It’s that time of year for part-time help at local tax-preparation offices, when drivers can see seasonal staff standing at busy intersections wearing costumes of the Statue of Liberty or Uncle Sam.
But they’re not the only ones who are hired part time, says professional advisor to Certified Public Accountants (CPA) Gary Marriage, Jr.
“I sometimes ask people, ‘Do you want a guy in a costume to handle your taxes?’” said Marriage. “Of course, the guy actually doing the paperwork probably won’t be the guy standing near the traffic, but he’s also not the person you want dealing with your bottom line. I know millionaires who go to these pop-up tax firms; they’d rather spend a few hundred dollars on their return than a grand or two with a skilled CPA, but this apparent savings comes at a cost, because a good accountant is likely to find many thousands of dollars in savings in a single tax return, and they are far less likely to make a mistake.”
To keep things running smoothly, have all records handy, and consider a long-term relationship. Not only is it advantageous to file taxes through a CPA, it’s also smart to have all relevant records readily available – no matter who is helping with the return.
“Not only do I strongly advise you to use a reputable CPA that you can trust, I also think you should try to establish a long-term relationship with him or her,” Marriage says. “Think of a financial professional as similar to a doctor or lawyer – the better they know you, the better off you’ll be.”
Remember that high-income earners pay the vast majority of income taxes – don’t volunteer more. Taxpayers with incomes exceeding $100,000 earn 60 percent of the country’s income; yet contribute 95.2 percent of the income taxes, according to recent estimates from Congress’s Joint Committee on Taxation. Additionally, those earning more than $100,000 – a bit more than 20 percent of taxpayers – pay for 75.7 percent of total federal taxes, excluding the burden on corporate and investment taxes.
“There are many high-income earners who are passionate about their careers and love what they do; they care more about their work than their income,” he says. “These tend to be the folks who need reminders that there are legal avenues available for protecting their hard-earned money.”
High-net-worth individuals should consider Charitable Remainder Annuity Trusts (CRAT). Many people, even financial professionals with years of experience, do not know about CRAT, a form of financial protection that Marriage often teaches to CPAs. CRATs are a flexible and effective instrument used in financial and estate planning that provides a significant tax shelter for any assets and property placed within it. That allows any assets to increase in value without being taxed on the increase. A well-constructed CRAT can provide financial security for the annuitants.