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What is a Tax Consultant, and When Do You Need One?

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For a large percentage of Americans, taxes aren’t as easy as filing a simple 1040EZ. Instead, many of us encounter unique financial circumstances each year that can complicate our taxes.

Considering that the average American gives nearly 30% of their income to Uncle Sam each year, it’s logical to look for ways to pay the government fewer of your hard-earned dollars. This is where a tax consultant comes in.

Tax consultants go beyond the task of simple tax preparation that an account is expected to perform. Though they often do prepare tax returns, they also take on a longer-term role to help clients minimize tax liability.

Benefits of Hiring a Tax Consultant

Contrary to popular belief, tax consultants aren’t just for the rich. Anyone that pays taxes can benefit from the skill of a tax consultant.

Here are five reasons to consider working with a tax consultant:

  • Save Time: Time is money, and we’d all like more of that, right? Even if you’re reasonably familiar with tax preparation, it’s bound to take you longer to do your taxes than if you hire a pro. Wouldn’t you rather spend your time doing something else?
  • Claim All Your Deductions: the tax rules are constantly changing, and it can be tough to keep up. We hear on the news that the president revised the tax law, and it has “good” or “bad” implications. The truth is that taxes are something to consider all year, not just when there’s a change to fiscal policy.
  • A tax consultant will pore over your financial records with a fine-tooth comb, finding opportunities for tax credits and deductions that you probably didn’t think of. For example, your tax burden can change based on when you buy a vehicle, and even what kind. As a result, you could save a significant amount of money for a relatively small price tag

  • Get Specialized Help: It’s a tax consultant’s job to be able to provide tax help and advice for a wide array of clients and financial situations, including retirement planning, managing taxes on capital gains, and small business and corporate taxes.
  • While a traditional accountant might have an average depth of understanding of one or more of these areas, a tax consultant is expected to have a more solid grasp of the most current tax laws.

  • Get Ongoing Support: We mentioned earlier that taxes are a factor year-round, and your tax bill can change drastically based on the decisions and purchases you make. A tax accountant can give you guidelines on how best to structure deals and purchases so that you make the most of your financial resources without overpaying the government.
  • Stay within Legal Limits: Knowing how much you’re allowed to deduct for a home office or what constitutes work meals and networking can get the average taxpayer in hot water.
  • Tax consultants make it their mission to know what’s legal and what isn’t. As a result, your tax returns will be above board, and you’ll have someone on your side if there’s ever a question by the IRS or another tax authority.

    This issue is especially relevant with the advent of tax preparation software. Though these programs can be helpful for simple returns, they’re not a substitute for a real-life expert.

    The Duties of a Tax Consultant

    What does a tax consultant do, exactly? Their duties can be distilled into five main functions:

    1. Stay up to date with all tax laws and regulations at the state and federal level.

    2. Prepare tax returns based on all client documents while keeping tax law in mind.

    3. Be able to complete sophisticated tax forms that are outside of the expertise of the standard CPA or tax accountant.

    4. Consult with clients about tax implications from events like marriage, divorce, the birth of a child, retirement, and spousal death.

    5. Represent clients in matters pertaining to tax collection, including IRS audits.

    Accountant vs. Tax Consultant – What’s the Difference?

    One of the first things to understand is that not all accountants prepare taxes as part of their job. Some help with budgeting, balance sheets, profit and loss statements, and perform other financial duties that have nothing to do with taxes.

    An accountant that does taxes is often referred to as a tax preparer. This means that they prepare taxes and may offer some basic advice.

    A consultant, on the other hand, knows not only how to apply tax principles but also the myriad of legal and financial implications associated with them. Tax consultants tend to offer both immediate and long-term advice about how to reduce your tax burden by taking advantage of as many tax deductions as possible.

    Talk to a Tax Consultant

    At Levy & Associates Tax Consultants, we work with individuals and businesses to streamline tax preparation and minimize tax liability. Our team comprises staff members across various tax disciplines, ranging from accountants and consultants to attorneys and former IRS officers.

    We offer a free no-obligation tax analysis. Contact us today to learn more.

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