It is one of the certainties
April 1, 2015 4:34 PM Subscribe
Who is the best professional to call on before 2015 taxes are due?
My life, my income, and what deductions I can take on taxes, have stabilized. I have a regular paycheck and I receive a very small amount of money as an independent contractor. However, this year, I got killed with taxes because of spousal support and lack of dependent/dependent care exemptions. I know I am not doing the best I can as far as minimizing my tax burden yet I don't have "extra" money to invest. Who do I talk to before April 15, 2016 rolls around? An accountant, tax preparer, financial planner, someone else or some combination? My main goal is to make sure what I receive isn't taxed to death.
My life, my income, and what deductions I can take on taxes, have stabilized. I have a regular paycheck and I receive a very small amount of money as an independent contractor. However, this year, I got killed with taxes because of spousal support and lack of dependent/dependent care exemptions. I know I am not doing the best I can as far as minimizing my tax burden yet I don't have "extra" money to invest. Who do I talk to before April 15, 2016 rolls around? An accountant, tax preparer, financial planner, someone else or some combination? My main goal is to make sure what I receive isn't taxed to death.
Best answer: You might also want to look into something called a "Enrolled Agent". These are specially trained tax professionals. If you Google the term, I'll get some referral services. CPAs may or may not specialize in taxes. Hope that helps.
posted by chinabound at 5:51 PM on April 1, 2015
posted by chinabound at 5:51 PM on April 1, 2015
Best answer: Most small, local CPA firms specialize in tax and small businesses. You don't want one of the big ones, and you should probably err on the side of someone who isn't a solo and a firm that's been around a bit. (Most solos are fine! But occasionally they aren't and if your financial situation has been uncertain, best not to take risks.)
Generally: Are you paying or receiving spousal support? If it's receiving--which is the only way I can imagine you owing more tax--the big thing here is that if you're getting stuff like spousal support and self-employment income, you really need to be making estimated payments and/or maxing your withholding. People often get shocked at the end of the year because they've gotten used to thinking of those payments as like "free money"--no withholding like an employer would do! So they allocate all the money to other bills and don't think about the taxes until the following spring. Basically, you're getting less than you think you are, and it's probably not going to be something that an accountant can fix as far as really decreasing your tax burden, but they can help you get it set up so that you feel it less keenly next year. If you used software this year, you should have probably gotten estimated payments set up through that.
Other than that, tax planning is usually a more long-term sort of thing, trying to maximize your retirement contributions, things like that. If you've got a business, even if it's a small one, you might benefit from talking over with someone whether you're deducting everything you can, but generally people don't have a problem with that.
posted by Sequence at 6:32 PM on April 1, 2015 [2 favorites]
Generally: Are you paying or receiving spousal support? If it's receiving--which is the only way I can imagine you owing more tax--the big thing here is that if you're getting stuff like spousal support and self-employment income, you really need to be making estimated payments and/or maxing your withholding. People often get shocked at the end of the year because they've gotten used to thinking of those payments as like "free money"--no withholding like an employer would do! So they allocate all the money to other bills and don't think about the taxes until the following spring. Basically, you're getting less than you think you are, and it's probably not going to be something that an accountant can fix as far as really decreasing your tax burden, but they can help you get it set up so that you feel it less keenly next year. If you used software this year, you should have probably gotten estimated payments set up through that.
Other than that, tax planning is usually a more long-term sort of thing, trying to maximize your retirement contributions, things like that. If you've got a business, even if it's a small one, you might benefit from talking over with someone whether you're deducting everything you can, but generally people don't have a problem with that.
posted by Sequence at 6:32 PM on April 1, 2015 [2 favorites]
The right person could be an accountant, a tax preparer or a financial planner. Any one of these professionals could offer the type of service you're looking for. I think the key is to communicate that you're looking for tax planning services. Tax planning can be either long-term or short-term in outlook.
In my experience, the line that accountants hate to hear the most is, "I want to minimize the tax I have to pay." No one wants to pay unnecessary taxes, so it helps to be more specific during initial contact with a financial professional. It sounds these might be some specific discussion points you could raise:
-I'd like to be able to better predict my year-end tax liability - what rules can I apply to set aside enough self-employment/spousal support income for tax purposes?
-I'd like to review my self-employment business model and the deductions that I currently claim to look for other areas where I might be overlooking deductible expenses
-I'd like to examine other tax deductions such as retirement savings vehicles, medical expenses, that might be applicable to me
Having specific objectives will help restrict the scope of your discussions, result in more focused advice, and most importantly keep the cost down.
posted by bkpiano at 3:42 PM on April 3, 2015
In my experience, the line that accountants hate to hear the most is, "I want to minimize the tax I have to pay." No one wants to pay unnecessary taxes, so it helps to be more specific during initial contact with a financial professional. It sounds these might be some specific discussion points you could raise:
-I'd like to be able to better predict my year-end tax liability - what rules can I apply to set aside enough self-employment/spousal support income for tax purposes?
-I'd like to review my self-employment business model and the deductions that I currently claim to look for other areas where I might be overlooking deductible expenses
-I'd like to examine other tax deductions such as retirement savings vehicles, medical expenses, that might be applicable to me
Having specific objectives will help restrict the scope of your discussions, result in more focused advice, and most importantly keep the cost down.
posted by bkpiano at 3:42 PM on April 3, 2015
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Tax preparers often aren't doing anything terribly much more complicated than interfacing between you and a professional version of something like TurboTax. This doesn't necessarily give them a good grasp of what the best tax reduction strategies are.
A fee-based financial planner may also help you maximize what you're doing with what you've got. There may also be some tax wisdom there, especially how best to maximize any retirement savings to take best advantage of the various tax situations involved with each different strategy.
posted by jgreco at 5:01 PM on April 1, 2015