Let’s get one thing straight; Turbo Tax is a horrible video game. What value can a box give you? Can it tell you how much money you need to move to your IRA to lower your tax liability? As you make more money now, your tax return becomes more complicated in the future. But, it doesn’t have to seem that way if you have a trusted Certified Public Accountant (CPA) by your side. Here are 5 top reasons you need a CPA this tax season.
1. To prepare yourself and your business for the new changes in the Tax Cuts and Jobs Act
Tax exemptions you once benefited from in the past are no longer available with the new 2018 Tax Cuts and Jobs Act. How will the new tax law affect you, the taxpayer? That depends if you have a trustworthy Certified Public Accountant (CPA) to advise you along the way. One thing we understand quite well is that the most successful professionals surround themselves with intelligent advisors. Did you know, according to the Tax Cuts and Jobs Act, state and local taxes are limited to $10,000? In the past, state and local property, income, and sales taxes were fully deductible. If you live in a high-property-tax jurisdiction, own an expensive home, or own both a primary residence and more than one vacation homes a change like this can drastically alter your financial situation for the 2018 tax year.
A CPA this tax season can help you recognize the tax implications of your financial situation and provide you with not just a solution to your dilemma, but a customized tax strategy for you. For instance, if you are a business owner are you aware of the 199A deduction? A 199A deduction can provide up to a 20 percent tax deduction on one’s qualified business income. A 199A deduction sounds like a blessing for your business, but claiming this deduction is not an easy walk in the park. A CPA can decipher recent complicated tax laws into insightful knowledge for your business and personal finances.
2. To make the best decision possible after a major life change
Three common life changes that may reap huge tax implications on your tax return are babies, marriage, or moving for a new job. For instance, if you got married before December 31st, you must file either married filing jointly or married filing separately. If you married into a complicated family business or entity deciding on how you file can affect your tax return. On the opposite end, if you got divorced, you will have to change your filing status. Especially with the changes from the Tax Cuts and Jobs Act, a CPA professional can guide you when it comes to tax season.
3. To start a new business
Starting your own business can be exciting and overwhelming. Not only do you need to focus on the operations side of your business, but you need to have an accounting system in place to prepare you during a future audit. A CPA can guide you through the necessary tax forms and financial procedures to start your business on the right foot. More importantly, a CPA’s license allows them to fully represent you in front of the IRS if any complications were to arise. Many business owners do not know that an ordinary accountant’s capability to represent you in front of an audit is limited. It is an accountant’s duty is to prepare and sign off on tax returns, but a CPA has the authority to put their license on the line to advise you with high-level business and tax decisions. You cannot get that level of value from an ordinary accountant or bookkeeper.
4. To own real estate or rental property
Owning an investment property can be a profitable business venture. However, there are a few pressing tax situations to manage, and a few major deductions you may want to take advantage of. A CPA can listen to your situation and provide specific information to help you claim complex tax deductions. For example, if you own commercial real estate and you can predict that you will earn more income this year, but not much income the following year a CPA can help smooth out or reduce the taxes paid across both years. Or your CPA can shed some light on a Cost Segregation Study.
A Cost Segregation Study can accelerate depreciation on your property. This tool can identify assets and their costs for federal tax purposes. Certain commercial buildings have a 39-year depreciable life but using accelerated methods; you can classify a commercial building as personal property or land improvements to accelerate the rate of depreciation. A Cost Segregation Study improves your cash flow and can significantly reduce your tax liability.
Talk to a CPA today about a Cost Segregation Study.
5. To transition the family business to the next generation
A family business working towards a goal of leaving a business legacy, pursuing a passion, and building wealth for generations to come truly is inspiring. However, when the unexpected happens and the family business needs to transition to its successor a CPA would be in your best interest to handle your succession plan. A CPA that understands your financial situation can create a succession plan that includes asset protection, perform a transaction analysis, and provide conflict resolution services. With a CPA by your side, they can help you decide and prepare the next leader of your business.
At The Garabedian Group Inc., we help your family business grow your wealth and secure your legacy. Talk to a CPA today!