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Monthly Archives: February 2019

Finding the right accountant to successfully guide you through the tax maze

BusinessCoaching

 

Choosing an Accountant Who Puts Your Goals First

There is an endless supply of do-it-yourself tax preparation tools and websites, and the sheer volume of options can lead you to believe the process of filing your returns is simple.

However, a DIY approach only works if you are satisfied with paying more than necessary. Tax preparation software handles all of the basics, importing income and considering common tax deductions. Unfortunately, when it comes to careful application of less-common tax-reduction techniques, these programs simply can’t compete with a skilled tax professional.

The Amazon Best Selling book, The Great Tax Escape, walks you through the process of choosing an accountant. Specifically, you will learn what to look for – and what to avoid – if you want a tax specialist who will help you keep your tax bill low.

Five Reasons to Hire a Highly-Qualified Accountant

As you know from your experience in business settings, companies that focus on their core mission are more successful. Devoting internal resources to creating excellent products and services, while outsourcing peripheral functions like IT and HR, makes it possible to innovate and deliver best-in-class solutions.

Focusing on your core mission is just as critical when it comes to tax preparation. The time you would spend trying to track down tax information is better applied elsewhere, and you are likely to pay more in the end anyway. These are five ways your accountant will free up resources for you to use in ways that will further your personal mission:

  • The tax code is constantly changing, and deductions that were available last year may not be appropriate today. Conversely, expenses you couldn’t deduct in previous returns may now be permitted. A skilled accountant stays on top of these changes and applies them to your situation, so you don’t have to complete extensive research.
  • Much of the tax code is spelled out and clarified based on specific cases. Unless you are following industry developments day in and day out, you are likely to miss all but the most significant decisions. Your accountant has years of experience with filing returns, and continuing education is required in every state. You can be sure that these professionals understand what works – and what doesn’t.
  • Experience also helps when it comes to developing your long-term tax savings strategy. Accountants have watched businesses grow and change, and they know how to get results. Their expertise in complex decisions like choosing a business entity or whether to consider cost segregation can be invaluable.
  • Different types of income are taxed at varying rates, and do-it-yourself filers often assume there is nothing that can be done to change their circumstances. Talented accountants know better. With the help of a skilled professional, it may be possible to move income from high-tax categories to low-tax categories, which can mean significant savings. .
  • Finally, timing is always important in the financial world, and that holds true when it comes to your tax strategy. Accountants have a deep understanding of the economy’s ebb and flow, and they notice patterns that have played out over the course of their careers. They use this experience to advise on when and how to apply tax strategies for maximum savings.

Learn more about why and how to choose the right accountant for all of your tax preparation needs by requesting a copy of The Great Tax Escape from our website.

Does my Rental Property Qualify for the New Section 199A Deduction Under Tax Reform?

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How do you know if your rental property qualifies for the 20 percent tax deduction under new tax code Section 199A? Just what we need–something else to learn along with all of the other tax code changes this year.

Well, maybe not.

There is a piece of good news: we won’t be required to learn this tax code because everything we need to know about it is in the new regulations proposed by the IRS. Existing rules govern.

Does the IRS deem your rental property a business? If so, then yes, your property qualifies for the deduction.

It might sound strange to think of your rental property as a business, especially if you now report the rental on Schedule E of your 1040.

If your rental property is carefully selected, maintained indoors and out, and managed efficiently, it can provide residual income, capital gains, and tax advantages, including the 199A deduction in many cases.

How Does a Rental Property Qualify as a Business?

If the rental property you own earns a profit, you own a business. Whether you manage it or you hire a company or individual to manage it, it still qualifies for the 199A deduction.

And the news gets better….

Schedule E rentals also qualify for even sweeter tax benefits. There are two ways the IRS treats rental activity as a business for the Section 199A deduction:

  1. Tax-favored Section 1231 treatment
  2. Businesses use an office in your home (and if it’s a principle office, and you have more than one rental property, you qualify for related business deductions for travel to and from your properties.)
    Your rental property will qualify for the 20 percent Section 199A deduction if you rent it to a commonly controlled trade or business, even if your rental property does not qualify as a Section 162 trade or business.

All of this can be confusing. Would you like help discerning whether your rental properties qualify for the new 20 percent Section 199A tax deduction? If so, please contact one of our qualified tax professionals. We can help with all of your Milwaukee rental property tax questions.