We share the below article on behalf of our newest CPA partner Todd M. Williams, from Trainer, Wright & Paterno (TWP). We hope you find the information helpful and invite you to contact us to learn more about this exciting partnership.
Planning Can Help Avoid Tax Mistakes – And One Plan Outshines Them All
For most people, thinking about taxes once a year is plenty enough. We know a lot of work goes into generating reports, hunting for receipts, organizing heaps of paperwork, not to mention dealing with the ultimate tax bill, should there be one.
We’re not surprised that during the rest of the year, the issue of taxes often falls way down the priority list for a lot of people. But thinking from a “tax perspective” all year long, and making a plan, can help reduce the headaches of tax season, perhaps even delivering a positive financial result when all is said and done.
In that vein, the best plan you can make right now at the end of this year’s tax season – a plan that just might deliver the greatest benefit on your taxes next year – is to plan regular conversations with your CPA.
That’s right, the best secret weapon you have in effective tax management is… communication.
Yes, it’s important to manage your expenses, investments, revenue, gifts, and every other aspect of your financial life, with a goal of tax reduction. But it’s very hard for laypeople to “know what you don’t know” when it comes to taxes. Tax laws change every year, just like your situation does. So, the only way you’ll know how to manage your situation – in the context of an ever-changing tax code – is to build a relationship with a CPA, or accounting team, and communicate openly throughout the year.
Regular communication can help eliminate surprises, like: missing out on deductions; owing more than you can handle; over-withholding, which amounts to loaning money to the government at no charge; missed opportunities for planning capital gains/loss events; missing out on pension contributions; or incorrectly timing asset purchases for your business. The list of potential mistakes and missed opportunities goes on and on.
So, even though we’re not even half way through 2021, the most important conversation to have with your accountant about this tax year is the likelihood of tax law changes (again).
Given the cost of pandemic relief, taxes are likely to rise, which makes planning even more important. For example, any increase in taxes highlights the positive potential impact of charitable contributions, especially transferring securities with unrealized gains – but how should you structure those gifts?
The best approach may be a donor advised fund, which delivers a tax benefit in the gifting year, but offers greater control over the assets as they are disbursed over multiple years. Another example, under the last presidential administration, we had discussed with several clients the possibility of terminating their “Sub S” election in favor of becoming a “C corp.” Under the new administration, some clients may be better off putting those plans on hold.
It’s understandable that people are conditioned to avoid both costs and hard conversations, but working with your CPA on a tax plan shouldn’t be painful – in either regard. A proactive, client-focused tax advisor should be able to work with you, within a transparent fee structure, to build a year-long communications plan that works for you.
Build a relationship that maintains an open dialogue throughout the year, and hopefully the only surprises you’ll get at tax time next year will be ones.
At TWP, we’re committed to this kind of open, transparent communication with all clients throughout our partnership with Concord Wealth Partners. As tax advisors, we know that smart decisions are based on robust, comprehensive financial information, and a solid relationship built on trust. Our new partnership with Concord is a unique opportunity to deliver just that.
We invite you to contact us for more details.
Todd M. Williams, CPA, CVA, ABI at Trainer, Wright & Paterno (TWP)
Concord Wealth Partners and Concord Asset Management are registered investment advisers with the Securities and Exchange Commission. Both firms are affiliated with TWP through common ownership. Concord Wealth Partners and Concord Asset Management provide investment advisory services and may provide such services to TWP clients. Concord Wealth Partners and Concord Asset Management do not provide tax or accounting services. TWP is not involved in providing investment advice on behalf of CWP or CAM, nor does TWP hold itself out as providing advisory services on behalf of CWP or CAM. No client of TWP is under any obligation to use the services of CWP or CAM. CWP shall not receive any portion of the fees charged by TWP, referral, or otherwise. It is anticipated that TWP professionals, solely incidental to their respective practices as CPAs of TWP, shall recommend CWP’s, or CAM’s, services to certain of its clients.
Respective Services Offered:
- Investment advisory services are offered though Concord Wealth Partners, LLC (CWP) to individuals and small business owners. CWP is a SEC Registered Investment Advisor. Learn more about CWP
- Asset management services are offered through Concord Asset Management, LLC (CAM) to financial advisors and professionals. CAM is a SEC Registered Investment Advisor. Learn more about CAM
- Tax and accounting services are offered though Trainer, Wright & Paterno (TWP) to individuals and small business owners. All of Trainer, Wright & Paterno’s CPAs and accountants are members of the American Institute of Certified Public Accountants. Learn more about TWP