There are some simple tax and accounting issues can be taken care without the help of a CPA. If you are preparing a 1040EZ form, there is no need to consult me. However if your return is complex in that it involves business income, investment income with rentals and net operating loss/profit, or any special situation is it advisable to get a competent professional to plan and prepare your taxes. The following are a couple of examples of common mistakes. There are hundreds of others that can occur for a variety of reasons. Let us help you with your particular situation.
Example of mistake – Double counting of tax due to exercise of stock options:
In over 25 years as an accountant you see many interesting and surprising things. One example that reflects the importance of proper tax planning and preparation is the case of individuals paying taxes on their stock option twice, thereby doubling the taxes they pay on their income.
On multiple occasions I have seen that people have paid tax due from the exercise of nonqualified stock options and then also paid capital gains on the same amount! This happens because they don’t recognize that the stock option gain is included on their W-2 total compensation. They then incorrectly use Schedule D to calculate a gain which results in an overpayment of tax.
Example of mistake -Incorrect allocation of tax payment:
I had a case recently that involved a couple of hundred thousand dollars of misallocated payments. The client had unintentionally sent payment for their dividend withholding taxes as a payment toward employee taxes. This issue took months to resolve. Attention to the correct detail would have avoided that headache for the business owner.
It is important to have a competent professional for any tax situation that is not simple. You never know when you are missing something. Please call us with any questions you may have.