6 Tax Related Questions for Your Accountant at Tax Time
Those tax time discussions with your accountant or tax advisor are necessary evils, but they can keep you from sending too much money to the government. Here are six questions that are not often asked but could be money-savers.
- What can I do to make the most of my children’s earnings?
Whether a summer job or work in your business, there is a way to create a nice nest egg for them and save them tax dollars down the road. Using a Roth IRA, the child can contribute up to $5,500 if they have earned at least that much during the tax year. The parents can contribute for them, but it counts against the $14,000 annual gift tax exclusion. This gives them tax-free qualified withdrawals later.
- How can I get the most tax value from my charitable giving?
The most efficient use of charitable giving would be to give away appreciated assets. In doing so, you can often deduct the full value and you also avoid capital gains taxes on the appreciation. There is a limit, however for full value deductions. Deductions for donations are reduced when the adjusted gross income for singles is more than $258,250 or more than $309,900 for married couples. Some notes:
- Do not donate assets that have declined in value as you will lose the capital loss.
- Non-cash donations should be substantiated. Their value must be substantiated by a process or person recognized as a qualified expert. Real estate can be appraised. Jewelry and art should also be appraised in writing by a recognized expert. Failure to properly substantiate the value of the asset can result in loss of the deduction.
- Obtain a written acknowledgement of the gift from the receiving organization that indicate the giver received nothing of value in return.
- How can I take advantage of the 0% rate on long-term gains?
Your taxable income must be in the 10% or 15% tax bracket to take advantage, with sales of assets owned more than a year tax free until the gains push you into the 25% tax bracket. Part of the gain can be taxed at 0% and the remainder can be taxed at 15%. To increase the amount eligible for the 0% rate, you can make a deductible contribution to an IRA. This gives you a deduction for the contribution giving you more in 0% eligible gains.
- What industry-specific tax regulations should I know about?
There are tax regulations that only affect specific industries, such as:
- Tax on trade-in value of automobiles.
- Freight taxes in the shipping industry.
- Food taxes in the restaurant industry.
Not only taxes, but also industry-specific grants and subsidies should be discussed and applied for tax breaks or funding.
- Can you help me with health care options for my employees?
Beginning in 2021, for a variety of reasons, labor shortages became a major issue for small businesses around the country. Attracting and keeping the best employees became even more challenging. Getting help in setting up health plans can go a long way toward getting and keeping good employees.
- Is there something I can do to help you do a better job for me?
This may seem like a silly question, but often accounting personnel accept what you give them in the formats you provide without being critical. If asked, they would be able to give you advice and resources to smooth the data transfer process, give them better input, and provide faster, more accurate, and often money-saving output.
Keep these questions and note down others to ask your tax expert(s) during the next meeting, and you could reap great financial rewards.