Beyond the Tax Return, items to consider during this filing season

Beyond the Tax Return, items to consider during this filing season

Read our current article in the March issue of the Boerne Business Monthly! You can also read the entire magazine below. Receipts, records, and the seemingly endless influx of tax forms in your mailbox indicate only one thing: tax season has begun. This ritual of gathering and organizing your financial and tax documents is performed at the beginning of every year in order to file your tax return. In most cases, this also involves delivering those files to your tax professional. However, when most people visit their tax preparer, their only thoughts are getting the taxes filed and out of mind. Instead of the rush to file and be done with your taxes, take this time consider if there are other items you should be considering. Are there other questions your tax preparer should be asking you? Are there questions you should be asking them? What other “house keeping” items need to be looked at in your financial portfolio? Below are a few scenarios that many individuals tend to overlook, but should be considered:

  1. Generational Planning: If you own a business, whether large or small, do you have a plan to deal with the transition to the next generation? Do you want to pass your business to your children, or grandchildren; do they even want it? There is a substantial amount of effort put into building a business, but often not much thought is given regarding business continuity once the owner is no longer willing or able to keep working. Without generational planning the business owner may be burdening the next generation with something they are not ready to run or operate, or even fully understand. Turning a company over to those who are not ready could result in the company meeting its demise, or being sold off for far less than it could be worth. A scenario any business owner would find appalling. Don’t let the future of your business fall by the way-side. Consider speaking to a professional regarding generational planning.
  2. Retirement Accounts: Are you properly utilizing the best type of retirement account for your tax situation; is there something better you could be doing? There are many different types of retirement plans available for a business owner. Over time, a retirement plan that was used at the inception of business may not be the most appropriate as the business has matured. The retirement plan in place may not only be affecting the business owner, but the employees as well. Take some time to review your company’s retirement plan. As with aging technology, your retirement plan may need an upgrade.
  3. Beneficiaries: When was the last time you looked at the beneficiaries on your various accounts? Depending on how long ago you set up those accounts, it could be years since you chose your beneficiaries. Are they still the people you want receiving funds upon your death? This would apply to retirement accounts, life insurance, and any annuities with a death benefit or a residual payout. As time marches forward and lives change, it becomes easy for individuals to forget to update their beneficiaries. Remember, the beneficiary listed on the account(s) is who will get the funds upon your death, regardless of who is designated by your Will. There have been instances where ex-spouses are still listed, a person’s parents are listed because they were single at the time of designation and are now married, or a child is left off because they had not been born at the time of beneficiary selection. It is important to visit this issue on an annual basis to make sure the beneficiaries listed are in tune with your current intentions.
  4. Wills: A tax preparer cannot prepare a Will for you, but should ask if you have one. If there is no Will, then the tax preparer should be able to recommend an attorney they trust or have worked with in the past. If you already have a Will, it may be a good idea to have your tax professional look it over to make sure it takes into account the current tax laws that may have changed over the past few years. Some existing Wills do not properly address the changes in the estate tax exemption, or the Generation Skipping Tax exemptions, or the relatively new portability rules.
  5. Estate Planning: For those with large estates, is estate planning/gifting being addressed? If not properly communicated, your tax preparer may not be aware if you have an estate tax problem. Not only do you have to take into consideration your current net worth, but you may need to consider future inheritances, which could create potential estate tax issues. Tax preparers with estate tax knowledge may be able to pick up on subtle details on your tax return and realize there could be a problem. However, not all net worth line items generate income and without communication this could create potential problems. The good news is the estate tax currently does not kick in for an individual until their net worth is $5.43 million ($10.86 million married). However, there are proposals being considered to drop this to a lower amount which could make this a hot topic again.

While it may seem most important to just get the tax return done, these are a few of the items that are important to discuss with your tax professional now before a problem occurs. Communicate any concerns and let your tax preparer help you be proactive this tax season. If you have any questions regarding these or other tax-related scenarios, contact us today. You can read this month’s entire issue of Boerne Business Monthly below.

is the largest, locally owned public accounting firm in San Antonio, Texas, with branch offices in Boerne and New Braunfels. We have been serving our community since 1991. We are a full-service CPA firm dedicated to providing a broad range of tax, audit, bookkeeping, tax controversy, and consulting services with superior customer service to help our clients meet their goals and objectives. Please click here to set an appointment with us.

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