Frequently Asked Questions

Certified Public Accountant In Reno Discusses The Hope Credit

One of the largest credits available for college students is the Hope Credit. This credit applies to your first two years of post-secondary education and is just one of the many credits available. To make sure you are getting all the credits available to you call a certified public accountant in Reno today.

According to the IRS “you can claim the Hope Credit if all three of the following requirements are met: You pay qualified tuition and related expenses for the first two years of post-secondary education. You pay the tuition and related expenses for an eligible student. The eligible student is you, your spouse, or a dependent for whom you claim an exemption on your tax return.”

The eligible expenses for the Hope credit are tuition, activity fees, books, school supplies, etc… The basic way to decide if something qualifies is that it has to be paid to the institution because of enrollment. Thus, books and supplies can be included if they are necessary for a class.

If you are a college student or one of your dependents is a college student, then you need to make sure you think about the Hope Credit when it comes time to file your taxes. You can deduct up to $2,000 for your college expenses.

On top of this, there are some modifications to the credit, which are provided by the American Opportunity Tax Credit. The IRS states that for tax years 2009 and 2010, the American Opportunity Tax Credit modifies the Hope Credit as follows:

1. The maximum amount of the credit is increased to $2,500.00.

2. The credit can now be claimed for the first 4 years, not 2, of postsecondary education.

3. The modified adjusted gross income limitations are increased.

4. Qualified expenses include course materials.

5. Generally, 40% of the Hope Credit is now refundable (up to $1,000).

If you are a college student, or one of your dependents is, then you need to contact a certified public accountant in Reno today and start deducting your college expenses.

Reno’s Best CPA,

Tim Nelson

Certified Public Accountant In Reno Discusses The Hope Creditencpaswp2022-11-29T14:19:10-07:00

Accountant in Reno Helps You Understand State Taxes

Understanding how state taxes apply to individuals and corporations can save you or your business a good deal of money. Of the 50 states, 45 of them have a tax on individuals or corporations. Each state has different regulations about how these taxes apply to residents and non-residents. To make sure that you are filing the proper tax forms you should contact an accountant in Reno.

Here in Nevada we do not have an individual or a corporate income tax. Knowing which states have these taxes is important if you want to relocate. As an individual or a business, you can change your economic situation by moving from a state that has these taxes to one that doesn’t, and vice versa. Moving is not the only reason to understand state taxes.

If you are business owner and decide it is time to expand, you need to understand taxes. The same goes for individuals who provide professional services in multiples states. You need to know that states have different rules regarding CITUS, which governs whether you are subject to state income tax in that particular state. The best way to make sure you are not forgetting to pay taxes in certain state is to call an accountant in Reno today.

As a general rule of thumb, if you are providing professional services within that state you are going to be subject to state taxes. If this is the case your will have to prepare a non-resident return. This additional requirement while complicate your tax preparation, but is something you need to be aware of.

Because of the variety of state income and corporate taxes and the possible affect on your tax situation, you need to be aware of them. If you have questions about how they apply to you or your business, talk to an accountant in Reno.

Reno’s Best CPA,

Tim Nelson

Accountant in Reno Helps You Understand State Taxesencpaswp2022-11-29T14:19:14-07:00

CPA In Nevada Versus Attorney, Who Do You Need?

As a CPA in Nevada, I understand that there can be confusion about whether you need a lawyer or a CPA to deal with the IRS. The truth is it depends on the experience level of the certified public accountant. Let me explain the basic process, and when an attorney may be needed.

It all starts with the IRS finding something wrong with your taxes. For example, I have a client who is being audited for 2007. The reason he is being audited is that a revenue agent came across his taxes and noticed that every deduction that he took for 2007 was the exact same dollar amount that he took in 2006. This was a red flag because the revenue agent knew it was impossible that he had spent exactly the same amount on mortgage interests and property taxes.

Once the IRS has flagged you as having a problem with your taxes, there are two main course of action. The IRS will bring it to your attention and they will offer you an assessment. This value will be what they think is the amount you actually owe them. If you decide to pay this amount then you are done. However, if you do not think this is right then the process begins.

At this point, you need to hire a certified public accountant to help you fight the IRS. An experienced CPA in Nevada will understand all of the tax laws and do everything they can to come to an agreement with the IRS. However, if your case moves to tax court you should hire an attorney.

An attorney will have a better understanding on when to push and when to pull back in court. They are more familiar with the court process and are more likely to reach an agreement. With that said, an experienced CPA can take you all the way through the battle. If the court case is focused solely on tax opinions and tax positions, than a certified public accountant should be able to represent you.

If an attorney is needed, it is important to remember that your CPA will be working for you the whole time. Just remember that your CPA will know when and if you need an attorney. When in doubt do not be afraid to ask questions and ask your certified public accountant in Nevada to explain the process to you.

Reno’s Best CPA,

Tim Nelson

CPA In Nevada Versus Attorney, Who Do You Need?encpaswp2016-09-22T22:00:40-07:00

What is the Difference Between A CPA and a Financial Advisor

As a certified public accountant in Reno, I am often asked what the difference is between a CPA and a financial advisor. Because of the frequency of this question, I thought I would take a second to discuss the similarities and differences.

Stockbroker versus Financial Advisor

First, I want to talk about the difference between a stockbroker and a financial advisor because people often think they are one in the same. A stockbroker buys and sells things (stocks, bonds, mutual funds). On the other hand, a financial advisor will do trading, but also look at other ways to invest.

What is a Financial Advisor?

Along with trading, a financial advisor will look at estate planning. They will also have their clients look into gold and foreign currencies. They have a short-term and long-term view on their clients’ money and want to help them prepare for retirement.

How is a CPA different?

A certified public account is better known for handling taxes. Along with taxes, they are known for dealing with audits whether they audit a business or represent a business in an IRS audit. Some CPA’s are trained and qualified in offering business advice on where to cut costs and how to turn your business around. With that said, it is important to remember that this is not a standard among CPAs, you need to make sure you ask your potential CPA about their background before taking too much advice from them.

Can They Be the Same?

The part that confuses people is that a good and experienced CPA can overlap with a financial advisor and vice versa. The best way to remember the difference is to think about the real numbers and current state of things when thinking about a CPA and the long-term “if” and “then” ideas when thinking about a financial advisor. If you are not sure if a CPA in Reno can suit your needs please give Evans Nelson & Company CPAs a call today (775-825-6008) and we will help you find the right person to help you with your financial needs.

Reno’s Best CPA,

Tim Nelson

What is the Difference Between A CPA and a Financial Advisorencpaswp2016-09-22T21:51:28-07:00

CPA in Reno Explains Offer In Compromise

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As a CPA in Reno, I am often asked what an offer in compromise is and how it works. There is a lot of misunderstanding about what an offer in compromise is and I thought I would take a second to clear up some of the confusion. The best way I know of to explain an offer in compromise is that it is where you make a deal with the government to settle your tax obligations for less than what you actually owe.

Is This Always An Option?

No. Offers in compromise are not always an option. They are based on your ability to pay. The IRS does not like compromising, because they lose money. They will work with you if you have financial hardships and it is clear that there is no way that you can pay them the amount owed.

Can Be Useful With Medical Issues

Say for instance that you have had medical issues and have lost the ability to earn a living and therefor you owe a lot of money, but have no way to pay it back. The IRS will often wave the interest and other penalties. This is one example of a financial hardship. Anytime you are faced with a financial hardship, it is more likely that the IRS will be willing to work with you.

Can You Pay In 10 Years?

The IRS will base your ability to pay on a ten-year mark. They will have you put together a budget and prove to them that you cannot afford to pay them the amount they are asking for. If your income has dropped dramatically and it is going to level out at this new amount, then you can put together a paying schedule based on your new income.

Pets, Coffee and Other Habits

The IRS is really tough with an offer in compromise. Once they have your budget they will ask you about extra spending and may even tell you that you need to cut your extra expenses so that you can pay them back. It sounds harsh, but I have had an IRS collection officer say that my client cannot have pets or they need to stop their daily coffee runs. If they find extra expenses, they will be less likely to compromise.

Every Case Is Unique and There Are Exceptions

With all the above said, every case is unique. Sometimes there are misunderstandings about your tax situation and by exploring these, your CPA in Reno may be able to prove that you do not owe as much as the IRS is asking for. If you can prove there is a mistake then they will work with you to figure out how much you actually owe.

If you are thinking that you may be able to work out an offer in compromise then you need to talk to an experienced CPA in Reno today.

Reno’s Best CPA,

Tim Nelson

CPA in Reno Explains Offer In Compromiseencpaswp2016-09-22T21:49:42-07:00

A Certified Public Accountant Explains Goal Getting Versus Goal Setting

I am frequently asked about the importance of setting goals when you are trying to get your finances in order.

I have been to many classes on goal setting through the years. The most influential classes I have attended have been about goal GETTING as opposed to goal setting. While it is important to dream about or visualize your goals, it is even more important to plan how you are going to get there! The old adage goes that a journey of a thousand miles begins with one step. We can apply that to finances via the phrase “you can’t get to retirement if you don’t start putting away money TODAY.”

An important part of good financial management begins with organization. If you do not know what you have (or what you owe), how can you begin to manage it? For example, I have a client who came into some money and asked me which of their credit cards to pay down. Should it be the largest balance card, or should they wipe out a few of the smaller cards. The correct answer was whichever card was charging the highest interest rate! It did not matter what the balance was, if the interest rate was low.

Once you figure out where you are (and that can be daunting), figure out where you are going. Determine spending habits, and more specifically WANTS versus NEEDS. Make sure the needs are taken care of, and then determine if the WANTS are worth the price you are paying for them. For example, I had a client who gave up their cable at a monthly cost of $60 because the programs she was watching just were not worth the cost. Instead, she committed to a healthier lifestyle, getting out and walking, riding a bike, or just sitting in the park. You would be surprised how entertaining people watching in a public place can be!

Once you have your financial goals down on paper, in a specific format, with measurable results, it is time to act on those goals. Put away what you have committed to, and stick to your guns. Use the common phrase “pay yourself first,” since the bills will always be there.

Determining where you are, what the plan is to get you where you want to be, and ACTING on those plans, are the three steps to ultimately getting what you want. And if you’re weak from time to time, see a Reno CPA for support!

Reno’s Best CPA,

Tim Nelson

A Certified Public Accountant Explains Goal Getting Versus Goal Settingencpaswp2016-09-22T21:35:18-07:00

A Reno CPA Talks About Motivation

With the tax deadline fast approaching, I thought I would take a second to talk about motivation.

There is no question that during “tax season” CPAs are extremely busy (not complaining, I actually enjoy it). However, from time-to-time, I am asked how I stay motivated during tax season.

I find that the busier I am, the more productive I am. Therefore, during tax season, it is not a problem to stay motivated. It is the rest of the year that is the problem!

Appreciative Clients Help

Seriously, it helps to have clients be appreciative of what you are doing for them. Often, they are unaware that you have just saved them thousands of dollars or gotten them out of a mess that they did not even know they were in. Those clients that take the time to say thank you or acknowledge the service I provide really give me a boost of energy.

Simple Lesson In Motivation

The best thing I can say about being motivated is that it has to come from you. In my opinion, motivation from outside is a short-term thing. The German philosopher Friedrich Nietzsche was quoted as saying, “he who has a WHY can overcome almost any HOW.” My recommendation is to focus on the results. If you do not have results in mind, then you are definitely going to struggle to stay motivated during the slow times, the fast times, and well, all the time.

Keep It In Front Of You

Often, people search for motivation, but forget that the easiest way to stay motivated is to keep your goals or desires in front of you. If you want that shiny red sports car, put in on the fridge. Do internet searches on what kind of car, what the prices are, and can getting a used one still make you as happy? I had a friend who purchased a 1996 Model 944 Porsche in 2005. Rather than saying he bought a 9 year-old car, he said, “I’ve finally fulfilled my 9 year-old dream of buying a brand-new 1996 Porsche!” Kind of funny, but perspective is the key!

In the end, you need to remember that motivation comes from within. However, it helps to keep your goals, wants, and desires in front of you. Lastly, although tax season is the busiest time of the year, it truly is the most fulfilling for me. For most people it is not the busy times when they need to stay motivated, it is in the slow times.

Reno’s Best CPA,

Tim Nelson

A Reno CPA Talks About Motivationencpaswp2016-09-22T21:29:21-07:00

What Do All The Initials Mean? (CPA, CVA, CFE)

I thought this was a fun question to discuss. I am often asked, “What do all the initials that follow your name mean?” This question is very important. People need to understand whom they are hiring to work with their money and knowing the difference between these different sets of letters will help you make the right choice.

The Easy One- CPA

The CPA is the easy one. CPA stands for Certified Public Accountant and means that you have special training, primarily in accounting and taxes, to help individuals and businesses in their financial dealings. It requires that you pass a difficult 4-part exam, an ethics exam, have at least 2 years of experience working for a CPA, and (under Nevada law) have at least 1,000 hours of looking at companies books and preparing their financial statements. Furthermore, once you become a CPA, you are required to have approximately 40 hours of continuing education each year. I say approximately because depending in which area you practice, it could be substantially higher than that! Most people do not know that each state certifies the CPAs in their state, rather than having a national certification. The requirements in the State of Nevada are more stringent than those of our neighbor to the west, California.

Okay Now For CVA

The CVA stands for Certified Valuation Analyst. It means they have special training in the valuation and determination of value of businesses. It does NOT mean they can do appraisals. I originally used the certification in helping attorneys resolve accounting matters in the court (litigation support). I’ve also used it in estate cases, divorce cases, shareholder lawsuits, mergers with other companies, helping companies determine whether or not to buy a competitor, helping business owners decide whether or not to add a new partner or enter a new line of business, and even in gifting situations where a business owner wants to give part of their company to their heirs. It is extremely technical in nature, and the part I like best is explaining what is going on in easy to understand terms to my clients.

Last But Not Least- CFE

My most recent addition to the letters behind my name is the CFE certification. It stands for Certified Fraud Examiner, and means I have formal training in the research and investigation of fraud and forensic accounting matters. I have been doing this for about twelve years, and love it! The “sleuthing” of accounting really gets me going. I love seeing how the fraudster got away with it, assisting law enforcement in putting away the bad guys, or even resolving how an owner is stealing from his partners! It can be complex, or as simple as fixing procedures around the office to deter employees or customers from making off with the valuable assets of the company.

Before you hire an accountant, make sure you understand what they are certified in and that they can adequately handle your financial needs. Remember, when it comes to your money you need to make the best decisions possible.

Reno’s Best CPA,

Tim Nelson

What Do All The Initials Mean? (CPA, CVA, CFE)encpaswp2016-09-22T21:26:52-07:00

A Reno Accountant Talks About the Different Types of Businesses

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There are many things to consider when starting a business. One of the first concerns should be organizing the business itself. There are many ways to organize a business in the United States. Each type of business has its advantages and disadvantages for taxes and operations. Here is some business tax advice from a Reno accountant about making the right choices for your company.

Sole Proprietorships

The Sole Proprietorship is the most common kind of business in the US. In this type of business, one person is responsible for everything. This includes daily tasks, owning assets, profits, losses and taxes. The owner would need an accountant to give business tax advice. The advantages of a sole proprietorship are that it is easy to set up and run, the profits do not have to be divided, and the owner calls all the shots. Disadvantages are that the business and its owner are inseparable according to the law. This means that if the business gets into legal or tax trouble, your personal property could be forfeit.

Partnerships

Another common business type is the partnership. Partnerships involve two or more running the company and sharing responsibility. As in proprietorships, the partners’ personal property can be forfeit if there are problems with taxes or lawsuits. Partners need to have clear legal agreements, to prevent disagreements about profit sharing, personal contributions, and inheritance. An accountant will tell you that partnerships’ advantages are that the work and troubles of running the business are shared, as are the taxes. Partnerships are usually short-lived, ending with the death or departure of one partner.

Corporations

The corporation is a more complex way to organize a business, but it has many advantages over other models. A corporation is an “entity” that is formed and registered in its home state. A business charter sets forth the corporation’s purpose, as well as whom its shareholders, or owners, are. The shareholders elect a corporate board, which directs the company’s operations. A Reno accountant is needed to give corporate business tax advice and to ensure that state and federal tax laws are followed. Taxes are generally higher. Corporations allow the owners limited legal and financial responsibility in lawsuits, debts or even bankruptcy.

Limited Liability Companies (LLC)

The LLC is a newer business class that works like a hybrid of a partnership and a corporation. LLC owners are listed as “members” and organizational paperwork is filed that sets out its purpose and terms. The main tax benefit for an LLC is that it is taxed at individual rates instead of higher corporate rates. Members also have limited legal and financial liability. An LLC cannot have more than two corporate features, like continuity of the agreement, management centralization, asset ownership, and ownership transferability. If it has more than two of these, it is re-classified as a corporation.

Before starting a business, talk to a Reno accountant about how to begin. Get good business tax advice and figure out your goals. If you have modest goals and do not want to share profits, a sole proprietorship is best. If you and someone else share the desire to make a business work and are committed to it, a partnership could benefit you. More upward-minded businesses should organize into corporations or LLC’s, depending on how they want to structure operations. Remember to ask about taxes, as each method’s tax liability varies.

A Reno Accountant Talks About the Different Types of Businessesencpaswp2016-09-22T18:11:52-07:00

What Are the Different Kinds of Reno Tax Preparers, and What Do They Specialize In?

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Every year in April, everyone begins scrambling to complete and file his or her taxes. Although many people prepare their own taxes, a business owner or someone with significant assets and investments needs to use a professional’s services. There are many kinds of Reno tax preparation services and Reno tax planning professionals. Some of these are Enrolled Agents, CPA’s, and attorneys. What is the difference between a tax preparation service and an Enrolled Agent?

Tax Preparations Services

Most people are familiar with Reno tax preparation services, such as H&R Block and Jackson Hewitt. These services will prepare and file your yearly return for a fee, and often offer refund advance loans. Many smaller such services exist all over the country. Usually they are staffed with certified professionals such as accountants, although some may hire experienced nonprofessionals or accounting students. Be careful using an uncertified tax preparer, because they may not know the tax code well and miss deductions.

CPA’s

Individuals can be certified as tax preparers in many ways, but the CPA is the most common. A Certified Public Accountant has to attend secondary school and receive a degree in accounting. They are licensed by their state, and take yearly continuing education classes for re-certification. Accountants do not just prepare taxes; they also give financial, business and tax planning advice. Some CPAs work for tax preparation services full- or part-time. It is recommended that large businesses keep a CPA on retainer. Any Reno CPA should display their most recent credentials or offer them openly.

Tax Attorneys

Attorneys can choose to specialize in a certain area of the law, just like doctors. Some choose tax law, which can be a very lucrative specialty. Tax attorneys are there to assist their clients in tax disputes, to set up tax shelters, draw up paperwork for corporate tax measures, and more. They are not specialists in filing actual returns. A tax attorney is good to have on retainer for a larger corporation, as they know the tax code well and can advise how to invest and what deductions might be best for the business. Check with the local Bar Association to find out if the attorney you are considering is well qualified.

Enrolled Agents

A Reno Enrolled Agent (EA) is different from a CPA in the scope and training of their job. EA’s are certified by the IRS to represent taxpayers. They do not have a set training course, but do have to pass a certification exam and get continuing education. An EA is a tax specialist who advises taxpayers in audits, investigations, and can prepare taxes. They have client privacy obligations, unlike other most tax preparers. An authorized agent is also the only taxpayer representative designated by the federal government. There are only about 49,000 EA’s in the US, and they should display their credentials prominently.

Different Areas of Expertise

CPA’s are financial jacks-of-all-trade. Their certification exam has 1000 questions, only about a quarter of which deal directly with taxes. Most Reno accountants focus more on actual accounting practices and only actively work on taxes during tax season. Their advice and guidance is very important for running a business efficiently. An Enrolled Agent, however, specializes only in taxes. Their exam covers every part of the tax code and does not include accounting and business principles. They have passed a very strict exam to become an EA in the first place, plus yearly Continuing Education classes and tests.

Practical Application

A company should have a CPA on retainer all year, to give advice on business matters as well as taxation. Their services are invaluable for running a business efficiently and profitably. While an Enrolled Agent will charge slightly less than a CPA, their services are more limited. If you or your business have specific tax problems, it might be best to call an enrolled agent instead of a CPA. They are bound by EA-Client privacy privileges, and are extremely experienced in tax matters, especially audits. A tax attorney should be retained by corporations or people with a high net worth to take proactive measures to shelter their income.

Reno tax preparation services can and do employ all types of tax professionals. When it is time to choose your tax-planning professional, determine the extent of your needs first. If you are an individual with a straightforward return, a tax service or CPA will work fine. If you fear an audit or need special representation to the IRS, employ and enrolled agent. For legal tax matters, hire a tax attorney. Each of these financial advisors can do their job within the scope of their specialization, but are not necessarily interchangeable.

Reno’s Best CPA,

Tim Nelson

What Are the Different Kinds of Reno Tax Preparers, and What Do They Specialize In?encpaswp2016-09-22T17:54:41-07:00

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