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Before Proceeding, Please Note: Tax laws are subject to change at any time. Consult your tax advisor or call us for the latest information. Accounting and Tax Center, Inc., is providing this information to you for use as general guidance. Accounting and Tax Center, Inc., is not engaging in rendering any specific legal, tax, or accounting advice. Only a qualified tax professional with all the facts at his or her disposal can determine the appropriateness of the application of any law to a given set of facts and circumstances.

The Blue Ridge Chapter of the Virginia Society of Enrolled Agents has a Links Page for links to forms, publications, and other useful sites and a News page with information about tax law changes that may affect you.

Frequently Asked Questions (Our Top 7)

1. Must I file a return? Can I claim a dependent? Should I itemize or use the Standard Deduction?

Please see Publication 501 - Exemptions, Standard Deduction, and Filing Information for a wealth of information.

2. I'm starting a new business. What do I need to do?

A lot. Always consult with your financial and legal advisors. But for some helpful links, we present the following:

Internal Revenue Service: See Starting a Business
Virginia Department of Taxation: Go to Virginia Department of Taxation, then click "Businesses Click Here."
See Virginia Employment Commission.
Virginia or Local Licenses & Permits: See the Department of Business Assistance - Frequently Asked Questions - Licenses & Permits.

3. What form of organization should I use for my business?

The IRS has some advice in this area: See Business Structures. But please seek appropriate legal and tax advice before deciding. You should make this decision even before you begin business as not making a decision is really making one.

4. How long should I keep my tax records?

Well, it depends. The IRS generally recommends in Publication 552, Recordkeeping for Individuals:

You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support items shown on your return until the period of limitations for that return runs out.

Based on that answer it could be forever. Individuals - Click here for Publication 552. Businesses - Click here for Starting a Business and click on "Recordkeeping." We recommend, if your records are not too voluminous, you keep them forever, just to be safe. But if you must get rid of some - see the above Publications. But, be sure and keep records dealing with property or capital assets (stocks, mutual funds, etc.) from the time you acquired them until the statute of limitations has expired after you sell those assets. If in doubt consult your tax advisor.

Keeping records for nontax purposes. When your records are no longer needed for tax purposes, do not discard them until you check to see if they should be kept longer for other purposes. Your insurance company or creditors may require you to keep certain records longer than the IRS does.

5. I sold my Mutual Fund shares in the ABC Growth Fund and received a 1099-B from my broker. Now what?

When you sell or exchange your mutual fund shares, or if they are redeemed, you will generally have a taxable gain or a deductible loss. This also applies to shares of a tax-exempt mutual fund. Sales, exchanges, and redemptions are all treated as sales of capital assets. The amount of the gain or loss is the difference between your adjusted basis in the shares and the amount you realize from the sale, exchange, or redemption. Click here for Publication 564. To figure your adjusted basis you will need good records.

Visit the IRS Frequently Asked Tax Questions and Answers site to find general information, and then contact us for help with your specific situation.

6. What do I do if I receive a letter from the IRS?

The IRS thinks this page will help you Understanding Your IRS Notice. After you have read that page, call us. We can help.

7. What do I do if I haven't filed a tax return for several years?

First, don't panic. Rarely does the IRS prosecute, but they can. What the IRS wants is for you to "return to the fold." In other words, they want you to file your returns. The IRS has more information on their web site at Haven't Filed an Income Tax Return? Here's What To Do. Of course, we don't recommend going to the IRS for help - they can't represent you and may not offer the best advice for you. We recommend that you call us to represent you.

Finally, who pays the most federal income taxes?

For tax year 2006:
The top 1% of filers (returns reporting $388,806 or more AGI) paid 39.89% of total individual income taxes;
The top 5% of filers (returns reporting $153,542 or more AGI) paid 60.14% of total individual income taxes;
The top 10% of filers (returns reporting $108,904 or more AGI) paid 70.79% of total individual income taxes;
The bottom 50% of filers (returns reporting $31,987 or less AGI) paid 2.99% of total individual income taxes;
The bottom 75% of filers (returns reporting $64,702 or less AGI) paid 13.73% of total individual income taxes.

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