First, what about seeking tax help? Say that you're an up-and-coming executive or professional man, in the £25,000 to £40,000 income range, and this time around you dread the April 15 filing date. You're wondering why in blazes you have never hired a tax man. You're far from alone.
But help is at hand. Says a top Washington tax adviser: "If your 1040 has outgrown you, contact a Accountant or tax solicitor promptly - and don't let a late date scare you off. A real pro in the field will try to help a man who comes in as late as February or March for the April filing." But sort your papers in a logical, businesslike fashion before you take them in (even executives muff this). Then your adviser will be able to work faster and more effectively - and his bill will be smaller.
And note: April 15 need be no do-or-die date. If the man you hire is terribly rushed, he will get you a 30- to 60-day filing extension, though the price you pay for being late is 6% interest on the tax due.
Your big problem is to find the right tax expert. To find a good man, you can, of course, ask your company's solicitor or chief accountant to recommend someone. A business friend might be able to name a tax specialist in a leading firm of solicitors or Accountants. But your best bet probably is to find a small, top-quality outfit. The big firm - not overly anxious for the small account - will usually give you the name you want. Don't count on your family solicitor for tax advice. This is important to remember. The average solicitor in general practice is no income tax specialist - and he isn't shunting you aside if he says he's unable to handle your 1040 problems. Computerized tax services, incidentally, are aimed mostly at the specialist, not at the individual taxpayer.
If you're on the way up in terms of income and have never employed a tax adviser, it may be best to get a younger man. He'll be more interested in the smallish account. Most important, he'll be able to keep working with you in the future. But before you pick anybody, consider the scope of the service you need. There's more to it, of course, than simply filing a 1040 each April. If you want just this, it's a case of taking your papers to an accountant's office, and, barring complications, exchanging a few phone calls. This is the routine part of what you can get.
But many executives with increasing incomes and growing investments have knottier tax affairs to unravel each year. They need tax service that goes beyond the routine. This means an overall strategy, not just April 15 thinking. For example, a skilled tax man can make certain that you're getting the fullest possible advantage of all capital gains that the law allows. He can give you the tax side of investments other than securities, including everything from real estate to diamonds. He can unscramble charitable donations for you - in terms of the new 2009 tax reforms.
The point is this: You don't simply hire somebody to figure out your best possible April 15 result - after the fact. You get a tax program that - with advance planning - ensures a favourable April 15 result.
You can get into some pretty hot arguments over who can best do your tax work, a Accountant or a tax solicitor. The more candid experts put it this way: The Accountant has the top accounting credentials. There are reliable, licensed accountants who aren't Accountants, but however competent, they lack first-rank rating. A Accountant will usually have a closer knowledge than a solicitor of the details of the tax law and will give you highly skilled technical planning and paperwork. He will also know all the ins and outs at Internal Revenue. He's your skilled, pragmatic tax pro.
The tax solicitor provides similar services, but is less of a tax technician. At the same time, he offers a different advantage. He can help you with long-range tax-related affairs: estate planning, the setting up of trusts, and so on. This is a plus.
Treating the Bite That Hurts
It's surprising how much about income taxes can be packed into a few pages. Obviously nobody can review the whole tax law - point by point - in one medium-sized website, let alone in one chapter. But it's possible to signal a few warnings, and to single out some special pitfalls.
One point at the outset: There is no single, magic formula for smart tax work. There is no "inside" way to cut way down on what a man must inevitably pay to the Internal Revenue. There is no secret gimmick that a few informed tax solicitors and Accountants know about. What there is, though, is the possibility of reducing your taxes to a minimum level in a given situation.
And... see: Income Taxes