Steuerberatung Hattingen primary function is to help individuals and business owners navigate the complex tax code. They can help clients create and implement a strategy that will minimize their tax burden and save them money over the long term. They can also offer insight into the different types of tax deductions that their client can take advantage of, and provide guidance on how to best structure a business to keep more of their hard-earned profits.
While you can find many resources online that will help you with the basics of filing your taxes, most people would benefit from working with a professional who has a comprehensive understanding of the tax code and how it applies to each individual client’s unique situation. When choosing a tax advisor, it’s important to consider their years of experience and whether or not they have worked with other clients in similar situations to ensure that their recommendations are applicable.
A good tax advisor will be familiar with all of the current laws and changes to the code on a yearly basis. They will be able to explain how these changes impact specific clients, and they will be able to help their clients stay compliant and avoid potential compliance issues. For example, if a taxpayer fails to file their taxes on time, the IRS can garnish their wages or even levy their bank account. This can be a major hassle for the taxpayer, and it may cause them to leave money on the table that they could have otherwise kept.
As the tax laws change on a yearly basis, so does the advice on how to manage them. There are two broad categories of advice: 1) Tax avoidance strategies that are scrutinized by the IRS and usually require a CPA, CFP, or EA, and 2) More benign strategies like adjusting the timing or type of income to reduce tax exposure.
If an advisor is providing guidance on a tax avoidance strategy, they need to be very careful to limit the analysis and projection of the strategy so that it does not go beyond what can be considered as formal advice (and potentially subject them to liability). For this reason, it is often best for advisors to follow the process of Consideration, Consultation, and Recommendation, when interacting with their clients.
For most people, the best way to cut their tax bill is through deductions and credits. Deductions are expenses that they have incurred that can be subtracted from their taxable income, and credits are dollar-for-dollar reductions in their tax bill. While there are some creative ways to legally reduce your taxes, such as moving out of the country or opening a Swiss bank account, most people will not find these strategies to be practical for their own personal circumstances. A good tax advisor will be able to brainstorm creative and legal ways for their clients to lower their tax bills, such as taking advantage of the current tax code’s allowances for medical expenses, retirement savings, home mortgage costs, and education expenses.