by Thomas F. Scanlon, CPA, CFP®
1) Have a Year End Planning Meeting with Your CPA
This meeting can be in person or over the phone, it really doesn’t matter. The only thing that matters is that it happens. Most individual income taxpayers are on the cash basis. This means, with some limited exceptions, for a taxpayer to take advantage of a tax strategy, it needs to happen in that tax year. This is where most of the heavy lifting is done, with the tax planning.
2) Complete Your Tax Organizer
Most CPA’s will send out a tax organizer in early January to their clients. This will have the prior year’s information preprinted with space to complete the current year’s amounts. Clients should complete this organizer as thoroughly as possible. This will save your CPA time and, it should save you money on the fee.
3) File an Extension if Necessary
Individual income tax returns are due on April 15th. If this falls on a weekend, the returns are due the following Monday. Sometimes, it may be necessary to file an extension. For taxpayers with investments in partnerships of LLC’s they may not have received the required reporting on Schedule K-1 yet. Additionally, self-employed people may want more time to fund their Simplified Employee Pension (“SEP”). Filing an extension will allow the return to be filed by October 15th.
Keep in mind, the extension only extends the time to file the return. It does not extend the time to pay the tax. Any tax that is due needs to be paid by April 15th. Also keep in mind that the first quarter estimated taxes are also due on April 15th.
4) Meet to Review the Completed Return
When the return is complete, have a meeting to review the returns. Again, the meeting can be in person or over the phone. The first goal is to review the completeness of the returns. If the steps above have been addressed, this part should be fairly straight forward. The second goal is to set the stage for next year. Do you need to adjust your withholding? Or do your estimated taxes need to be adjusted? Now is the time to begin planning for this year.
ACTION ITEM: Take these 4 steps to Help Your CPA and Reduce Your Taxes.
Thomas F. Scanlon, CPA, CFP® is with Borgida & Company, P.C., Certified Public Accountants in Manchester, Connecticut, celebrating 44 years of tax, advisory and accounting services. Call 860.646.2465 for more.
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