9 Tax Things You Absolutely Must Chat With Your CPA About

Many people only visit their accountant once a year. Business owners, however, generally speak with their tax professional much more. So, how does an individual investor weave through the maze of deductions and create a tax plan? It starts with having an open and comfortable relationship with your CPA. As a financial advisor, I’m often asked who I would recommend in the accounting world. After interviewing several dozen accounts, I now have a great relationship with a CPA I’ve had for over 15 years. One of the main reasons I’ve stayed with this accountant is the great communication we have. So, here are my tips for you to have this same quality experience:

1. Talk to your accountant about your financial needs and wants. When I meet with clients initially, our meetings can sometimes take hours. The reason for this is that we all have financial history and we haven’t had a chance to share this with an advisor. I welcome this dialogue, because the better I know my clients, the better job I can do advising them on their wealth. The same can be said about your accountant. For example, if you accountant knows that you have an interest in starting a business, having children, buying a new boat, etc. there are financial considerations to talk about.
2. One of the best questions to ask your accountant is: Have I taken advantage of all the tax deductions? You might assume you have, but don’t you owe yourself to ask? Your accountant has probably provided you with some questionnaire to complete, but there are still a lot of things on your Form 1040 that don’t get addressed such as what you want for the future.
3. If you’re self-employed you should ask about corporate retirement plans. There are a lot of options that are best to be considered prior to December 31, but even though we're passed that deadline, there are still plans available for you. For example, self-employed individuals and business owners who wish to open or contribute to a SEP IRA, you have until April 15th to open or deposit into your SEP IRA for the previous year. Contribution limit is 25% of compensation or $53,000 (2015) whichever is less.
4. If you’ve earned income this year, you should consider converting from a traditional IRA to a Roth IRA? Talk to your accountant about how this decision will impact your bottom line, and most importantly, your retirement. Consider converting traditional IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA if you are eligible to do so. Keep in mind, however, that such a conversion will increase your AGI (Adjusted Gross Income) for 2016.
5. Thinking about gifting to family members? Ask your accountant how best to gift if you’re thinking about doing so with your assets. How about gifting for future college costs? You may consider funding a 529 College Savings Plan. Shelter gifts using the annual gift tax exclusion before the end of 2016 to save gift and estate taxes. The exclusion applies to gifts of up to $14,000 made in 2016, talk to your financial advisor such as myself about opening a College 529 account for your child or grandchildren’s education.
6. Have you contributed to your IRA or Roth IRA for 2015? Consider opening or making a contribution to your IRA before April 15, 2016 for tax year 2015 if you do not have a 401K. The limit is $5,500 and $6,500 if you’re over 50 and may be tax deductible depending on your modified AGI. Also ask if you qualify to contribute to a Roth IRA. If so, the tax treatment may be in your benefit.
7. If you stock that you’re interested in giving away as a donation, how do you do this? What are some ways of giving donations with appreciated stock of mutual funds? Consider giving appreciated stock or mutual funds as a charitable gift instead of cash.  Talk to your accountant on how this will save you on taxes; however do not donate funds that have lost money.
8. What is one of the best ways to lower my tax bill? No brainer here. One of the best ways to lower your tax bill is to reduce your taxable income, make sure you are contributing the maximum to your 401K plan. Your accountant will have other ideas to share with you.
9. If you’re retired, it’s time to think about Required Minimum Distributions. If you’re near the age of 70 ?, you should ask when you should take your RMD. Take required minimum distributions from your IRA or 401(k) plan (or other employer-sponsored retirement plan). RMDs from IRAs must begin by April 1st of the year following the year you reach age 70-1/2.

Sun Group Wealth Partners

Forbes