The most important thing to remember with any sort of tax planning, Christopher Lieto said, is to be proactive and communicate early and often with your trusted adviser.
“If you know that you have a deal coming in which you are going to sell a large tranche of stock or you’re going to be getting an inheritance, it is always good to reach out ahead of time and consult the professionals earlier, rather than calling to say something like, ‘Hey, we sold our investment property and we have a $2 million gain, (now) what should we do?’” said Lieto, partner at Mazars USA, an international audit, accountancy, tax, consulting and advisory firm with an office in Edison. “At that point, many times, it’s too late.”
Lieto said that, while taxpayers might be considering estate planning or setting up trusts and protecting assets for future generations while the political and tax landscapes are still favorable, the one thing he continues to stress to his clients is to simply pick up the phone or send him an email prior to any financial decision.
“Let’s talk about it to make sure you and I are always moving forward in lockstep,” he said.
That — and to file all of the necessary information as soon as humanly possible.
“As a cash-basis taxpayer, a person will look to pay more expenses at the end of the year to reduce the income for that particular year, (as well as) wait to bill their clients so the income comes in the following year,” Lieto said. “However, the ever-present issue is one of compression as we approach deadlines.”
There is a Sept. 15 tax deadline for partnerships and S-corporations, a Sept. 30 deadline for trusts and the final Oct. 15 deadline for individuals.
“You have three deadlines in 30 days, and, a lot of times, a partnership may go into a trust which then goes into an (individual income tax return), so everything waterfalls,” Lieto said. “That compression that we see at the end of the season is very difficult.
“What I think all individuals and business owners should think about is, the earlier the information is in, the more efficient and effective everything will be. We have businesses that will get their January bank and credit statements, reconcile their accounts in January, and we can then do the work in February, and it’s done. But we also still run into situations where it is the summertime and we still haven’t gotten the information we need, and therein lies the challenge.
“Everybody needs to be on the same page and work together to get the information in a timely manner.”
Reach Christopher Lieto, partner at Mazars USA, by clicking here, or calling 732-475-2121.