Tips To Finding A Good Tax Adviser

Cartoon Man At Crossway With Three Arrows Pointing In Different Directions for Huddleston Tax CPAs Blog About Finding A Good Tax Advisor

 

No matter what your tax situation, tax season can be a huge headache. The more complex your financial situation is, the more difficult filing your taxes can be. This can be doubly true if you’re a business owner; trying to handle all of the credits, deductions, and various incomes for a business can be absolutely overwhelming. One of the ways you can take charge of your tax situation is to hire a tax adviser. However, there are many tax advisers out there and many of them aren’t exactly reputable. This article will offer a few tips for finding a good tax adviser for yourself or your business.

 

What Will A Good Tax Adviser Do For Me?

 Before we get too deep into offering advice, we should define what exactly it is that a tax adviser does. A tax adviser – a good tax adviser, anyway – is someone highly educated in local and federal tax laws, preferably a credentialed CPA, who will file your taxes for you and minimize your risk of audit. While there are many people, in a variety of professions, who can bring a lot of tax knowledge to the table, you should look for someone with one or more certifications. The first thing you should look for is a Preparer Tax Identification Number, or PTIN. Anyone who prepares tax returns professionally is required by the IRS to have a PTIN, so this the most basic requirement when looking for a tax adviser. You’ll want someone who has more than just this, however; find a professional who is credentialed in some way. While a CPA is the best option, an enrolled agent or licensed attorney can also be good options. 

 

Do I Need One?

 Whether you need a tax advisor or not largely depends on how complex your taxes are. If you are simply filling out a 1040EZ form, chances are you can handle it on your own pretty easily. However, if it gets much more complicated than that, you will probably benefit from making use of a tax adviser. If you’re in business for yourself, it gets more and more critical that you make use of a professional to file your taxes. Whether you own a business, are self-employed, or own property that you rent out to paying customers, your tax situation can veer towards the confusing and having your taxes filed professionally can decrease your audit risk significantly.

 

How Much Will It Cost?

 There are a lot of untrustworthy people out there claiming to be tax advisers, while in fact they’re scam artists trying to swindle you out of your money and perhaps even make off with your tax refund. You’ll have to be cautious when looking for a tax adviser; one of the things that you should keep an eye on when looking for someone to prepare your taxes is the fee. A professional CPA will usually charge an hourly rate; if a so-called “tax adviser” wants to charge you a flat rate, or take a cut of your refund, then there’s a good chance it’s a scam.

 

How Do I Find The Best Tax Adviser Out There For My Money?

 Even after you filter through all of the tax advisers that are obviously scams, you’ll still be left with a lot of people claiming that they’ll do the best job handling your taxes. Choosing the best one involves a little research, and a willingness to vet anyone you’re considering. First, look for someone who specializes in your specific needs; for example, if you’re a business owner, you’ll want to find someone who is an expert in business tax. When you find someone who has the proper credentials, make sure you read reviews online and check their references. Finding out if your prospective tax adviser has a lot of other satisfied customers will go a long way toward your own peace of mind. Make sure whoever you choose is well versed in all of the IRS laws when it comes to filing; for example, they have to provide their PTIN number when they file your taxes. They should also e-file when they submit your return; not only should this be expected of any reputable tax prep company working in the modern day, it’s also IRS law for any preparer that files more than 10 returns and receives compensation for their work.

 

 

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How to Determine Which Filing Status is More Beneficial

Unfortunately, most people cannot choose their tax status when it comes to filing taxes. Your status is determined by your current set of life circumstances and your income. If you are unmarried without children, you must file as single. If you are a single parent, you can claim yourself as head of household. Only married couples have a choice as they are able to either file jointly or separate.TaxesFilingStatus

Single

Being single typically carries the most tax liability as you cannot claim the same credits or deductions that many of your tax counterparts claim. As your income increases, portions of it will be taxable under a progressive tax system, increasing the amount you owe as you progress in your career.

Head of Household

A single parent has the benefit of claiming dependents on his or her tax form, as well as certain deductions and credits which can significantly reduce their tax burden. However, a head of household is subject to the same progressive tax system as someone who is classified as single.

Married

Those who are married can file their taxes either jointly or separately, but this choice is largely dependent on which status will benefit them the most. There are some situations in which it is actually more beneficial for each married partner to file separately.

Widower

If you lost your spouse within the past two years, you can still file jointly for this year’s taxes and take advantage of the benefits which married couples may receive.

Discovering how to reduce your tax liability is the best way you benefit from your filing status.

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What are the Penalties for Filing a Late Tax Return?

Having to file a tax return late is always a tough situation. The extra fees can be steep and the longer you wait the more in danger you are of being subject to the failure-to-pay penalty. However, if you find yourself in this position it’s important to know what the penalties are so you plan for them in advance.TaxReturnScrabble

The Failure-to-File Penalty

The failure-to-file penalty applies to you if you did not file your tax return by the filing deadline. This penalty is typically more than the penalty which follows from failing to pay your taxes, and for this reason it can turn into an extremely troublesome experience.

Size of the Penalty

Filing your taxes late normally subjects you to a fee of 5 percent of any money owed for each month that you did not file. It begins to accrue in value on the first day that you missed the filing date. The penalty can reach up to a maximum of 25% of the taxes you owe in failing to file.

Late Payment Penalty

This penalty only applies if you failed to pay any taxes owed by the tax deadline, regardless of whether or not you filed on time. This payment penalty is worth 0.5% of any taxes owed for every month that you do not pay. While it’s not as steep as the failure-to-file penalty, and is often waived if both penalties apply for each month you owe, it is still an important thing to be aware of.

To avoid these penalties, you should always file and pay your taxes on time. Don’t wait!

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You Missed the Tax Deadline?Now What?

Deadlines and dates get away from people all the time. In our fast-paced, hectic society, missing a deadline on occasion is practically inevitable. The good news is that if you have missed your tax deadline, there are remedies available which are not detrimental to your financial stability. The few tips below will help you understand what to do if you did miss the deadline.TaxClock

Use IRS Free File

If you have earned $62,000 or less for the 2015 tax year, you can use IRS Free File. There are forms available right on the IRS website that can be filled out online. You can also file for an extension, even though you are late, giving you until October 17, 2016 to file. Filing through Free File is one of the most secure online options and is a faster delivery option to the IRS.

Accept the Penalty for Filing Late

Even if you miss the tax filing deadline by one single day, you will have penalties and fees for being late. You just have to accept it and be prepared to pay it, because, forgetting or not being prepared comes with consequences. Figure out what your penalties may be and put funds aside or send them in as a partial payment.

Final Word

Filing late really is not that big of a deal. Yes, it comes with penalties, but they are not as stiff as you might expect. It is best to work with the IRS and make a payment plan so that you can pay what is owed, if that is the case. Also, accept the reduced refund minus late payment fees/penalties.

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4 Ways to Start Planning for the Next Tax Season Now

Planning ahead for the next tax season should begin with the new tax year on January 1st. It is best to determine how much tax you will be expected to pay and where you can make cuts to make those savings. When you are able to plan ahead, not only does it cut down the time in your preparations, the entire process will be less stressful.TaxSeasonCalendar

View Credits for the Upcoming Tax Year

It is important to be aware of the tax credits and deductions available for the upcoming tax year. This helps you plan which items you want to take advantage of such as home improvements or an environmentally friendly vehicle. Create a list of items you wish to take advantage of in the upcoming tax year.

Quarterly Assessments

Rather than waiting until you have all of your tax documents in your hand to file, do quarterly assessments with an accountant. Not only can this be adjusted as the year goes on, it gives you an idea of which tax bracket you will end up in. You will also determine your expected tax liability.

Plan Capital Losses and Gains Offsets

The best way to minimize your tax liabilities and prepare for the upcoming season is to offset capital gains and losses. It will actually save you money in the end. Plan these offsets with a financial adviser to ensure that they are done properly.

Begin a Savings Account

If you know that you will owe the IRS, start a savings account. Divide your expected liability by 52 weeks. Set this sum of money aside and put it into a savings account for the specific purpose of paying off your tax liability.

Final Word

These simple tips will help you get ready for upcoming tax seasons. Consider using a receipt scanning device to organize your receipts by category on your computer. This also helps with preparation.

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How Wealthy People Avoid Paying Taxes

The wealthy seem to have all kinds of tricks up their sleeves to avoid paying taxes. While some simply do not file, others have learned where the loopholes are. It may be a good idea to put some of these tricks to use to help reduce your individual tax liability.DollarBillCloseUp

Overseas Accounts

If you own a business or are a regular stock trader or investor, having an overseas account may be a good idea. However, you must be a registered resident of the country you wish to hold the account in. The business must also be registered in that country.

Frozen Assets

Freezing your assets is also known as gifting them to family members (children). This helps you avoid paying federal estate taxes. Essentially, it removes any appreciation value from the assets which prevents it from being taxed at higher rates.

Shell Companies

A shell company is one that exists only on paper. You can funnel money through this shell company through sans taxes. The company should be legal and should only provide a couple of services, if any. In most cases, shell companies are used for international operations to avoid paying taxes on profits.

Final Thoughts

Be careful when using these strategies. One false number or missed paper trail cover-up and the fun is over. The IRS will be on you and an audit will be almost immediate. If you plan to use any of these strategies, procure a financial planner and skilled accountant. They will make sure that your paperwork remains legal and your assets are protected.

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5 Apps Which Can Help if You Procrastinated on Your Taxes

Society is becoming technology based. Applications have been designed for mobile devices to make it easier to keep track of spending, donations, mileage and more. The apps are convenient to use.MobileApps

ItsDeductible Donation Tracker

If you make charitable donations to offset tax liabilities, this app is a big help. Users can track the amount of a donation, the organization’s name and keep track of itemized logs for filing purposes.

IRS2Go

With IRS2Go, users are able to view the status of a refund, view tax records and find tax preparers. IRS specific notifications can also be sent to your phone from the app. You are not able to file taxes from this app, though.

Expensify

Expensify is a good app for those that travel for business frequently. You are able to track traveled miles, meals and other business expenses. A photo of your receipts is all that is needed.

Bloomberg BNA Quick Tax Reference

The Bloomberg reference app helps users see tax schedules and rates with a simple search. The app has a built-in calculator and includes retroactive calculation technology to go back as far as 2011.

MileIQ

When you drive or fly regularly for business purposes, MileIQ helps keep track of the miles you have traveled. You are able to select business routes to automatically track mileage and automatically detect and track business travel.

It is ideal to make sure that the app you wish to use is available for the operating system on your phone. Some will send notifications to get your attention. Easy access to tax deduction information can make the filing process easier too.

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How to Estimate Your Tax Refund

It is possible to estimate your tax refund or the amount that you might owe before getting your tax documents from employers. Doing so helps you budget for expected payments or make plans for your refund. There are a few options to help you compute your estimate accurately.CalculatorTax

Online Tax Estimating Software

Nearly every online tax preparation service has a refund estimate tool available. If you have filed online with a specific service for multiple tax years, the information from previous returns is likely saved in the system. This information will help you complete the refund estimate quicker.

Use the IRS.gov Website

The IRS website is the most secure option for completing a tax refund estimate. A tool is available directly on their website and will use information from recent pay stubs and last year’s tax return. The tool will let you know if you will owe or obtain a refund with approximate amounts.

Complete a Test 1040 Form

You can take the old way and complete a test 1040 form. This can be printed from the IRS.gov website. It will give you an idea of what your estimated refund or payment would be based upon last year’s return, if your wages have not fluctuated much.

Estimating your tax refund is not necessary, but is helpful for those that have struggled with finances. It is also helpful for families that wish to plan a special vacation or major purchase. You can make changes to your withholdings from income if it does not appear that your refund will be what it needs to be.

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How to Get Credit for Your Charitable Giving During Tax Time

Not all donations can be written off on your taxes. For example, a donation to a private party or individual does not count. If you donate your time to an organization, you may not deduct the value of your time either. In this post we’ll take a closer look at what is required to receive credit for charitable donations.SalvationArmyPhoto

Qualified Organizations Only

The organization that you donate to must be a 501-3c to qualify for a tax credit. These are verified as non-profit organizations. The IRS also offers an IRS Exempt Organizations Select Check search option on the IRS.gov website so that you can see if your organization of choice is there.

Keep Receipts

Keep all of your receipts and make sure to get one. Get receipts for cash donations as well. This is proof of your donation to the organization should disputes of validity come into play.

Avoid Incentives

Any time that an organization or charity event advertises gifts for donations, the value of those gifts may offset the donation amount. In some cases, the entire donation amount can be disqualified if an incentive was received. It is important to deduct the value of the incentive received from the donation amount.

Document Values of Donated Goods

Every item has a value. Document the value of the goods being donated and have those values reflected on a receipt. You may also have an organization representative sign an itemized list of goods and their values.

It is important to be aware of the status of the organization you wish to donate to. You may think that you are helping a great organization and will receive a tax credit and end up discovering otherwise. Do your homework before making a charitable donation.

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How to Decide if You and Your Spouse Should File Separately or Jointly

If you have just gotten married or if your life circumstances have changed, you may be interested in choosing to file a joint return. If you are unsure of the most beneficial way to file, here are some of the factors which should figure in the decision-making process.JustMarriedPic

Filing Together

For most taxpayers, the benefits of filing together are much greater than those of filing separately. The standard deduction which a married couple can claim when filing taxes together is almost $13,000. There is also the earned income credit, educational credits, and dependent credits which can be claimed. Filing together offers you the ability for higher write-offs in most situations and gives you the best tax return outcome.

Filing Separately

There are a few rare instances in which a married couple may want to file separately. This can happen if the spouses have a significant difference in income and one can take advantage of deductions, such as medical deductions. If this is the case, you may consider submitting separate tax returns so that the spouse who paid for large medical bills can get the benefit of these without a higher income knocking the deduction down.

Ask an Accountant

If you are considering filing separately, you always want to consult an accountant. This will give you the knowledge that you need to decide if you want to file separately and the exact tax bill or credit you are looking for in either direction. Specialized knowledge can help you avoid costly slip-ups which could prevent valuable breaks on your taxes.

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