Why Contact a Tax Pro After April 15?
July 05, 2014
Have you visited your doctor for your annual physical? Have you seen your dentist once or twice in the past year? Your financial health is as important as your physical health. To stay healthy, you must monitor your health and be aware of any changes. Your financial health needs to be monitored in the same way. Even though you see your licensed tax professional once a year, you may need to have another meeting or checkup during the off-season. Your tax professional can keep you on the right track, but only if he or she knows what’s going on.
Many times, there is little that can be done come tax time to fix an unpleasant tax situation that occurred earlier in the year.
Here are some examples of situations that warrant an off-season visit or communication with your tax professional.
* Events such as marriage, divorce or remarriage result in a change in marital status, but can also result in a change in tax status. The exemptions claimed on your W-4 may need to be adjusted to prevent an unexpected tax bill.
* If you are going through a divorce, discussing with your tax professional the ramifications of dependency, alimony, family maintenance, childcare, marital status, and division of property before signing the document is extremely helpful.
* If you are self-employed, earn 1099 income, don’t have sufficient tax withholding, or even have changes to your financial situation during a tax year, you may be need to develop or adjust your current estimated tax payment plan to avoid year end surprises.
* If you’re planning to start a business, have a plan. Review the necessary steps with your tax professional. This may involve hiring employees, choosing an entity, purchasing assets, getting the appropriate identification numbers, etc. All of this affects your current tax situation. Even after you’re in business, discussing how things are going during the year makes good business sense.
* If you are contemplating giving property to achieve a certain outcome such as protecting the property for heirs in the event of illness, it is important to review your options. If you are the recipient of the gift, you need to have certain information about the gift such as basis. It is easier to get that information closer to the time of the gift than trying to find it years later.
* Property transactions may warrant the advice of your tax professional. If you’re selling a piece of property, estimated tax payments may need to be made to avoid an underpayment penalty at the end of the year. Just how much to send in and where and when to send it is information that can help you.
* Did your company present you with an early retirement proposal? Or are you planning retirement? This event definitely changes your life. Handling pension benefits incorrectly can create the dreaded 10% penalty.
* If you find yourself in financial trouble, bankruptcy may be the option you choose. If so, there are tax implications you should be aware of and options that may be available, so contact your tax professional. Time is of the essence if you are in a bankruptcy situation.
While you probably use care in choosing a doctor, do you apply the same care in choosing a tax professional?
Last, but not least, if you receive a letter from the IRS, call your enrolled agent! Do not ignore it or toss it in a drawer hoping it will disappear. Putting off action only creates more letters and possibly, larger penalties.
The key word is communication: keep us informed of any changes in your life because they may change your tax situation.
Robert Cantu is a Santa Paula Enrolled Agent-National Tax Practice Institute Fellow, licensed by the US Department of the Treasury to represent taxpayers before the IRS in audits, collections and appeals. As a Director of the local chapter of the California Society of Enrolled Agents, he is actively involved in the tax profession at the local, state and national levels.