We’ve all seen those commercials with the disclaimer telling you to check with your doctor to make sure your heart is healthy enough for physical activity. My advice this month is to check with your tax preparer to make sure your tax planning is healthy enough for any life moves you might make. Most life moves will have a tax impact – some good, some detrimental. This is why you should stay in contact with your tax and financial professionals throughout the year. Think of it as similar to going to the doctor; you want to go before you get sick, to catch things early, before they cost you a lot of money in taxes.
Like a general practitioner who might have a couple of personal specialties and makes referrals for more specialized treatment and consultation, Enrolled Agents can act as your general tax practitioner with some specialties. Our office specializes in handling IRS and state correspondence such as audits, but we work as a team with other professionals for our clients who need additional consultation in the areas of estate planning, business formations, purchasing or selling a home, even bankruptcy.
Tax Season, as it is known in the industry, often feels like visiting the hospital emergency department. You go because you have to and the closer it gets to the regular deadline, the more hectic it can feel, just like going to your primary care physician for a check-up versus sitting in the ER waiting room with a pain in your side. With bigger issues, you want a more in-depth look at your personal situation.
Let’s say you are a construction worker, and looking at recent tax reform makes you nervous that not a single mile of driving or a new screwdriver or hammer appear to be deductible this year. You decide to create a company that gets paid for the job you used to get paid for. Instead of being an employee, you are now a subcontractor. While it might be a smart move, you should really discuss this with your tax professional. There are likely pitfalls that will affect your end-of-year liability and may even subject you to quarterly tax deposit requirements that, if not made, would lead to late payment penalties. And you would want to be paid more; you now have to account for your own Social Security and Medicare payments and your own health and business insurance premiums. Often, business changes and decisions will require the input from an attorney who practices in this area. Our network of professionals allows us to refer you to the attorney who has the best knowledge in that particular area.
The bottom line for you is our office is open throughout the year. Call us, stop by, look for our emails (if you are a client) to make sure your finances are healthy enough. FBN
By Patrick Fleming, EA
Patrick Fleming is a partner with Northern AZ Financial Services Co. For more information, visit
northernazfinancial.com or call 928-526–3999.