TOM WHEELWRIGHT | What You Need to Know About Who Prepares Your Tax Return

You can have the best tax strategy in the world and it wouldn’t matter if your tax return isn’t properly filed. Your tax return is THE place to capture your tax savings.

For this reason…

Your tax advisor should always be involved in your tax return preparation.

If someone other than your tax advisor prepares your tax return, then it is very likely the tax savings identified in your tax strategy will not be fully captured in your tax return.


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Do You Really Need a Tax Strategy?

If you are an investor or if you own a business, then you absolutely need a tax strategy. The tax law is designed to benefit investors and business owners. A tax strategy is designed so you know exactly what you need to do to maximize these benefits.

Many of you are thinking about starting a particular investment strategy or a business and you just aren’t sure if you should do your tax strategy before or after you start your investing or business.

I always recommend getting your tax strategy done before you start your investing or business because then the foundation can be in place and ready for your new venture. Plus, in most cases, it is possible to keep the foundation flexible enough so if your venture takes you in a different direction, your tax strategy can adapt to these changes.

Best of all, by doing your tax strategy before, you can get a jump start on the rules you need to know as an investor or business owner to legally maximize your tax savings. This is one area that most people neglect to focus on early and by the time they do focus on it, it is a huge project that requires a ton of catch up. In fact, most people in this situation never get caught up. As a result, they aren’t able to maximize their tax savings.

What if You Don’t Have a Tax Strategy?

If you don’t have a tax strategy, my recommendation is to get one in place beforeyou file your next tax return. Waiting to file your tax return until your tax strategy is created can provide more flexibility and opportunity.

Here’s how. When you file your tax return, you are taking a position. For example, claiming your home office as a deduction on your tax return is taking a position. You are taking a position on how the area of your home office is calculated.

Consider this scenario:

Pierre files his tax return claiming his home office as a deduction. He calculates the area of his home office to be 10%. After developing his tax strategy, Pierre learns that his home office area is actually 20%.

If Pierre has not filed his tax return, he can claim the larger deduction. If Pierre has filed his tax return, then claiming the larger deduction could be more challenging because when it comes to tax returns, consistency is very important. If Pierre files his tax return using 10% and then changes it to 20%, he will have more explaining to do.

Keep in mind that it is not only how a deduction is calculated that may change, but where a deduction is claimed. Your tax strategy identifies these key positions.

Keep Your Tax Strategy Up-to-Date

If you already have your tax strategy in place, be sure to review it at least once a year with your tax advisor. Tax strategies evolve and the tax law changes so it’s critical to update your tax strategy regularly to make sure it is still minimizing your taxes.

A good time to do this is when you prepare your tax return. You can make sure your tax savings are properly captured and identify opportunities for the future.

If you already have a trusted tax advisor… sure to tell them about my FREE, 3 Day event just for CPAs, the CPA-Revolution Masterclass. Just forward this email, and click here to learn more about the event.

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Tom Wheelwright, CPA

To ensure compliance with requirements imposed by the IRS, we inform you that any US federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and it cannot be used for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. If you are not the original addressee of this communication, you should seek advice based on your particular circumstances from an independent advisor.

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