Year-End Tax Planning: Moves To Consider Before Dec 31
From Tax Guide.
Tax Guide · Arab, Alabama
Tax Consulting: What It Is and When It Makes Sense
What does a tax consultant or advisor do? Learn how tax consulting differs from tax preparation, when it helps and what to bring to a first meeting.
The short answer
What does a tax consultant do?
A tax consultant helps you understand how taxes affect a decision or a situation and helps you plan ahead, instead of only reporting what already happened.
Most people meet a tax professional once a year for a return. Consulting is a conversation that can happen at any time: before you sell something, start a business, hire someone, change jobs, retire or take a large payment. The goal is for you to know the tax side of the choice before you make it.
A consultant explains, asks questions and lays out options. You make the decisions. A consultant does not promise a particular result, and rules change, so the answer is always based on the current ones and your facts.
Compare
What is the difference between tax preparation and tax consulting?
Tax preparation reports the past on a return, while tax consulting looks ahead to help you decide what to do next.
The two work together. A good plan is checked when the return is prepared, and a return often shows what to plan for next year.
| Tax preparation | Tax consulting | |
|---|---|---|
| Looks at | What already happened | What could happen |
| Timing | Around the filing season | Any time of the year |
| Output | A filed return | A clear picture of your options |
| Useful for | Reporting income and claiming what applies | Big decisions and changes |
Preparation and consulting often work together.
Situations
When should I talk to a tax advisor?
It is worth talking to a tax advisor before a major change in your income, family, property or business, since some choices cannot be undone.
Many people call after the event, when the options are fewer. A short conversation ahead of time can show you what to watch for.
- You are starting, buying, selling or closing a business
- You are hiring employees or paying contractors for the first time
- You are selling a home, land or investments
- You are approaching retirement or taking retirement withdrawals
- You got married, divorced, had a child or lost a spouse
- You owe every year and want to understand why
- You are not sure how a new tax rule affects you
The meeting
What should I bring to a tax consulting appointment?
Bring your most recent tax returns, current income information and a short list of your questions or planned changes.
For a business, add recent profit and loss reports and payroll information. For a decision such as a sale or a retirement withdrawal, bring the paperwork tied to it. Do not send Social Security numbers or documents through the website. Bring them to the office or call us.
It also helps to write down your goals. We can walk through tax effects, but a plan should fit your life. See year-end tax planning and tax planning for small business owners for examples of what a review can cover.
Choosing wisely
How do I choose a tax advisor near me?
Choose someone who explains clearly, answers your questions in plain language, does not promise results and is honest about what they can and cannot do.
Ask what the advisor does day to day, how they handle your records, and what happens if the IRS or Alabama contacts you later. Be careful of anyone who promises a huge refund, or tells you to use a shortcut that sounds too good to be true. The IRS publishes guidance on choosing a tax professional, and it is worth a read.
It also helps to know what a consultation is not. It is not a substitute for filing on time, and it is not legal advice. A good consultant will tell you when a question belongs with an attorney or another professional, and will explain which parts of your question are tax questions and which are not.
A local office also helps because you can sit down in person. See how our tax planning and consulting fits alongside our other services. Because tax law changes, also see keeping up with changing tax law.
How we can help
How Melton Tax Services can help with tax consulting
Our tax planning and consulting service gives you a place to ask tax questions and plan before you decide.
We listen first, explain the tax side in plain terms and lay out your options. We do not give legal advice, form companies or handle your money, and we do not promise outcomes.
We serve Arab and the surrounding area. Call 256-586-4635 or contact the office to talk about your situation.
Answers
Questions about tax consulting
Is tax consulting only for businesses?
No. Individuals and families use it too, especially around life changes such as a marriage, a home sale or retirement.
Is consulting the same as tax preparation?
No. Preparation puts your past year on a return. Consulting looks ahead at choices. The two often go together.
When is the right time to ask a question?
Before you act. Many tax choices are hard or impossible to change afterward.
Will a consultant tell me exactly what I will owe?
They can give an estimate based on the facts you provide, but the final result depends on your actual year and on the rules in force.
Can you help if the IRS or Alabama has contacted me?
That falls under our tax representation service, where we review the notice, explain the options and respond to the agency on your behalf.
Does Alabama change what advice applies to me?
It can. Alabama has its own return and rules, and we check how they apply to your situation.
Read next
Related reading
Tax Planning for Small Business Owners
From Tax Guide.
New Tax Law: How Tax Law Changes Affect You
From Tax Guide.
Retirement Savings and Taxes: IRA, 401(k), Roth
From Tax Guide.
Tax Planning
A service Melton Tax Services provides.
Melton Tax Services
Questions about your taxes or your business?
Our team in Arab is just a phone call away, and we are glad to talk it through with you.