Most people assume that they should meet with their CPA to discuss their taxes after December 31st. The typical logic behind people’s thinking is there is no sense in meeting with their CPA before year-end since they don’t receive their various tax forms such as 1099’s or W-2’s until January or February of the following year.
On top of that there is the psychological factor related to meeting with your CPA; most people (and who can blame them) dislike taxes and treat a visit to their CPA’s office similar to a visit to their dentist’s office. If there is way to delay they will make sure to procrastinate as much as possible!
The major problem with waiting until after December 31st to meet with your CPA is it is too late to make any moves related to your business which could help lower your taxes because the year is already over. Any moves you make at that point will only affect the next year’s taxes and not the prior year’s taxes. That’s why the best time to meet with your CPA is in October or November.
I am sure I still don’t have you convinced so let me dig a little deeper here and expand on my reasons why you shouldn’t wait.
A good CPA doesn’t only prepare taxes but also helps his or her clients reduce the taxes they will have to pay by effectively utilizing tax reduction strategies. The most effective tax strategy to use for a particular client may differ from year to year and will often be based on what has already happened during their client’s tax year. If you meet with your CPA in October or November he or she can look at what has happened so far during the year and estimate what your taxes will be for that year; this will allow your CPA to advise you on effective tax reduction strategies that you can implement before December 31st. If you wait until after December 31st it will be too late to implement any of these tax planning strategies since you are already into your next tax year by that point. Here’s an example to further illustrate this point:
*Please note this blog assumes you are a calendar year tax payer with a tax year-end of December 31st.