Tax Planning Isn’t Rocket Science, But it Can Save You Money!

Tax planning can save you money.

You don’t have to be a rocket scientist to do a little planning ahead to save big dollars on your tax return.

Today I want to talk about tax planning, and  why it’s so important.


I recently got a call from a woman who wanted to take $30,000 out of her IRA to buy something special.  She went to her financial planner to take the money out and he told her that she needed to take another $7500 out just to cover her taxes, but to talk to a tax person first.  So she called me.


Well, I ran the numbers for her and if she took $37,500 out of her IRA , it was going to cost her over $9,000 in state and federal taxes combined.  Even though she would be withholding $7500 for her federal taxes, she’d still have to come up with another $2000 to be whole.  Then we started talking.


You see, she didn’t need to make the purchase right away, she was just thinking about it.  So I decided to see what would happen if we split the $30,000  between 2013 and 2014, $15,000 each year.  What a difference!  Instead of paying over $9000, she’ pay $688 per year total for her state and federal income  taxes combined.  That wasn’t a typo–six hundred and eighty-eight dollars a year.  $1376 total tax for a savings of over $8000!


So by waiting for another 60 days to take half the money she wanted out of her IRA she’d save $8000.  How cool is that?


In fairness, the woman’s particular situation just put her into a sweet zone for this to work out so well.  For many people, splitting up the IRA withdrawal  would not save them any taxes at all.  But my point is–how do you know?   By taking the time to ask–she saved $8000.


What’s going on in your life that could benefit from a little tax planning?  Selling some stocks or mutual funds?  Donating to charity?  Do you own a small
business?   Are you getting married?  Getting divorced?  Having a baby?  Getting a new job?  Buying a home?  Any of these events, and many more, could use
a little tax planning.


My business card says, “If you don’t have a tax strategy, you’re probably paying too much.”    It’s true.  So often in my job, I’m trying to help people who’ve already made decisions and come to me when its’ too late to make changes.  Why would you want to give the IRS more money then you need to?  It’s not rocket science, it’s just common sense.   The best way to keep more of your money is to make a plan for keeping it.  Call me.  I can help.

Tax Preparer Fraud—How to Avoid Being Taken

Tax Day

Photo by chuck holton at


I’ve seen a lot of stories in the news lately about tax preparer fraud.  The IRS is catching these folks and they’re going to jail.  That’s a good thing in my opinion.  Those of us with licenses and who play by the rules really hate the crooks; they’re bad for business.


The IRS tried to regulate preparers by setting up the Registered Tax Return Preparer (RTRP) designation.  I made all my employees take (and pass) the test as a condition of employment, but the RTRP requirement was thrown out in court so anybody can hang up a shingle saying they’re a professional tax preparer and they don’t need to do didly squat to prove they’re competent.


So how do you tell if the person you’re hiring to do your taxes is legit or not?  I was recently asked that question at a panel discussion about Enrolled Agents on the web the other day.  The feedback I was getting from the non-tax preparers is that they don’t know what questions to ask, or what to look for when hiring a preparer.


Enrolled Agents are licensed by the Department of the Treasury to represent taxpayers before the IRS.  That means we are hired by and work for citizens to help them with their IRS issues.  We do not work for the IRS.  CPAs and attorneys are also allowed to represent citizens before the IRS; they are licensed by their respective states.  EAs are federally licensed. 


So, being an EA, I’m going to recommend you hire an EA.  My buddy the CPA will say to hire a CPA.  And I’ve got a couple of tax preparer friends who don’t have any initials after their names that, to be perfectly honest, are really good tax preparers.  But the biggest issue I think a regular person has to be aware of is—how do you know the person you hired isn’t a fraud?


Face it, I can tell you I’m an EA until I’m blue in the face, but how do you know?  Ask to see my license!  Oh sure, I’ve got a nice little document hanging on my wall.  I got that back when I first became an EA.  But EAs need to renew their licenses every three years.  You want to take a look at the license I keep in my wallet.  (I’m not going to post it online to prevent some fraud monster from copying it.)


Another way to check out a preparer is to go online and look them up.  You can check on an EA by going to the National Association of Enrolled Agents website:


If you want to check out a CPA, you can find out their status at CPA verify:


One thing that everyone who prepares returns professionally must have is a PTIN number, that’s a Preparer’s Tax Identification Number.  Anyone who gets paid to prepare tax returns must use one of these numbers when preparing your return.  You can check on a PTIN number by checking out this directory: the big problem with that directory is that if the preparer hasn’t enrolled in it, she won’t be listed.  Now, the IRS is supposed to have their own directory, but they charge you $35 and they send you a CD, so that’s really not a user-friendly option.


It’s important to know that non-paid preparers, like the volunteers at VITA or AARP, do not have to use a PTIN on your tax return.  So if you’re using one of those services and there’s no PTIN number on your tax return, that’s okay.  VITA does have a pretty decent training program for its volunteers.


This is important:  If you pay someone money to prepare your taxes and there’s no PTIN number for the preparer down by the signature line—Walk away and do not pay for the return.  That’s the number one sign of tax fraud.  The PTIN is the IRS’s way of keeping track of tax preparers.  Anyone not using a PTIN is hiding something.


Here’s another thing to watch out for:  If your preparer promises you a big refund before she even sees your paperwork.  How can they know how much you’ll get back if they haven’t even looked?  That’s another deadly warning.


Another big fraud scam is when they say they can get you money for something you haven’t done:  for example—college tax credits.  That’s the most recent scam that tax preparers went to jail for in my city.


What’s scary is, I think I spoke to one of their clients on the phone last year.  I received a call from a fellow asking me what I’d charge to do a tax return with a college tax credit.  I asked the man a few questions about his return and I realized that he didn’t qualify for a college tax credit—and I told him so.  He didn’t seem to care he just wanted me to prepare the return, claiming the illegal credit, and charge less than the other guy who told him about the scheme.  I told him I wouldn’t do that return for him.  I’m not sure who he had gone to, but at least one group of preparers is now going to jail for illegally preparing returns claiming credits.


So, here’s my best piece of advice:  if a tax preparer tells you that you can get money back for something you know isn’t true, DON’T DO IT!  You could wind up in big trouble, and your preparer could wind up in jail.

Is Your Tax Preparer a Dinosaur?

Perry the guinea pig in his stegosaurus costume. Photo by Kelsey Witzling.


A big part of my business is helping people who are getting audited by the IRS.  What you might find surprising is how many people I wind up helping  that paid a “professional” to prepare their tax returns.  I use the term professional loosely here because right now, basically anybody with a computer can hang out a sign and say they are a tax professional.


Now the IRS tried to put a stop to that, they set up rules requiring testing and training for anyone getting paid to prepare tax returns.  But they lost a court case so now you’re stuck trying to guess if your preparer has even minimal competency.


One of the questions I ask when reviewing an audit return is, “How old is your tax person?”  Full disclosure here, I’m also “over a certain age”—let’s just leave it at that.    Lots of tax professionals are older.  (At the IRS convention in Chicago this summer, we made a game of looking for people who were under 40—not many to be found.)  But the dinosaurs are the ones who don’t keep up with the new tax laws.


True story:  a woman came into my office because she was being audited and the IRS wanted a few thousand dollars from her.  She had had her return done by a “professional” but he didn’t do audits so she found me on the internet.  Red Flag 1:  if your “professional” won’t represent you on a tax return that he’s prepared then he’s probably not credentialed.


Anyway, I took a look at the return and asked her a few questions.  By the time I got to, “How old is your tax preparer?”  I already knew the answer.  He was a retired CPA.  He just did tax returns during the season to keep busy.


I handed back the tax return and told her to pay the money.  The tax return had been prepared using 2004 tax rules.  Had the return been done in 2004—fine, but since it was her 2010 taxes, everything was different.  Here’s the real kicker—had she done her own taxes using Turbo Tax or some other home style software—she wouldn’t have made that mistake.  The software questions would have guided her to the right answers and she never would have claimed a deduction that she wasn’t allowed.


There are lots of mature tax preparers (I’m one of them) who keep up their licenses, take update classes and keep up with what’s new in tax law.  The tax dinosaurs, on the other hand, are living in the past and can cause more harm than good for their clients.  Here are some warning signs that you’ve got a dinosaur:


1.  Your preparer won’t e-file your tax return.  Any professional tax preparer that prepares over 10 tax returns a year is required to e-file the returns.  If you have a “normal” tax return and you still have to mail it—that’s a warning sign that your person is behind the times.

2.  Your preparer doesn’t use tax software.  I don’t care how brilliant the person is—software is necessary for today’s tax returns.  Software isn’t perfect, but it eliminates many mistakes.


You should also beware of preparers who won’t sign your return and don’t have PTIN numbers.  That’s not necessarily a dinosaur, that’s more likely fraud—you should run from those guys.


Dinosaurs are extinct.   The one time the IRS tried to do the right thing and protect people from the tax dinosaurs, they lost the court case.  So you have to protect yourself.   Tax dinosaurs should be extinct too.

Should You Hire a Tax Professional that Wears a Funny Costume?

Taxes are complicated.  Although, some returns are fairly easy to do, with Congress changing the rules all the time, it really helps to hire someone who knows what they’re doing.


Okay, I’m going to toot my own horn here, but Enrolled Agents are licensed by the Department of the Treasury to represent people before the IRS in all tax matters.  We have to pass a test.  Actually, it’s nine hours worth of tests divided into three parts.  You have to pass all three before you can call yourself an EA.


EA’s are also required to take 72 hours of tax training every three years to keep their certification.  And we also have to pass a tax compliance check—meaning, the IRS takes a closer look at my tax return.


Most of those people at your big box chain tax stores are not EA’s.


There’s also a new preparer designation called a Registered Tax Return Preparer, or RTRP for short.  They also have to pass a test, take continuing education, and they have the ability to represent taxpayers before the IRS but it‘s limited.  At Roberg Tax Solutions, everyone who prepares returns is either an EA or an RTRP, meaning that we’ve all got the licenses to do our jobs.  The most basic tax preparer designation is a provisional PTIN holder-but even they must do the continuing education credits.


It’s important to know that because most tax preparers out there don’t have any credentials.   None.  Every day I hear stories about people who used a so-called “professional” and got in trouble with the IRS because the “professional” didn’t know the tax law, or perhaps chose to ignore it.


Okay, the IRS requires that I say this:  ‘The IRS does not endorse any particular individual tax return preparer. For more information on tax return preparers go to’   Just wanted to make sure I got that in there.


Now I was going to write about how you don’t want to hire the guy in the crazy costume to do your taxes.  But I’m not in a position to say that.  You see, every Halloween, Roberg Tax Solutions dresses up and helps with the Maryland Heights Halloween parade.  We used to dress up for the Pujol’s Foundation Winter Carnival too until they discontinued that.


So, go ahead and hire the tax person in a crazy costume.  Just make sure that you check his or her credentials for doing taxes first.  (By the way, the guy in the Shark costume is Mike, our new guy.  He’s in the shark costume because, well–he’s the new guy.  And the shark dance?  Well, the little kids at the parade kept begging him to “Do it again!”  For what it’s worth, he’s better at taxes than he is at dancing.)

Bad Calls


Photo by Otto Greule Jr at Getty Images

Let me start with full disclosure:  I am a card carrying member of Cardinal Nation.    As I write this I am sitting on the sofa wearing my St. Louis Cardinal’s jersey hoping to type this out before the first pitch of the game.   So forgive me if it’s considered blasphemy but, the infield fly rule called against Atlanta during the 2012 Wild Card Play-Off was a bad call.  (  Hopefully we would have still beaten the Atlanta Braves anyway, but we’ll never know.


Another bad call occurred in week 3 of the 2012 NFL season featuring the Green Bay Packers and Seattle Seahawks—a Hail Mary pass was thrown and members of both teams caught the ball while the replacement officials gave conflicting rulings. (  That was a horrible call.


Sometimes tax preparers make a bad call when they do your taxes.  We’re not perfect either.  The other day I got a phone call from a woman who needed help.  The IRS was going to garnish her paycheck and she needed some help stopping it.  After I got the immediate problem taken care of, I asked her some questions about her tax return.  After getting enough details, I realized that the woman’s previous preparer had missed a pretty major deduction.  I recommended that she amend her return and have it done correctly, it would seriously help with her tax debt.  You see, when you make a bad call on your taxes, unlike some of the referee calls in sports, you have a three year period to make it right by amending your return.


The woman asked me what I’d charge to fix her taxes and she was a little shocked by the price.  She told me that her other preparer at “Brand X Tax Company” had only charged her half that much so she wouldn’t hire me.  Ahem.  I used to work for “Brand X”.  I know their billing practices and they charge by the form.  Had the preparer done all the forms that this woman needed to correctly file her tax return, the price would have been much closer to, if not more than, what I was charging.  But besides that, we’re talking about reducing her tax burden by a few thousand dollars.  Really I’m not all that expensive.  So now who’s making the bad call?


I remember a few years back, an elderly woman came into my office with an IRS letter.  It said that she owed about $10,000 and she didn’t know what to do about it.  As I looked at the letter and then at her return, I realized that she had a bunch of stock transactions that hadn’t been reported on her tax return.  Although the IRS said that she owed $10,000, when I checked things out, she really didn’t owe anything at all, she just needed to have her tax return done correctly.


When I told her the cost, she too was shocked, “But my other lady only charged me $20 to do my taxes,” she said.  “But your $20 tax return is going to cost you $10,000,” I replied.  She was smart, and now her taxes are done correctly.


Here’s the big hint—if you get a document that says “Important Tax Document”, you probably need to report something from that paper on your tax return.  If you give your preparer that piece of paper and she ignores it, that’s a red flag that something’s wrong.  Shame on her.  If you don’t give that paper to your preparer, then it’s shame on you.


Preparers can make mistakes.  (Even me, that’s why I have my staff review my returns just like I review theirs.  We’re all human.)  If you get an IRS letter, the first thing to do is to contact your tax preparer and give her a chance to fix it.  She might not have even made a mistake; sometimes it’s an IRS mistake.  They’re human too—(some of them.)  But if your preparer can’t or won’t help you when there’s a problem, it’s time to make the right call and move on.

Is Your Tax Preparer a Phony?


Photo by Brandon Koger at

One of my biggest complaints is about fake tax preparers.  They’re all over the place.  They magically appear during tax season and then disappear on or before April 15th.  When the IRS letters start showing up, they’re nowhere to be found and their victims wind up paying me (and people like me) lots of money to get them out of the jam they’re in.


For example:  One year I had to assist five different people who received audit letters and all of them had had their returns prepared by the same woman.  Besides the fact that all the tax returns were wrong—the thing they had in common was that all of them said they had been “self-prepared,” even though all five of the people who came to me stated that this woman had prepared their returns and that they each had paid her $200 for the service.  I’ll never know how many bad returns that person did—but if five of them walked through my door, I‘m guessing that there were a whole lot more.


So how do you know you’ve got a lemon preparer?  The best way to know is to see if he or she has something called a PTIN number.  (PTIN stands for Preparer Tax Identification Number.)  A real preparer signs her name on your tax return and puts her PTIN number on it.  A fake preparer does not sign your return and your return will say “self-prepared.”


Most folks don’t know that professionals are required to have PTINs.   Unless you were burned by a bad preparer in the past, it’s not something that would ever be on your radar.  It’s on my radar because I have to tell people they’ve been burned on a regular basis.  It’s never a fun conversation.


So how do you know if you’ve got a real tax professional instead of a fake?  Well now there’s a directory and you can look your tax preparer up.  All you have to do is go to:


You can type in your preparer’s name and if they’ve got a PTIN, you can find them there.  For example:  my last name is Roberg and I work in Missouri.  If you wanted to check my credentials, you’d go to the site and type those in and I’d be there.


Or say you don’t have a tax preparer and you’re looking for someone.  You can go to the website and type in your zip code and it will give you a whole list of preparers in your area.  For example, I work in the 63146 zip code area.  If you type that in, well of course I’m on that list, but so are a whole bunch of other tax folks who work in my area as well.


Click on a name and it will give you the person’s credentials and business address.  EA means enrolled agent (that’s what I am.)  EAs are licensed by the Department of Treasury to represent clients before the IRS.  CPAs are Certified Public Accountants and RTRPs are Registered Tax Return Preparers.  RTRP is the new tax professional designation, it means the person has passed a test demonstrating competency is basic tax return preparation.  Persons with PTINs but no credentials will just have their names listed.


Will hiring a professional with a PTIN prevent you from ever getting audited?  No, I can’t promise that.  But it does show that you’ve hired a professional who’s serious about obeying the law, and that’s something you want in your tax preparer.