Looking for tax accountant

When looking for a professional to handle your taxes, you need to make sure that you make the right choice. There are many benefits of having a tax accountant handle your taxes, but you should ask plenty of questions before you place all of your most important information in a stranger's hands.

Why would you need a tax accountant? Most people feel that they can handle their own tax situation, however, there are some benefits that make hiring someone well worth the cost.

For example, preparing your own taxes can be quite time-consuming and stressful. You can be left with a lingering fear of an audit situation. Many people are frustrated and confused -- which can lead to mistakes. Hiring a professional gives your tax returns an increased level of accuracy. Your tax situation could be quite complex, including stock market investments, business dealings, rental properties and other tax situations. If it is, you will need specialized advice.

If you have the goal of paying as little taxes as possible, a tax professional could be very helpful. He or she can provide you with detailed planning and advice. If you are facing a tax situation, such as the filing of back taxes, paying off a tax debt or fighting an audit, you shouldn't go through it alone.

When looking for an experienced tax accountant, you need to make sure that you find the best professional for your financial situation. Ask your friends, family and business associates who they would recommend. It helps to ask someone who has a similar tax situation as you do.

Accountants should never promise you big refunds. If someone tells you that everything is deductible, you should be wary. You will be ultimately responsible for all of the information on your tax return in the eyes of the IRS, not your accountant.

There is nothing wrong with switching accountants. If you aren't comfortable or feel that your accountant isn't right for your financial situation, you need to do what is best for your tax situation. Don't feel that you have to be loyal to your accountant no matter what. I recently had a friend tell me that they stay with their accountant because he is great at what he does, even if he doesn't let them take deductions that they qualify for.

If you have a relatively straight-forward tax return, retail franchises could provide adequate services for your needs. Some tax preparers are more experienced. You often can find a CPA or an Enrolled Agent working in a tax preparation company. Ask if you can meet with a CPA, enrolled agent or the senior tax preparer. As you are charged by the number of tax forms necessary to file your taxes, you won't pay any more to talk to someone with more experience.

Local tax firms offer specialize in individuals and small businesses. Make sure that you check out their expertise to make sure that they can handle your taxes. Enrolled Agents have passed a rigorous test and a background check by the IS. They often specialize in complex tax situations. CPAs have passed the CPA exam and are licensed by the state they work in. They usually specialize in specific areas, such as audits, taxes or business consulting. They are best for complex accounting, however not all CPAs will handle tax situations.

Tax attorneys have chosen to specialize in tax law. They usually have their juris doctor degree and a master of laws degree in taxations. They are great for handling your complex legal matters, such as estate tax returns.

When meeting with a tax professional, you should ask some questions to ensure that you find an experienced, trustworthy tax accountant.

Make sure that you ask the following:

• How long have you been in business?
• What licenses do you have?
• What tax issues do you specialize in?
• Do you have experience in tax situations like mine?
• Do you outsource any work?
• How long will it take to complete my tax return?
• What is your privacy policy? Will my information be shared with any third-parties?
• Am I currently paying too much, too little or just the right amount of taxes, in your opinion?

Tax accountants usually have very different attitudes about the US tax system. You want to find one that you can work well with and trust with your finances. You want to find an experienced, competent tax accountant who specializes in your situation and can help you minimize your taxes.

After you have narrowed down your choices, perform a quick background check. Contact your state's board of accountancy to check on the license. They can tell you if any disciplinary action has been taken against the CPA. The IRS Office of Professional Responsibility can help you with Enrolled Agents, their licensing and their disciplinary history.

Six don't-miss tax breaks

As carrots go, admittedly there are sexier ones to be had. But the rabbit food of choice dangling before you this and every tax-filing season is the opportunity to minimize your tax bill or maybe even score a refund.

Getting that carrot (legally) usually means taking full advantage of legitimate tax breaks. So it pays to know what they are and how to figure out whether you're entitled to take them.

Below is a list of six key breaks that may serve you when filing your 2005 taxes this year.

Some payback for your purchases?

If you live in a state with no wage income tax or you live in a state with very low income taxes but high sales taxes, you might get a bigger break on your federal return than you're used to.

That's because for tax year 2005 you'll be given a choice: You may deduct you state and local income taxes on your federal return. Or, instead, you may choose to deduct the general sales tax you paid in 2005. So if you made big purchases last year, your sales tax outlay may have exceeded your income tax outlay.

Use your alimony to save for retirement and get a deduction.

If you're divorced and don't have a paying job, you may think you're not allowed to make an IRA contribution, because the rule is you must have earned income to do so. However, alimony received is treated as taxable income on your federal return, so, in fact, you are eligible

The ex-spouse who pays the alimony may use the payments to reduce his or her gross income.

Didn't make much last year? Take advantage of the saver's credit.

Maybe you ditched a salaried career in the past couple of years to try your hand as a small business owner. Chances are your paycheck has never been so low, since much of the money you make may be plowed back into the venture. Or maybe you're just a recent college grad in your first job. Well, here's one salad-days perq:

Low-income taxpayers may receive a credit (a dollar-for-dollar reduction of the taxes they owe) for 50 percent of their contributions up to $2,000 to qualified retirement savings plans such as 401(k)s, 403(b)s as well as IRAs.

The benefit is three-fold: you contribute to your retirement savings, you reduce your taxable income if you contributed to a 401(k) or deductible IRA, which can reduce your tax liability, and then the credit for that contribution will reduce your tax bill further.

The credit is available only to those taxpayers with an adjusted gross income of $25,000 or less ($50,000 or less for married couples). And the credit may not exceed your tax liability.

You have until April 15, 2006 to put money in an IRA and have it count as a 2005 contribution. The contribution limit is $4,000 if you're under 50, $4,500 otherwise, assuming you earned at least that much in 2005.

You don't need gains to make the most of your losses.

Many investors know they can use their stock losses to offset the taxes they owe on their stock gains in a given tax year. If the losses exceed the gains they can use up to $3,000 in losses to offset ordinary income.

But you don't have to have gains to write off losses up to $3,000 of income if you had a holding that became worthless in 2005, said certified public accountant Alan Dlugash, who chairs the Taxation of Individuals Committee for the New York State Society of Certified Public Accountants.

And by worthless he means having a value of $0. For tax purposes that holding would be considered sold as of Dec. 31, 2005, Dlugash said. So you can use that as a loss to offset up to $3,000 of ordinary income on your federal tax return.

Think broadly when it comes to home-office deductions. Requirements to qualify for big home-office deductions (e.g., a portion of your rent and utility bills) are fairly stringent and tend to be scrutinized by the IRS.

But even if you don't qualify for the big expenses, you may still deduct smaller items like the cost of hooking up a second phone or fax line, or the cost of office supplies.

Generally speaking, "any costs that you incur that assist you in earning income is deductible," Dlugash said.

The exceptions are those items you would buy for personal use anyway, such as that nice suit you wore to wow potential clients or your television.

To see which home office deductions you'd be entitled to take, check out tax publisher CCH's home office deduction site and calculator.

Move what you can above the line.

An above-the-line deduction (e.g., alimony you paid, business expenses, stock losses up to $3,000, deductible IRA contributions) reduces your gross income, and therefore your adjusted gross income (AGI).

Since eligibility for most "below-the-line" deductions – which you take only if you itemize -- is tied to AGI limits, lowering your AGI will increase your chances of being eligible for other tax breaks.

So you want to make sure you deduct what you can above the line.

Take business expenses. Maybe you have a full-time salaried job. But you also borrow money to invest in a rental property with your brother. You may be able to deduct the loan interest as a business expense, Dlugash said. Ditto for any materials or classes you paid for to educate yourself about becoming a landlord, not to mention the cost of travel to and from your rental property.

If you're a homeowner, you may be able to move a portion of your mortgage interest and property tax deduction (which normally is an itemized deduction) and count it instead as an above-the-line business deduction if you have a home business, according to Dlugash and CCH. That would reduce the income on which you must pay self-employment taxes. (For more on this, click here.)

Indulge your inner procrastinator if you must.

Sure, there are three months until April 15, but if that's just too tight a timeframe for you, this year you're allowed to apply for a free, automatic 6-month filing extension, no questions asked. Keep in mind, though, the extension is only good for filing your return, not for paying what you owe. For that, Uncle Sam will insist you fork it over on time and in full.

10 Strategies to Cut your Tax Bill

1. Make your January payment in December. That way, you can deduct the additional month’s interest. Your January payment is for the use of the money in December, and the interest can be deducted if paid and mailed prior to January 1st.
2. Defer Income. Tax rates are decreasing. Collect your bonus in 2007 rather than 2006. If you’re self-employed, try to hold off your billing in December so your income checks come in January. This will carry your income over to the next year.
3. Accelerate expenses. Prepay your tax preparer with a check before December 31st for the return he prepares in the next year. Prepay your Keogh or IRA fee or any other investments expenses.
4. Pay your fourth-quarter real estate taxes before December 31st. Fourth-quarter taxes are due February 1st. If you pay your fourth-quarter tax before December 31st, you will be able to deduct that tax payment one year earlier.
5. Remaining money in your Salary Reduction Plan. These plans are called flexible spending accounts. These accounts require you to reduce your salary by a given amount that goes into a fund that can pay certain benefits, such as medical expenses and dependent care expenses. If you don’t use it, you will lose it. If you have money in this account, spend it! Prepay orthodontia or buy that second pair of glasses, etc.
6. Make charitable contributions. You can make a contribution with cash or charge it on your credit card. Other contributions can include donation of clothes, furniture, or equipment. Make sure to always get a receipt for every contribution you make.
7. Pay estimated state income taxes by December 31st. State taxes are due around January 15th. By paying them by December 31st, you get to deduct the taxes a year earlier.
8. Recognize any capitol losses. Sell non-performing stocks before December 31st. Any losses offset your capital gains first, and the next $3000 of losses can offset ordinary income. Any excess losses are carried forward into your next year.
9. Get married…or divorced. If your marital status is determined as of December 31st, you may qualify for a marriage bonus. If you plan to divorce, make sure it’s done legally and before the end of the year. This may qualify you for some tax savings.
10. Open a Keogh account if you’re self-employed. You can contribute as much as 20% of your net Schedule C income into a Keogh tax-deferred retirement plan, and your contribution is deductible.

Ten Strategies to Cut Your Tax Bill
1. Make your January payment in December. That way, you can deduct the additional month’s interest. Your January payment is for the use of the money in December, and the interest can be deducted if paid and mailed prior to January 1st.
2. Defer Income. Tax rates are decreasing. Collect your bonus in 2007 rather than 2006. If you’re self-employed, try to hold off your billing in December so your income checks come in January. This will carry your income over to the next year.
3. Accelerate expenses. Prepay your tax preparer with a check before December 31st for the return he prepares in the next year. Prepay your Keogh or IRA fee or any other investments expenses.
4. Pay your fourth-quarter real estate taxes before December 31st. Fourth-quarter taxes are due February 1st. If you pay your fourth-quarter tax before December 31st, you will be able to deduct that tax payment one year earlier.
5. Remaining money in your Salary Reduction Plan. These plans are called flexible spending accounts. These accounts require you to reduce your salary by a given amount that goes into a fund that can pay certain benefits, such as medical expenses and dependent care expenses. If you don’t use it, you will lose it. If you have money in this account, spend it! Prepay orthodontia or buy that second pair of glasses, etc.
6. Make charitable contributions. You can make a contribution with cash or charge it on your credit card. Other contributions can include donation of clothes, furniture, or equipment. Make sure to always get a receipt for every contribution you make.
7. Pay estimated state income taxes by December 31st. State taxes are due around January 15th. By paying them by December 31st, you get to deduct the taxes a year earlier.
8. Recognize any capitol losses. Sell non-performing stocks before December 31st. Any losses offset your capital gains first, and the next $3000 of losses can offset ordinary income. Any excess losses are carried forward into your next year.
9. Get married…or divorced. If your marital status is determined as of December 31st, you may qualify for a marriage bonus. If you plan to divorce, make sure it’s done legally and before the end of the year. This may qualify you for some tax savings.
10. Open a Keogh account if you’re self-employed. You can contribute as much as 20% of your net Schedule C income into a Keogh tax-deferred retirement plan, and your contribution is deductible.

Microsoft Money Deluxe

Microsoft Money Deluxe program covers all of the bases of personal finance—banking, investing, financial planning and taxes. Microsoft Money fulfills the needs of the seasoned investor and the homemaker.
This choice financial software package is comparable to our top pick in most features and even seems to be a little more user friendly. However, Quicken offers more reports, producing a clearer and fuller illustration of your entire financial status.


Ease of Use/Installation:
While using Microsoft Money, you'll notice tabs at the top of the screen that show you exactly what section you are in. Just click on the tab of the section you're looking for and you're there. These tabs make a complex program of this type really very easy to navigate.
A tour introduces the software and a help window answers questions about the program and its features. Because personal finance encompasses so many facets, plan on spending some time becoming familiar with the program.
We had no problems or errors during the installation and setup of this product.

Banking/Bills:
Microsoft Money Deluxe allows you to manage multiple accounts at multiple banks or credit unions. Once your accounts are set up in the program you can transfer money, make deposits and make electronic payments.
This program also provides an amortization schedule that shows exactly what your loan payments are and how a better interest rate would effect your payments. The schedule also shows what you're paying towards interest versus principle—so you can determine how much faster a loan can be paid off by paying above the minimum payment.

Reporting:
Microsoft Money Deluxe has a limited reporting section when compared to some of the other personal finance products we reviewed—offering seven reports in all.

Financial Planning:
Microsoft Money Deluxe has an incredibly inclusive financial planning section that covers insurance, debt reduction, retirement, college and planners to help you organize life's big events so you can be prepared for the future.
This product also includes an array of specialty calculators to assist in the planning process—you can calculate college expenses, taxes, the cost of your Roth IRA, life expectancy and more.

Personal Investing:
Microsoft Money Deluxe works directly with Ameritrade so you can view all of your investments online. They offer stock quotes, history and individual stock projections for the next six months. Because of this partnership, you can receive up to 35 free trades with your purchase of Microsoft Money.
The program also allows you to allocate all your assets, manage your 401K and use the capital gains estimator.

Tax Options:
Microsoft Money Deluxe has the ability to export all your financial information into the H&R Block tax software, TaxCut, saving you time and avoiding errors. While doing your taxes Microsoft Money will help you find deductions, optimize and estimate your capital gains and estimate your tax withholdings. The program will also offer audit help, incase the IRS decides to step in.
The tax section also includes IRS publications on the tax law changes, a newsletter, and some general questions and answers—very useful information when filing your taxes.

Summary:
Once again Microsoft has put together a very practical software package with Microsoft Money Deluxe by offering easy-to-use tools and a program that interacts with the web to provide tons of information.

The bottom line—Microsoft Money Deluxe is exceptionally user-friendly and effective, but offers limited financial reports.

Personal Finance Software

Managing your money can be an overwhelming and discouraging chore, but through personal finance software, your finances can be organized and you can look to the future with the security of knowing you'll have enough money to take care of the necessities of life.

Through personal finance software you can bank online, utilizing transactions, deposits and online bill pay, manage your portfolio and 401K by trading stocks, mutual funds and bonds, receive real-time stock reports, current tax articles and other information so you can wisely direct your money and make good financial choices. Then easily export your data to tax software to get the most out of taxes.

Personal financial software can provide reports and graphs, giving you a clear illustration of where your money has been, where it is and where it's going. These reports are priceless when planning your financial future.


What to Look for in Personal Finance Software

Ideal personal finance software provides ample user-friendly features that allow you to manage every aspect of your finances including your accounts, investments, future plans and taxes. The software should also provide current information on tax laws and stock reviews so you can make informed decisions. Below are the criteria this site used to evaluate personal finance software.

• Ease of Use/Installation – Personal finance software that offers intuitive navigation, user-friendly features and is easy to install ranked higher in our reviews.
• Banking/Bills – Personal finance software should include features in the area of online banking, including: electronic payments, account transactions, account reconciliation, the ability to write and print checks and the ability to exchange currencies, that make banking from your PC convenient.
• Personal Investing – Personal finance software that offers an investment feature used to get stock quotes and manage your mutual funds, stocks, bonds and 401K, so you can take care of all your investing needs.
• Financial Planning – Personal finance software that allows you to plan your retirement, purchases, taxes, lifetime events, home purchases, debt relief and other financial goals and money management concerns and provide financial calculators to help you estimate costs, plan collage expenses, savings, taxes and so on.
• Tax Options – Some personal finance software can export all of your financial information into tax software and help you find missed deductions and estimate your tax withholdings and capital gains.
• Reporting – Personal finance software that provides reports and summaries of your finances so you can plan your cash flow and invest more wisely.

Through personal finance software, you can manage your finances conveniently and stress free, stop money leaks, make better investments and increase your personal net worth. In short, with personal finance software you can make your hard-earned money work harder for you.