Collaborating with your CPA can result in your best return
You know the old saying “death and taxes”? There’s a little truth to that saying. If you are used to going to a CPA firm and just getting a piece of paper back with the results, this article is for you. At the end of the day, taxes can equal 39 percent of your income and some taxpayers spend less than 30 minutes a year on taxes. As your CPA firm, we wanted to give you some insight on how to prepare to collaborate with us to produce your best return. Listed below are some bullet points detailing how to become an ideal client for any CPA:
- Track, Collaborate, and Listen. The best thing you can do for your business is to track expenses. Which expenses should you track? Expenses that are ordinary and necessary for your business. An “I’m paying you to do this” mentality will most likely not yield favorable results for your business. You need to work together with your CPA. Your taxes are pivotal. Accountants want to collaborate and plan, but it can be challenging to do so when clients come in unprepared. Your accountant will have much more to work with if you consistently keep a detailed record of your expenses.
- Know some areas and categories to track. This should be provided by your CPA. For example, if you have a rental property, tracking costs in the categories below would be of benefit.
- Closing Costs, Mortgage Interest, Property Tax. Mortgage interest is one of the largest deductions available for real estate investors. Fortunately, this expense is easy to track as it comes on a form 1098 every year. Mortgage interest is only deductible in the year it is paid. Some deductible closing costs include inspections by lenders, appraisals, loan origination fees, and recording fees.
- Day–to–Day Expenses. With renters come maintenance. With maintenance comes expenses. Some deductible day–to–day expenses related to a rental include: HOA fees, snow removal, lawn care, gutter cleaning, tree trimming, landscaping, garbage removal, utilities, property management fees, etc. If you are spending money to benefit your tenants’ quality of life, it is most likely a deduction.
- Repairs can be deducted if they are done to maintain good condition of your property. Some examples would be broken faucets, leaking windows, paint, repairing a roof, cracked concrete, water heaters, sinks, and plumbing. Some more major repairs can be deducted over the usable lifespan of the repair. Some examples include roof replacement, new siding, new driveway, and anything structural.
- Ask Questions. When it comes to your tax plan, never be afraid to ask questions. A good CPA will be there to help you no matter what is happening. Make sure you are working with a CPA to help you track, organize, and plan.