Postcard from Virginia?
Postcard from Virginia
I get asked this question a lot, “What is this postcard from Virginia that I got in the mail?”.
Here is how the typical conversation goes with a client.
Q: What is this postcard from Virginia I got in the mail?
A: By receiving this postcard from Virginia they are telling you how much of a state refund you got last year because you itemized on your tax return.
Q: So, do I have to claim that somehow?
A: Yes you have to either claim it or show proof that it doesn’t have to be claimed.
Q: But, aren’t I being taxed on that income twice?
A: No, and actually the IRS is giving you a benefit by allowing you to claim it the following year. Otherwise you would have to reconstruct your tax return each year you itemize.
Conversation regarding the Postcard from Virginia Completed
Once I walk them through it they are generally appeased but not necessarily happy. That is the way of the income tax laws in the US. That is also why it helps to go to a professional to have your taxes prepared. If you had received that postcard and recognized it as your state refund but not known that you had to claim it on your tax return would you have? Or, if you didn’t itemize would you have included your state refund from last year anyway?
All of these things are reasons to question whether you should be preparing your own taxes or now. Maybe you should be taking your information and having a professional prepare them for you. Generally the professional will offer a free consultation to go over your information with you. They will also discuss other items that you may have forgotten or need to research further to insure that you qualify for every deduction and credit available to you. A single additional credit or deduction can generally cover the preparation fees not only for that year but many years to come.
What you need to realize as a potential client is that it is in the professional’s best interest to prepare a return that gets you the biggest refund or smallest balance due. Or to find new deductions/credits that you hadn’t claimed before because they want to keep you as a client. This means that you keep coming back year after year as well as referring other clients to them. To Practical Accounting Solutions there is nothing better than receiving a referral because that is the biggest compliment any client can give us.