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Now that tax season is right around the corner, it’s always a good idea to start your preparations as early as possible to avoid the rush of putting it all together at the last minute. But if filing is too much of a hassle, getting a trusted accountant will make the process easier for you. To make the most out of their services, asking the right questions can help this tax season go smoothly.
What are some good questions to ask about taxes?
It may be tempting to get the process of preparing and filing your taxes as quickly as possible, but taking the time to ask your accountant a few of these questions can help you come up with a better strategy to handle your annual taxes.
1. What is my estimated tax bracket for this year?
Your tax bracket is the rate you’ll need to pay your taxes on different portions of your taxable income. It’s part of the progressive tax system where the rate increases as your income grow. But other factors like your filing status and the number of your dependents will also trigger changes in this rate.
If you’re not sure which tax bracket you belong in, you can ask your accountant to help you calculate it. Knowing your tax bracket for this year will help you estimate how much your annual tax bill will be.
2. How can I reduce my taxes?
Since you’re allowed to lower your tax bill through deductions and credits, asking your accountant which methods are applicable to you will help you save money in the long run.
To reduce your taxable income, you can contribute to your Individual Retirement Account (IRA), Health Savings Account (HSA), or Flexible Spending Account (FSA). If you can, donating to a charitable organization can also lower your tax bracket, whether it be furniture, clothing, or cash as long as you keep all the records.
3. Am I qualified for any deductions?
Aside from contributions and donations, you can also lower your tax bill by claiming deductions that you’re qualified for. Standard deductions and itemized deductions are the largest available, and you can ask your accountant which method will best fit you.
If you have a pass-through entity, it might also be worthwhile to ask your accountant if you’re eligible for the Qualified Business Income (QBI) deduction since this can subtract up to 20% of your taxable income. Student loan interest, home mortgage interest, gambling losses, and business expenses are also options available for tax breaks.
4. How do I estimate my income for this year?
Since your income is one of the factors that determines your tax bracket, keeping track of your annual salary can be handy to estimate your taxes. Calculating your estimated income for the year may be easier if you’re an employee since you can refer to your monthly pay stub. But if you have multiple side hustles, the process can become more complicated since you’ll also have to pay self-employment taxes. That’s why you’ll have to ask your accountant how to get an accurate estimate of your annual income so you won’t be surprised by the time you receive your tax bill.
5. What changes should I make to improve my tax bill for next year?
Aside from keeping your financial records in check, your accountant can also give you advice on how to improve your taxes for next season. Since formulating a smart financial strategy can help you save money without underpaying your taxes. If you own a business, you can even come up with a better business plan with a manageable budget to help you obtain your financial goals and improve your cash flow for the next few years.
6. Are there any recent changes in the tax laws that I should know about?
A few changes in the tax law can happen throughout the year, so it’s understandable if there are a few that you’ve missed. To make sure there aren’t any that can affect you or your business, you can ask your accountant if there are any adjustments. Since a good accountant will stay up to date to ensure their clients will get the best accounting services.
Also, if you have any questions about recent law changes, don’t be afraid to ask them for further clarification.
Need help for the upcoming tax season?
If you dread the months leading up to tax season, there’s no reason to procrastinate and pay your dues late when you can contact Lear & Pannepacker. They have a professional team of accountants that can handle your account so you won’t have to deal with the hassle of preparing your taxes. You can contact our team now know to know more about our services.