Tax advice is the expert insight that a financial or tax professional offers clients to help them minimize their tax liability. The advice could range from specific actions that a taxpayer can take to broader strategies, such as planning for investments or retirement. A tax advisor may also provide guidance on how to handle complex transactions, such as when a business owner is selling part of their company or when they purchase a property.
A person who provides tax advice must meet certain qualifications, such as holding a license or certification. Depending on the scope of their work, they may be licensed as a Certified Public Accountant (CPA), tax attorney, or enrolled agent (EA). CPAs must follow regulations set forth by the Internal Revenue Service in Circular 230, which contains ethical/conduct rules and provisions for people who practice before the IRS.
In addition, a person who provides tax advice must be familiar with the federal and state laws that govern their field. This includes understanding the details of tax rules, tax deductions, and credits that a person or business can claim. Often, it’s best to hire someone with a master’s degree in taxation or a bachelor’s degree in accounting.
Many different things can impact taxes, and the best way to determine how much a person or business will pay is by reviewing the tax code. The tax code is the legal “rules” for how much state, local, and federal governments can charge a person or business each year. A person or business must follow the rules, or face fines and other penalties.
Typically, tax law is passed by a legislature. After being passed, the new rule is assigned a number or code section. Once that is done, it is added to the main collection of tax laws known as the Internal Revenue Code (IRC).
The main purpose of tax law is to ensure that everyone pays their fair share of the nation’s expenses. However, the rules can be complicated. Some of the most common ways that a person or business can lower their taxes include using credits, maximizing deductions, and deferring income.
Ideally, a person or business should seek tax advice before taking any action that might affect their taxes. However, this isn’t always possible. Even if a person or business has made the right decisions, they might find themselves in a bad situation when filing their returns.
Tax season is stressful and time consuming for most people. That’s why it’s important to seek the help of a qualified financial and tax professional, like those at Benefit & Financial Strategies in Flagstaff, Arizona. The professionals can review the latest tax laws and help you come up with a strategy that will reduce your tax liability. Contact the office to schedule your appointment. We look forward to working with you! Steuerberatung