It may not have occurred to you to hire a certified public accountant (CPA) to oversee your personal finances, but their expertise isn’t of value solely to the business world and the super-rich. Among all personal finance issues, tax law is one of the most complicated. Some say this is intentionally so, to keep laypeople from “gaming” the system. A good CPA, however, can organize your tax affairs to ensure you meet your liabilities without paying more than you need. Here are just five of the ways an accountant can help you with your tax concerns.
How Can You Pay Less Tax?
Although fair taxation is an essential part of society, no one wants to pay more than they legally must. A good CPA will be able to look over your tax affairs and suggest changes that can reduce your overall liability while staying entirely within the law.
How Can You Avoid Undue Attention?
Even when all your tax arrangements are fully legal and defensible, attracting the attention of the IRS is preferably avoided. It’s possible that even the most meticulously self-prepared accounts can have mistakes, and in any case, an audit is a stressful experience to go through even if you’re blameless.
A CPA who is expert in tax issues can advise on which accounting methods or tactics are most likely to slip “under the radar,” and those which may attract scrutiny. You can then decide on your own balance between minimizing your tax liability and risking the IRS taking a greater interest in your accounts.
Should you be faced with an audit, a CPA who has worked closely with you will be an invaluable ally to have at your side.
How Can You Invest Spare Funds Efficiently?
If you’re in the happy position of having some spare wealth on hand, your CPA can help you choose where to invest it to the greatest effect. All investments are a balance between risk and reward, but an accountant will also be able to advise on which investment vehicles are most tax-efficient when taking into account your other financial circumstances.
Are Your Retirement Plans Sufficient and Tax Efficient?
Retirement planning is an exercise best conducted as early as possible. When investments are conducted over a period of decades, as is typical with a pension plan, then even the most minor details in tax can have a large effect on the final outcome. In some ways, taxation will play a greater part in your retirement investment’s ultimate success than will the type of vehicle you choose. A clever CPA will ensure that your investment efforts will go towards making your retirement more comfortable rather than being swallowed up by the treasury coffers.
Donations and Gifting
Whether you want to make a financial gift to help a family member through school or donate to a favorite charity, paying close attention to tax issues when doing so will benefit everyone concerned. Not only will the value of your gift be maximized for the lowest cost to you, but you also can arrange the donation or gift in such a way as to cause as few issues for the recipient as possible.
There’s no doubt that the more complicated your finances, the more essential it is to hire a CPA. However, if you can’t fully handle these five tax questions yourself, then you should consider going to an accountant who can address them to your long-lasting financial benefit.