Michael Fitzsimmons CPA

San Diego, CA

(619) 757-1500     info@fitz-cpa.com

Services for Individuals

Personal Tax Return / Individual Tax Return / Form 1040

Individual clients typically meet one or more of the following criteria:

Our goal is to maximize deductions and credits to save money, identify opportunities to save even more money next year, present information to reduce the chance of audit, and document transactions to provide audit protection – to put the taxpayer in the strongest possible position in case of IRS audit.

Sole Proprietorship Business / Schedule C / 1099-MISC / Independent Contractor

Anyone who earns income by selling goods or performing services, but does not have taxes withheld is generally taxed as a sole proprietor. This includes persons working as independent contractors and those who receive IRS Form 1099-MISC for “nonemployee” services. This generally means:

  • Schedule C of IRS Form 1040 is included in the personal tax return to report business profit.
  • Self-employment tax of 15.3% is probably owed on net earnings. This is in addition to federal and state income taxes.
  • More business expense deductions can be claimed because many of the limitations on “employee business expenses” do not apply. Tax laws that are more favorable to sole proprietors / self-employed / independent contractors include those regarding:
    • Miscellaneous itemized deductions limitations
    • Cutback of itemized deductions for high-income individuals
    • Disallowance of itemized deductions for Alternative Minimum Tax
    • Deduction of expenses in calculating income subject to Self-Employment tax
  • Higher tax-deductible retirement plan contributions can be made to a SEP-IRA, SIMPLE IRA, or 401(k).
  • Use of a business entity, such as an S-Corporation, should be considered.
  • Claiming the maximum deductions allowable and maintaining the necessary documentation is crucial to protect the tax payer in the event of an IRS audit.

Real Estate Investments

Real estate investing has long been an excellent tax strategy, primarily because of depreciation deductions, Section 1031 Exchange, and special real estate depreciation recapture rules. We integrate real estate investments into overall tax planning and tax return preparation for our individual clients. Click here for more information.

Executive Tax Consulting

Executive tax planning involves understanding the economic, risk, and opportunity characteristics of alternative courses of action. Income tax rates, amounts, and timing can vary drastically depending on choices made. The role of the executive tax consultant is to illustrate the potential tax results and place them into perspective as important components of the final decisions. Click here for more information.

Expatriate Tax Return

  • Foreign earned income exclusion
  • Foreign housing exclusion
  • Foreign tax credit
  • Residence / domicile for federal and state income tax purposes
  • Moving money into and out of the United States (Form TD F 90-22.1 due June 30)
  • Estate / gift tax issues for non-citizen spouses

Non-Resident Tax Return

  • Nonresident Alien Tax Return (Form 1040-NR)
  • Green Card / Permanent Resident
  • Use of international tax treaties to prevent double-taxation
  • Estate / gift tax issues for non-citizens and non-citizen spouses
  • Foreign tax credits
  • Residence / domicile for federal and state income tax purposes
  • Moving money into and out of the United States (Form TD F 90-22.1 due June 30)
  • Coordinating business and personal income tax returns with immigration / residency application

Schedule K-1 Investments

Many individuals invest in business entities that report tax information on a Schedule K-1 each year. Investors can save taxes by properly claiming additional related deductions, offsetting multiple K-1’s, and offsetting K-1 items with other items on the tax return. Proper tracking of information on basis, loss carry-overs, suspended credits, alternative minimum tax (AMT) items, etc. is critical.

Tax Projections

Sophisticated tax planning software is used to perform what-if scenarios to see the impact of various alternatives on current and future years’ tax liabilities. Combined with qualitative factors, this allows an individual to make well-informed decisions to save taxes and maximize long-term wealth.

Quarterly Estimated Tax Payments

Individuals whose federal or state income tax liabilities are not entirely covered by withholding must make quarterly estimated tax payments to avoid tax penalties. Various calculation methods can be employed to optimize income and avoid or minimize penalties. Quarterly estimated tax payments are generally due:

  • April 15
  • June 15
  • September 15
  • January 15 of the following year

Any additional tax owed must be paid by the filing deadline of April 15 of the following year, even if an extension of time to file the tax return is obtained.

Taxpayer Representation

  • Audits
  • IRS & State Tax Notices
  • Installment Agreements
  • Offer In Compromise

Extension of Time to File

Personal tax returns are due April 15, but taxpayers can get an automatic extension of time to file. Since the extension only applies to when the tax return must be filed, not when the taxes must be paid, the amount of taxes should be estimated and paid in full by April 15.

Items of Note

Taxpayers may receive a 2009 tax deduction for Haiti earthquake relief donations made in 2010 to a qualified 501(c)(3) charity. Congressional leaders have announced plans to permit taxpayers to elect to deduct on their 2009 tax returns charitable contributions for Haiti earthquake relief even though the contributions were not made until 2010. This is similar to the special provision made for January of 2005 donations to charity for the relief of victims of the Dec. 26, 2004, Indian Ocean tsunami.

Back to Top

I am a fee-only professional compensated on an hourly or project-fee basis. I maintain my independence and objectivity by refusing to sell insurance, annuities, mutual funds, or software –
I do not earn commissions.