Tax FAQ Series: Is it important for you to handle both my personal and business tax returns?
Yes, we believe it is. Here are 2 important reasons why.
- Your refund will likely be larger.
- Your audit risk will likely be smaller.
The US Tax Code has evolved since 1861 when the first tax was imposed. While it was originally very simple, hundreds of thousands of lines of law are added each year. But it’s rare that Congress (or anyone else for that matter) removes old laws. As a result there are now multiple ways of reporting just about every piece of information associated with both the personal and the business tax return. It’s become a system where HOW information is reported has become far more important than WHAT is reported.
And how the information is reported will determine what the tax liability will be. But the result can be VERY different depending on which method of reporting is used for almost every piece of data. In many cases the information can be reported on either the personal or business returns. So determining where to report the data has a significant impact on the final tax liability.
Where the information is reported will also significantly impact the potential audit risk. Some forms and worksheets are “suspect” in the eyes of the IRS and greatly increase the risk of an audit. But unfortunately, these same forms are the ones usually recommended by tax software packages and typical tax preparers.
Knowing where and how to report the information is our business. It’s what we study, what we focus on and what we excel at. Because of our collective training and experience, we’re able to select the reporting methods that accurately portray your complete tax information so that it both reduces your tax liability and your audit risk. But if we’re only dealing with a portion of the information (either personal or business) then the result is not optimal. Our experience suggests that when we’re able to handle all the returns involved the benefit to our clients is a reduction of 20% to 60% in tax savings.
Who prepares your returns will always be your decision as you’re ultimately responsible for their accuracy. Our recommendation is simple. Make sure they’re prepared by someone who understands not just the forms and worksheets, but by someone who also understands the tax law and IRS procedures so the final product addresses both the tax amount and the audit risk.
Have more questions? Call (480) 888-7111 to schedule your free tax consultation.
If you have a question you would like featured on our Tax FAQ series, contact [email protected]