Better Money Return

Savvy Filing Tips for Individuals, Business Owners to Save on Taxes

Better Money Return

This time of year is crunch time for a bulk of America's tax preparation work. As a result, we thought now might be an opportune moment to check in with the head of IFA Taxes, John Dahlin.

After all, he is a Certified Public Accountant (CPA) with more than a decade of experience working on behalf of a range of different individual taxpayers and business owners. His consulting background includes partnering with estate attorneys and other planning professionals to help draw up holistic tax plans.

Traditionally, April 15 is the deadline for most individual taxpayers to file. Since that date falls this year on a federally recognized holiday, your taxes won't be required to be sent to authorities until Monday, April 18. If sent by mail, such envelopes and/or packages must be postmarked before midnight that day.

Below is a Q&A session with Dahlin aimed at providing some tips for filers ahead of their preparation work as IRS deadlines approach in coming months. 

Q: What are you telling people to watch out for in terms of being prepared to work with you ahead of the new filing deadline facing many taxpayers?

Dahlin: We encourage our tax clients to take a look at and fill out the tax questionnaire that was sent out in January. This highlights potential areas of taxable income, deductions or credits that a taxpayer might qualify to receive. This can be a very helpful tool in terms of helping us know what's going on in your household. It helps us to make sure we're not overlooking any possibilities by simply making sure you've got all of the right forms gathered and organized. After all, a fairly basic filing situation requires more than just a W-2 form. There are always more questions that need to be asked to make sure that every possibility is addressed to maximize refunds and minimize tax liabilities.

Q: Could you provide some examples?

Dahlin: An issue I always try to make my clients aware of early in the process is that they might not get full 1099 investment statements from their custodians until later in the quarter. They should also realize these forms are often amended with corrected information and reissued. So, while it's best to get all of your original statements into us sooner rather than later, you've also got to keep watching for any amended tax-related documents that might be coming.

Q: What should small business owners pay special attention to this time of year?

Dahlin: Their filing deadlines are coming up a lot sooner than those for individuals. If you're filing as an S-corp or partnership, for example, your deadline in a typical year is March 15. That deadline for business owners wasn't extended due to the coronavirus pandemic. As a result, these taxpayers who should've filed for an extension need to reach out to us as soon as possible. It's important that they realize their returns can also get extended, just like with their personal tax returns. But they need to be aware of what's required by law in terms of avoiding any possible penalties and working within IRS guidelines to properly file extensions and meet other reporting requirements. 

Again, a lot of people will seek extensions, especially if a company's net income flows into their personal tax situations. Even if they're running late or haven't done much of anything yet, it's still important for business owners to get their tax information together. It's just that the process of planning and fully developing their tax strategies is probably going to be a more pressing matter at this stage of the game.

Q: What types of businesses are most impacted by recent changes to the U.S. tax code?

Dahlin: Mostly different types of "pass-through" businesses. This would include S-corporations and entities taxed as a partnership — including general partnerships, LLCs and limited partnerships. Also, sole proprietorships will be impacted.

Q: What do you mean by "pass-through" businesses?

Dahlin: Almost any business which isn't paying income taxes on their business returns. In other words, business owners who are reporting income from their companies as part of their own personal returns.

Q: Why would someone in that situation be facing different tax treatment?

A: In the latest changes to the U.S. tax code, the 2017 Tax Cut & Jobs Act, pass-through business owners in general can deduct up to 20% from their qualified business income. (That excludes C-corps, however.) The new law has also expanded deductions for capital equipment for a variety of different businesses, not just pass-throughs. The corporate tax rate for C-corps has also been lowered from 35% to 21%.

Q: Do only families with tens of millions of dollars need to worry about estate tax planning?

Dahlin: No, in order to avoid probate, you need to make sure to figure out how best to protect any assets that you own. You also need to set up proper designations and, in some cases, trusts to make sure your assets go to the right parties. People tend to overlook the viability of trusts, but they can be extremely valuable in smoothing the passing of assets between different generations. Establishing a trust is about more than just eliminating the risks posed by estate and other various taxes.

Q: What are the biggest changes individual are facing?

Dahlin: The major changes can be referenced in the FAQ section of IFA Taxes, which can be found on IFA.com. But to summarize, one of the biggest reforms is the act's $10,000 annual cap for deductions on state and local taxes, or SALT. Also, individual tax brackets have changed, leading to the potential in some cases for increased tax savings.

Another alteration in the tax code that individual taxpayers are asking about is elimination of the 2% miscellaneous itemized deduction. This means that expenses like tax preparation fees, financial advisor fees and employee business deductions for unreimbursed employee expenses aren't going to be allowed to be itemized on individual federal tax forms. Tax brackets have also been altered.

Q: How long does it take IFA Taxes to finish a typical client's IRS filings?

Dahlin: I'm telling people that they need to have their information to us by the end of March, or they risk having to file extensions. It doesn't mean we're not going to be able to figure out to the best of our abilities what they might owe. It just means we might not be able to realistically finalize their returns until all of their forms and statements are complete. Due to the pandemic, the IRS is swamped and processing of tax filings is taking a lot more time. The U.S. postal service is also reporting big delays. So, for taxpayers who are planning on mailing in their returns, I'm just warning them to expect delays in the process. 


This is intended to be informational in nature and should not be construed as tax advice. As a division of Index Fund Advisors, Inc., IFA Taxes provides a wide array of tax planning, accounting and tax return preparation services for individuals and businesses across the United States. IFA Taxes does not provide auditing or attestation services and therefore is not a licensed CPA firm. IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. Federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter herein.

Certified Public Accountant (CPA) is a license to provide accounting services to the public awarded by states upon passing their respective course work requirements and the Uniform Certified Public Accounting Examination.