9 Reasons a Local CPA May be Best for Your Tax Situation
Wesley R Howell CPA Your Best Tax Solution in Central Florida
Today, with all the “free” on-line tax solution, it is hard to know when a good local CPA may be a better bet. If anything in this article sounds familiar in your tax situation, it is in your interest to contact a professional. If you spend more than a few hours preparing the information to file your own taxes this year, its time to ask yourself; “does it make sense to outsource this portion of your financial life to a professional?”
One of the basic rules of life and business is; outsource what you don’t enjoy, fully understand or that another source may be able to make more financially beneficial. Many of our clients here at Wesley R Howell CPA find that as their business grows, so does the level and complexity of their income and investments. A good CPA can anticipate your future tax situation and plan accordingly, thus through proper planning save you money in the long run.
Automated programs such as TurboTax and others like it are great for people with relatively simple taxes, those with a steady long-term unchanging job an little need to keep track of receipts and expensed. In other words, standard deduction filers may do well with these programs, provided they never need to answer questions about their taxes from the IRS.
However, Tax-filing software won’t help you minimize taxes in a more complex environment, because without the personal interaction and expertise, a program does not know what to ask and what to look for. A complex return both makes it more likely you will make mistakes and more likely a good CPA may find opportunities to minimize your taxes over time.
We present 9 of many triggers that may signal it could be time for you to call your local CPA. Once you reach some of these factors, it is to you advantage to have a personal relationship with a CPA who is on your side, an office like Wesley R Howell CPA.
- You earn more than $200k per year as a business or as an individual:
As you can see from the table below, your odds of being audited rise significantly if you earn more than $200k. Most everyone we know would prefer to have a CPA who personally knows their tax situation and has their back if they get that letter from the IRS.
Income Level Likelihood of An Audit
Under $200,000 0.9%
Over $200,000 3.7%
Over $1 million 12.5%
- You receive K-1s.
Typically, an individual receives a K-1, if you’re a partner in a business or a shareholder in an S corp. A few K-1s are simple to include in your tax return, but more specifically, TurboTax and other on-line automated programs are not built to handle many of these variables. A CPA can also review the information and determine if it is correct from the source.
- You could be subject to the Alternative Minimum Tax (AMT).
Many of our clients have to pay the Alternative Minimum Tax (AMT). Common triggers include exercising ISOs; high state income tax – such as those in California and New York; the sale of qualified small business stock; large business expenses incurred by an employee; and investment advice fees. In general, paying the AMT makes your taxes more complicated, which is why more than 75% of AMT payers hired a professional to do their returns, according to the President’s Advisory Panel on Federal Tax Reform. The IRS’s AMT Assistant can help you figure out if you’ll be hit by the AMT. If you fall into this category, call a CPA if not us call someone, but call. Do not attempt this level of tax return on your own.
- You have material foreign source income.
This applies to more people than you think, including those who own foreign ETFs, mutual funds or stocks of foreign companies (including some you may not immediately recognize as foreign, such as Nestle or British Petroleum.)
- You own a business, are self-employed or have rental properties.
A CPA can help you find opportunities to minimize taxes by depreciating business or real estate assets. Tax planning is essential for anyone who is self employed or who owns a small business. A good CPA can help guide you into the best legal way to fit tax savings within the labyrinth of rules in the new tax laws.
- You are considering selling some real estate.
A CPA can help you use a like-kind exchange to minimize your taxes on the capital gains of property that you are planning to sell.
- You are setting aside money for the next generation.
CPAs can be invaluable to help decide which vehicles to use for tax-deferred or tax-free saving, whether you are considering a 529 plan for college saving or creating a family trust for your children.
- You plan to make a large charity gift.
This is not as simple a transaction as you might think. A CPA can apprise you of the tax advantages of the different possibilities, including using your retirement plan as a source of funds or employing a donor advised fund.
- You anticipate a big capital tax gain.
A CPA can help you plan so that the gain is taxed at long-term rates, and help you find other ways to minimize taxes, like employing the Qualified Small Business Tax Credit or tax-loss harvesting.
It does not matter if have finished your taxes for 2018 or still working on them today, this is a good time to consider whether you need a local CPA. You now know how many hours you spent gathering the information, researching new opportunities in the tax code and refreshing your memory on how the tax software works. Did you find everything a CPA may have found, are you sufficiently prepared for next year to maximize your exact situation?
If you decide to look for a CPA in the Central Florida Area we have the answer. Studies have found the best and most affordable CPAs for individuals and small businesses, work for themselves or within small local CPA firms. Here at Wesley R. Howell, CPA we would be more than happy to set up an appointment and have a chat; see if we may be your best answer. Call or email today, you have nothing to lose and everything to gain: