Category Archives: Tax Guide

Estate Planning and Tax Issues


People may get the ability to earn money soon after they complete their high school or college education, but having the ability to manage a person?s financials is not possible for everyone through a course, it can come through knowledge and experience.

Learning to pay taxes and saving on taxes is one such thing which people can get to know by checking out the tips and advices shared by tax professionals in the web and by applying them in their tax preparation.

There are scenarios where people may face tax issues and one is during estates either owning them or inheriting them or transferring them to someone and the issue would be paying taxes for them. The best way to deal with estate and tax issues would be through getting the help and guidance of a tax professional with expertise in that.

One of the popular estate tax issue scenario is, when a person who is the owner of an estate dies, the executor of the estate will be identified from the descendants will or if there is no such will, the court will appoint the administrator. Normally, the surviving spouse on the family members takes the responsibility.

Four major steps to be carried out by the executor or administrator.

1. Final 1040 filing: It is to file the descendant’s taxes for that year. If there is surviving spouse, the final joint return to be filed including the income and deductions of the descendant till the time of death in addition to the income and deductions for the complete year of the survival spouse.

2. Estate’s income tax return filing: In addition to the descendant’s final income tax, you may have to do the filing of estate income tax also. If you have to file the tax Return form 1041, it is better to hire a tax professional who has good experience in the tax law area.

3. Estate tax return filing: Form 706 for the estate tax return is to be filed. If the descendant does not have any dues, and did not do sizable gifts then there is no need for filing of Form 706.

4. Apply for EIN: If you are doing the filing of Form 1041 and Form 706 then you have to get the employer Identification Number (EIN) which is similar to Social Security number. If you have to apply for EIN, then the form SS-4 can be downloaded from IRS website and filed.

Then you have to file FORM 56 to notify that you will be acting on behalf of the descendant’s accounts.


Why Hire a Tax Professional?


Since most of our needs in life can be met only if we have money and money determines most part of our survival quality right from lifestyle, education, health and many such things, it is a must for every individual to know the ways of how to manage their finance effectively.

There are many ideas and suggestions available in the web to effectively manage the personal finance for individuals. As most of the financial management ideas involve with tips on savings, credits, investments and debt management and many more as such even average people are able to give tips and advices.

Whereas when it comes to making use of provisions lay out by Govt. to protect interests of individuals and to have a reasonable taxation norms, it requires the help of an expert and professional tax services firm to understand and make use of those tax provisions. These professionals offer various tax services includes tax preparation, guidance on tax norms and in filing of taxation too.

The decision to file the tax on your own or seek a tax professional is a personal one. There are many circumstances and facts that influence the decision of hiring a tax professional. But everyone needs some professional expertise once in a while. The decision should be revisited every year. 60 % of the tax payers hire a tax professional to help them to file. It is the safe way.

You can seek them if

(1) You have your own business
(2) You have big change in your lives such as marriage, kids, divorce, caring age old parents etc.
(3)You had heavy transaction in the year
(4) You anticipate tax troubles and not having great records.

You can ask these questions to yourself before taking the decision

1. Are you well aware of the tax processes?
2. Have you bought or sold any stock this year that may be gain or loss?
3. Do you get consulting income or freelance income?
4. Are you doing financial support to any person or organization?

Hire a Tax Professional if you are in a dilemma and don’t have enough clarity on how to proceed with your tax preparation and filing. Even if you are having a confusing situation making you feel that you might have made errors, missed out info on your accounts you can seek a tax pro to help you out. Tax Professionals are of different types as enrolled agents, CPAs and Tax Attorneys having different training and qualifications.


Should you hire a CPA for Tax Preparation?


Let it be personal life or business life, the only key for prospects is the ability to manage the finance better. A thorough understanding of the financial needs based on the expenses is required to manage finance better. Financial monitoring of income and expenses should go into the books correctly and based on that financial forecast must be done and decisions related to investment and borrowing should be done accordingly.

Even though individual knowledge is good to understand and manage finance, it could help in personal financial management, when it comes to business and even to get better ideas to know areas where money can be saved, where it needs to be invested more and where tax benefits can be availed, for that an independent or a third person with an expertise in Financial planning is required.

CPAs play the role of advisers in a wide range of financial matters to the businesses, financial institutions, individuals, nonprofit organizations, and also to government agencies. Nowadays many individuals get the help of CPAs in personal financial planning and tax preparation. They sort their help for building college funds, develop estate plans and to plan for retirement.

With the services of professional CPA Medford OR people can get their financials analyzed and planned pretty well and get their tax preparation done too.

Traditionally many company managers, business owners for both profit and non-profit organizations depend on CPAs to get the advice on accounting systems, solve various management problems and to maximize the outcome.

In addition to that, they assist in data process design and installation and in management information system. They serve as corporate managers, assist in re-engineering the finance functions, extend their expertise to resolve management issues, capital market transactions, streamline employee benefit plans, analyze and prepare the financial and operational information system for management decisions. CPAs function as trusted members of senior management teams in many successful companies.

Before selecting a CPA for your tax, make sure whether

(1) he is a certified accountant,

(2) he is licensed to practice

(3) professional organization he belongs

(4) how far he is active in his organization

(5) compatibility of your needs with the CPAs expertise and personality.

A long term relationship in working with CPAs would provide you the assistance for well-informed consistent approach in solving the personal financial and business problems and guide you in achieving your goals.


A General Guide in Preparing Taxes


To feel wise about your financial planning, people should not just focus in making money alone through right investment but also should care about saving money and understanding their income and expenses better so that they can manage them well.

Tax preparation is one of the best means to understand your financials better and to manage finance effectively. There are several Tax laws and Acts that govern and protect an individual’s finance needs which can be used to avail exemption on the tax amount that needs to be paid. This requires the guidance of a CPA in Medford Oregon to understand and prepare taxes correctly. You can do filing your own tax return or engage an accountant. There are few matters to be considered when deciding to engage a tax pro or do it by you.

What’s the time you have: You need at least 16 hours to spend your time in record keeping tax planning and completing the federal form. Even if you hire a professional it is your responsibility and spends time to gather the information and get the forms together.

Have patience to know the tax changes: The Tax code is millions of words in length and it is difficult to read it through the filing season. You will not be able to put together all the matters and bring out the most accurate and complete return by yourself. Get the help of tax pro at this juncture.

Expertise in Computer: Whether you prepare your return or get the support of tax pro E-filing is a very complex accomplishment. 80 percentages of the tax payers file their tax return electronically. If you are comfortable with computer operation, then there are great tax software package that support e-filing and printing.

Money to spend: IRS does not impose any charge for filing but your expenses will be for the tax preparer and the software.

Level of Comfort after the filing: Depending upon the tax preparer or software you may get the audit support for an additional fee. The IRS can pose challenge on the return filed by you for up to three years. The peace of mind after that time is really worthy.

Finally to say, the changes in your family life and career have consequences in your tax returns. The professionals can guide you for any tax reduction. Everyone needs sound knowledge of professional tax once in a while and it has to be checked every year for any updates.