Have a general question? Check to see if we have an answer here first! Here’s a list of our most frequently asked questions:
The CPA’s job is to partner with the client in organizing tax related information into the annual return, and assisting the client to understand the reporting process. The goals are to harvest and optimize allowable deductions, to minimize taxes, and to remain compliant in reporting and filing responsibilities.
The tax laws change every year, often at the 11th hour. I spend virtually all my required continuing education hours staying abreast of new legislation. The biggest change that I see these days is in the attitude of the tax agencies, which during the past few years of the struggling economy has become extremely rigid enforcement on compliance. Therefore, part of my job is to work proactively with clients to meet filing deadlines and requirements in order to avoid the ever-increasing number, type and magnitude of penalties being assessed. New practitioner penalties are being instituted and enforced as well, putting us at greater risk for noncompliance assessments.
The role of planning can’t be overemphasized when it comes to resting easy in anticipation of tax day. Prepaying taxes comes from both withholding taxes from employment and sometimes investment income, and paying estimated taxes. By understanding the big picture of next year’s income, we can zero in on a plan that will lead to an optimal outcome at tax prep time.
Only if you like the idea of making an interest free loan to the government. The best outcome is to neither overpay nor underpay taxes. Obviously the bottom line is a moving target, but we want to come as close as possible. If you are one for whom tax refunds constitute an enforced savings plan, we can adjust. But my preference is to put a different and more beneficial savings plan in force – one that keeps your money working for you, either in savings or in managing debt.
Like the answers to so many other questions – ‘It depends’. To avoid penalty, the taxpayer will want to prepay taxes that are the lower of last year’s tax bill or the current year projected tax bill. We’ll do the math to figure out how you can prepare by prepaying the appropriate amount of tax, knowing what we can about the current year vs the prior year. The trick is to balance prepayment of taxes with considering the best use of your income and cash flows.
The entity that is best for your business is the one that’s the best fit with your life. Some people will do anything to avoid paying taxes. Other people will go to extremes to avoid adding complexity to their lives. I work closely with new businesses to structure their enterprise so that it gives them all the joys plying their craft profitably, at the same time honoring the fundamental business and living style of the owner. I like to think that this is the kind of work that makes my practice different from many others.
Incorporation is one solution for minimizing taxes, but incorporation also comes with a giant leap in management responsibility. If you are willing to make that effort, then incorporation (or another similar strategy) may be the best solution. But it’s important to be sure that you understand all that is involved before taking that step.
I have not observed that taking a home office deduction will in itself trigger an audit. For those who do work at home, and who have a dedicated, legitimate office in their house, using that deduction can be extremely valuable in reducing taxes. Often an analysis of ‘what if’ is helpful in deciding whether to use the home office deduction.
If you are a US citizen, you are required to report and include any/all income you receive from anywhere in the world. There are provisions to prevent double taxation, so if your income is taxed in the country of its origin, you’ll likely get a tax credit on your US taxes. The tax agencies are also putting substantial effort into collecting information (and taxes!) on financial transactions in and out of the US.
Sorry, it doesn’t work like that. It’s better for both of us if your information is organized so that it makes sense at the outset. We can provide you with a tax organizing document that will make it easier to sort and categorize the various aspects of your tax related information.
Your call! Some clients prefer to drop and run, and await a call when the returns are complete. Others like to sit and get the running commentary, and leave with the finished product, and with a better understanding of the process as well as planning tips. I believe the latter is better, but not to everyone’s taste (if there’s any taste to tax accounting!). Some clients like to take a first pass at return prep and then go over their process. As an educator, I feel especially successful when clients gain confidence to do their own financial management and preparation.