Taxation
People have many choices regarding how to get their income tax returns completed each year. They can choose a national tax preparation franchise, a professional tax accountant, or even an off-the-shelf or internet-based tax return preparation program.
National tax services may be fine for people with fairly simple returns, but are usually overwhelmed with demand during the tax filing season and may hire inexperienced people preparing tax returns for the first time. These tax preparers typically view their job as a way to earn extra money rather than as a career. Each of these preparers is paid by the number of returns prepared plus a commission and, therefore, has an incentive to complete as many returns as possible without paying attention to all of the details.
Alternatively, off-the-shelf tax preparation software may be fine for people who enjoy preparing their own returns, but only if the returns are reasonably simple. These software programs usually don’t perform advanced tax calculations and may not reliably keep track of loss and credit carry forwards as well as professional tax preparation programs.
Allen & Company is a CPA firm. CPAs are highly educated. They must have a bachelor’s degree and they must obtain 40 hours of continuing education each year so that they can remain current with changing tax laws and accounting standards. CPAs are experienced. They must have at least one year of experience with a public accounting firm or at least one year of experience working under a CPA in a private company in order to obtain their CPA certificate. CPAs have credentials. To become licensed, they must pass the CPA exam, which is one of the most rigorous exams in all professions. CPAs are also trustworthy. Most CPAs are members of the AICPA who must abide by a strict code of ethics and whose firms must undergo a quality review once every three years.
Allen & Company will be available to you throughout the year, can suggest strategies to reduce your income taxes that will more than cover the fees, and provide true peace of mind.
Income Tax Planning
Many people and businesses pay too much income tax because they do not know how to reduce their income tax. The goal of income tax planning is to minimize tax liabilities without sacrificing other personal and financial goals. Two basic techniques to reducing income tax are avoiding tax altogether and deferring income tax. Avoiding tax includes generating tax-free income, creating tax deductions and credits, and shifting income to other family members who are in lower tax brackets and to whom you intend to provide some support anyway. Deferring tax includes reducing or eliminating your taxes today by postponing them to some time in the future when you may be in a lower tax bracket. Deferring taxes gives you money currently so that you can invest it to make more money.
Income tax planning services include assessing the current income tax situation and the potential impact of both current tax legislation and proposed legislation and developing a strategy to legally avoid or defer as much tax as possible. We communicate in plain language to our individual and business customers so that they can understand their current tax situation and our proposed strategy for helping them reduce their taxes.
Tax Planning Principles
Tax planning is a process. After considering all the alternatives including the tax implications, choose a course of action.
Consider all types of taxes. The income tax under United States law represents only about 40% of all the taxes that you pay. You should also consider how to reduce sales tax, property tax, payroll tax, gift tax, estate tax, and the other taxes that you pay.
Do not make a financial decision based only on the income tax ramifications. Most major decisions in life are made because of non-tax considerations such as family, business, and pleasure. Although you should take advantage of opportunities to reduce your taxes, you should not let tax motivations outweigh good business and personal judgment.
Avoid tax, but do not evade it. Tax avoidance through legal techniques is the proper objective of tax planning. While tax avoidance is acceptable, tax evasion is not. It is wrong to fabricate transactions, claim deductions for expenditures that were never made, or conceal income. Such efforts to reduce your tax liability can result in monetary or criminal penalties.
Know when to consult a tax adviser. The tax law is complex. If you have questions about the tax consequences of a transaction, especially if the transaction involves a large amount of cash or property, you should review your plan with a tax professional.
“Nobody owes any public duty to pay more than the law demands: taxes are enforced extractions, not voluntary contributions.”
-Supreme Court Justice Learned Hand
Individual and Business Income Tax Return Preparation
Today’s income tax laws are so complicated that unless your financial affairs are extremely simple, chances are that you will benefit from assistance from a tax professional. It is too easy to overlook deductions and credits that you are entitled to if you only prepare one income tax return each year. Even the use of computer software is no substitute for the assistance of a seasoned tax preparer. We prepare hundreds of individual and business income tax returns every year and we know what to look for when preparing your income tax returns. More importantly, you will have someone to answer your questions during the rest of the year.
Income tax preparation services include preparation of income tax returns for individuals, trusts, partnerships, limited liability companies, C corporations, S corporations, and homeowner associations.
Other Tax Return Preparation
Other tax preparation services include preparation of United States estate tax returns, United States gift tax returns, exempt organization returns, employee benefit plan returns, sales tax returns, property tax returns, occupational tax, and business license renewal returns. We have considerable experience in each of these tax areas. Let us help you file correct tax returns as well as minimize your tax liabilities.
