Tax

The returns that need a CPA usually carry a K-1 from a partnership or an S-Corp, rental property, equity compensation, self-employment income, the sale of a business interest, or income earned in more than one state.

Preparation covers the federal and state returns you are required to file, and the estimated payments for the year ahead, so next April arrives without a surprise attached.

Bill explains the return before you sign it. Bill's stated goal for every client is comfort and confidence with topics that are complex and unfamiliar, and a return you do not understand fails that test.

Form 1065 reports the partnership's income and allocates it to the partners, and each partner receives a Schedule K-1 to carry onto a personal return. Getting the allocation and the capital accounts right is most of the work.

The items that take the time are special allocations that follow the partnership agreement rather than ownership percentages, capital accounts maintained on the tax basis, guaranteed payments, and the basis limits that determine whether a partner can deduct a loss at all.

Send the partnership agreement along with the books. The agreement determines how several of those numbers are calculated.

The S-Corp return reports the corporation's income and passes it through to the shareholders on Schedule K-1. The recurring questions are reasonable compensation for a shareholder who works in the business, the split between payroll and distributions, and each shareholder's stock and debt basis.

Basis is the one that catches people. It determines whether a loss is deductible this year and whether a distribution is taxable, and it has to be tracked year over year rather than reconstructed at the end.

Bring last year's returns and the current year books. Compensation, distributions, and basis are all easier to correct before December than after it.

A trust or an estate files its own income tax return for the period it holds assets. Income taxed at the entity level reaches the top bracket quickly, and income distributed to beneficiaries is taxed to them instead and reported on a Schedule K-1.

The work turns on distributable net income, what the trust document allows or requires the trustee to distribute, the fiscal year election available to an estate, and the split between principal and income.

Trustees and executors usually inherit this job with no warning. Bring the trust document or the will and the date of death, and the first conversation can settle what has to be filed. Form 1041 reports income, which is a separate filing from the federal estate tax return.

Anyone can pull your Form 990 and read it, and that is what separates it from every other return. Grant makers do read it, and so do donors checking how much of a dollar reaches the program.

Preparation covers the core form, the schedules your activities trigger, the functional expense allocation across program, management, and fundraising, and the governance answers the board is putting on the public record.

An organization that misses the filing three years in a row loses its exempt status automatically. If a deadline is close or a year was already missed, say so at the start of the conversation.

By the time a return is prepared, most of the outcome is fixed. Plan earlier and you make the decisions in the months when they can still change what the return says.

The usual subjects are the timing of income and deductions, a large capital gain and what to do about it, a Roth conversion, charitable giving including appreciated stock, equity compensation and when to exercise it, and estimated payments sized so April holds no surprise.

This is also where the personal return and the business meet. If you own the company, the individual plan and the business plan are one plan.

Business tax planning covers the choices that are still open, such as entity structure and whether an S election helps or costs you, reasonable compensation against distributions, when to buy equipment and how to treat it, retirement plan design, and where you have created a filing obligation in another state.

Planning is worth the most when it runs alongside the accounting, because the answer depends on numbers that have to be current to be useful.