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We have all heard the old adage, “There is no such thing as a stupid question”.  That would be good advice to keep in mind when meeting with your CPA.  It is never too late to start a new and continuous practice of preparing a list of questions before your meeting.

This is especially key at this time of the year.  While the majority of people are looking ahead to the holidays and shopping, you can turn your mind towards huddling up with your CPA and making year-end tax moves towards trimming back Uncle Sam’s funds request.

Pre-preparing the questions you want to ask assists in directing your meeting with your CPA and helps to keep things steadily moving while staying on track.  If time doesn’t allow for everything on your list to be addressed, you can start your new list with what was left out of the discussion.

What would be a possible number one question on your list? How about, “What are my projected taxes this year and for the next two years?”

These estimates from your CPA make it possible for you to formulate knowledgeable decisions on whether you should defer or take income, and if you should accelerate or cut spending. All are priority decisions to be completed before attending any New Year’s Eve celebrations.

Would it be helpful to know what tax strategies you’re CPAs other Clients are employing?  If their profiles are similar to yours, then their tax moves might be useful considerations for integration into your current strategies.

A proven smart move by one Client can easily become the next shrewd tax move by you.  Since your CPA already has a Client that is running smoothly after making a switch the error factor is lessened for you to try the same strategy.  For instance, a Client has moved into a high deductible health plan and realized a cut in taxable income through the addition of contributing to the employees’ health savings accounts. In this type of move there may also be industry-specific strategies.  It is worth asking your CPA for their insight.

Do you have any excess inventory that has just been lying around?

If you have been trying to sell excess inventory items at full price, tax laws prevent you from taking a write-down.  Turn this around by asking your CPA if you can take a write-down if you can provide proof that you have been offering the items at discounted prices.  Proof can consist of such things as an email advertisement, distributed flyers, or personally written invitations to your client list.  If you meet the burden of proof, the inventory itself doesn’t have to move or show any decrease for you to be able to claim it as a write-down.

Do I have to depreciate the computers I purchased, in the same year they are purchased?  Not necessarily.

Tax code section 179 maintains that you can immediately deduct up to $108, 000 worth of new business equipment and property as long as it is placed in service by the end of the year in which you procured it and are claiming it.  Does it matter whether you paid cash or placed it on your credit card?  No, but this deduction does have some restrictions and will require a discussion with your CPA to know which will apply to you.

Putting my kids on the books, should I or shouldn’t I?  They actually do work!

Well, the reality of them emptying the garbage, cleaning the business site inside and/or out, or if they are modeling for your product catalog all leads up to their ability to earn up to $3,300 without paying any income taxes.  In this case you will be responsible for covering payroll taxes around 20%, but you can still come out ahead if your business falls into, approximately, the 35% tax bracket.

What is the manufacturer’s deduction and is my company eligible to take it?

There was a tax change in 2005 regarding the tax code that lets companies deduct a percentage of their profits for products they’ve made in the U.S.  As an example, the 2006 deduction was 3 percent and increased in 2007 to 6 percent.  Ask your CPA for today’s deduction percentage and whether you are eligible.

Is there an advantage to buying a hybrid as a company car?

This appears to be a good move for your money holder and the environment.  Just take a look at the quickly vacillating gas prices across the nation and see if that helps you decide.  Ask your CPA what tax credits, if any, are available from the IRS.  It seems that the amount has quantifiable components such as the make, model and year of the vehicle.  There might be a component related to how many hybrids the car manufacturer has sold for the given year.  Your CPA has the current guidelines, just ask him.

Are my QuickBooks an advantage for my CPA when preparing my tax returns?

QuickBooks are only an advantage if the person operating the tool is doing a great job of tracking income and expenses.  If the tool information you provide your CPA is inaccurate, it is a waste of your CPA’s premium time during tax season.  Give your CPA plenty of time to review your QuickBooks information ahead of meeting and set deadlines so they can review and make any necessary mistake fixes.

Conclusion

The best source of up-to-date and credible information is your CPA.

 

Before making any changes or long-range plans it is good advice and simple wisdom to ask your CPA first.

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