49 and up 20% discount offer "Including a current IRS schedule D" $95 to $345 "Including a current IRS schedule D" $34.95 to $499.95 "BasisPro helps you quickly track and calculate cost basis" $1,000 "Allows customized reporting" $1999.00 to $5000.00
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Tax Deduction Reminder Your payments for income tax services, advice and business related books and services may be tax deductible as an investment expense under IRS Sections 67 and 212 as an Investor to the extent that miscellaneous itemized deductions exceed 2% of your adjusted gross income. Alternatively they are fully tax deductible under Trader Status as a business expense by most corporations and trade or businesses under Section 162 of the IRS Code. New Paid Preparer Signature Laws: IRS Notice 2004-54 Alternative Methods of Signing for Income Tax Return Preparers I. PURPOSE This notice provides that the Internal Revenue Service will permit income tax return preparers to sign original returns, amended returns, or requests for filing extensions by rubber stamp, mechanical device, or computer software program. II. BACKGROUND Section 6061 of the Internal Revenue Code generally provides that any tax return, statement, or other document shall be signed in accordance with forms or regulations prescribed by the Secretary. Section 6695(b) imposes a monetary penalty on income tax return preparers who fail to sign a return. Treas. Reg. § 1.6695-1T(b) requires an income tax return preparer to sign a return after it is completed and before the return is presented to the taxpayer for signature. III. REQUIREMENTS FOR USE OF ALTERNATIVE METHODS OF SIGNING This notice authorizes income tax return preparers to sign original returns, amended returns, and requests for filing extensions by means of a rubber stamp, mechanical device, or computer software program. These alternative methods of signing must include either a facsimile of the individual preparer’s signature or the individual preparer’s printed name. Income tax return preparers utilizing one of these alternative means are personally responsible for affixing their signatures to returns or requests for extension. Income tax return preparers who use alternative methods of signing must provide all of the other preparer information that is required on returns and extensions, such as the name, address, relevant employer identification number, the preparer’s individual identification number (social security number or preparer tax identification number), and phone number. This notice applies only to income tax return preparers as defined by Treas. Reg. § 301.7701-15(a) and does not alter the signature requirements for any other type of document currently required to be manually signed, such as elections, applications for changes in accounting method, powers of attorney, or consent forms. In addition, this notice does not alter the requirement that tax returns or requests for filing extensions be signed by the person (i.e., the taxpayer) making the return or the request by handwritten signature or other authorized means. IV. EFFECTIVE DATE This notice applies to any original return, amended return, or request for filing extension filed on or after January 1, 2004. DRAFTING INFORMATION The principal author of this notice is Richard Charles Grosenick of the Office of Associate Chief Counsel (Procedure and Administration). For further information regarding this notice, contact Richard Charles Grosenick at (202) 622–7950 (not a toll-free call). Facsimile Signatures Allowed for Some Employment Tax Return The Internal Revenue Service has issued new rules allowing corporate officers or duly authorized agents to sign employment tax forms by facsimile, including alternative signature methods such as computer software programs or mechanical devices. The IRS issued Revenue Procedure 2005-39 to clarify new rules for allowing corporate officers or duly authorized representatives to sign employment tax forms by facsimile or other allowable automated means. The new procedure will reduce the burden in filing employment tax returns because it will make filing employment taxes simpler, and reduce the number of returns the IRS rejects due to signature issues. Rev. Proc. 2005-39 applies to the following forms: Any form in the 940 series, including Form 940, Employer’s Annual Federal Unemployment Tax Return (FUTA); Form 941, Employer’s Quarterly Federal Tax Return; Form 943, Employers Annual Federal Tax Return for Agricultural Employees; and Form 945, Annual Return of Withholding Federal Income Tax; Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons; Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips; Form CT-1, Employer’s Annual Railroad Retirement Tax Return; and Any variant of these forms, such as Form 941c, Statement to Correct Information; Form 941-SS, Employer’s Quarterly Federal Tax Return. Notice 2007-79 allows Electronic Return Originators (EROs) to sign the following forms by rubber stamp, mechanical device (such as signature pen), or computer software program: Form 8878, IRS e-file Signature Authorization for Form 4868 or Form 2350; and Form 8879, IRS e-file Signature Authorization. The alternative methods of signing must include either a facsimile of the individual ERO’s signature or of the ERO’s printed name. EROs using one of these alternative means are personally responsible for affixing their signatures to returns or requests for extension. This notice does not alter the current requirement that Form 8878 and Form 8879 be signed by the taxpayer by handwritten signature. |
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Last updated: January 10, 2015 visitors since January 2014TradersTaxPlan™, TradersAdvantage™, TraderStatus.com™, TradersTaxPlan.com™, TradersAdvantage.com™, DoYourOwnDaytraderTaxes™, DoYourOwnTaxes™, DoingYourOwnTaxes™, DoYourOwnDaytraderTaxes.com™, DoYourOwnTaxes.com™, DoingYourOwnTaxes.com™, DoYourTaxesOnline™, DoYourOwnTaxesOnline™, DoYourTaxesOnline.com™, and DoYourOwnTaxesOnline.com™ are trademarks and service marks of Colin M. Cody, CPA and TraderStatus.com, LLC, Trumbull Connecticut Copyright© 1999 to 2015 Colin M. Cody, CPA and TraderStatus.com, LLC, All Rights Reserved |