Fun fact: the Tax Code is over 74,000 pages long and contains about 4 million words. I’m going to go out on a really sturdy limb and say you haven’t read it cover to cover. I’m going to go even further out on said limb and say your CPA (myself included) hasn’t, either. Admittedly, I’m more inclined to read Game of Thrones or Harry Potter.
A common misconception is that CPAs know every rule and loophole hidden within the Code and can apply them to each and every individual or business. Full disclosure – while that’s a very nice compliment, it’s simply not true. It’s impossible.
With that said, your CPA should be able to research and find strategies and deductions that will save you money. How can you help? Ask questions! Lead us to water and, I promise, we’ll drink (lead us to a bar and we’ll drink, too).
No matter your situation, this applies to you: asking the right questions and phrasing them the right way can save you some tax dollars. Here’s how…
Ask Specific Questions
Broad questions like, “Can I save more money on my taxes?” and “Am I paying too much in taxes?” are difficult to answer. Look at last year’s tax return and target certain areas. Do you own a business? Focus on business income and deductions. Do you itemize your deductions? Drill down on your Schedule A. Do you have rental properties? Analyze Schedule E.
Once you segregate the components of your tax return, jot down a few points about each area. Could you be missing certain deductions? Did you make a big purchase this year? If yes, maybe it’s deductible. If not, maybe it would benefit you to make a purchase before year-end.
Remember, your CPA does not know about your financial moves until you tell him or her, so it’s crucial to keep good records and maintain constant, transparent communication.
Phrase Your Questions Correctly
It’s not what you say, it’s how you say it. Don’t believe me? Take a look at this chart, which is backed by scientifically proven data:
The way you ask questions can make all the difference in the answers you receive. Let’s look at a few examples:
- “Can I deduct my car expenses?” vs. “What’s the best way to deduct my car expenses?”
- “Can I take any additional deductions?” vs. “Which additional deductions can I take against my business income?”
- “Can I deduct my home expenses?” vs. “How can I deduct my home expenses?”
See the difference? The first question in each example is more likely to receive an answer like “unfortunately, no”, while the second question in each example is much more likely to stimulate strategic thinking and encourage problem-solving. It’s human nature to want to solve someone else’s problem; adding a simple word like “how” in front of a question can really change the recipient’s perspective.
Find the Right CPA!
Again, it’s extremely important to constantly communicate with your CPA and to be honest and transparent when doing so. That, coupled with asking the right questions and phrasing them correctly, should motivate your CPA to search for the answers that are going to benefit you the most and save you the most tax dollars as possible.
If that doesn’t work or you are not getting any meaningful answers, it may be time to search for a CPA who is a better fit for you. These types of questions could also be used when interviewing a potential new tax advisor. Keep in mind that you want a CPA who doesn’t work just for money, but for you.
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Nick Aiola is a CPA and the owner of Aiola CPA, PLLC. Nick and his team provide the highest quality of tax and advisory services to real estate investors and individuals and business owners in the real estate industry.
Phone – (646) 397-9537
Email – firstname.lastname@example.org
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