Our Philosophy on Tax Returns
We’ve been saying this for 20 years and we’ll keep saying it: a tax return is a report card, not a strategy. The strategy happens in January through December. The return just tells you how well the strategy was executed.
Think of it this way. If you wait until you’re sitting across from your tax preparer in March to ask “What can we do to lower my taxes?” – you’ve already lost. The decisions that move the needle happened months ago. Did you set up the right entity structure? Did you run payroll at the right salary level? Did you make retirement contributions before the deadline? Did you time that equipment purchase correctly? Did you elect into your state’s pass-through entity tax before year-end? Those are the questions that drive your tax outcome. The return just records the answers.
Having said that – we still take return preparation very seriously. Because even the best strategy falls apart if the return is sloppy. A missed K-1 entry, a wrong depreciation method, a state filing that gets overlooked – those things create real problems. Amended returns, penalties, interest, and the occasional unpleasant letter from the IRS (or worse, your state department of revenue). So yes, the return is the last thing we do. But we do it right.
S Corporation Returns (Form 1120-S)
This is the bread and butter for most of our business clients. If you elected S Corp status (and if you’re earning above $60,000-$80,000 in net income, you probably should have), your business files Form 1120-S and issues K-1s to shareholders. Getting this right means more than plugging in revenue and expenses. It means properly tracking shareholder basis, handling reasonable compensation, managing distributions, and making sure the return aligns with the payroll that was run throughout the year. We see botched 1120-S returns all the time from other firms. Basis issues, loan documentation gaps, distributions that exceed basis – yuck.
Partnership Returns (Form 1065)
Multi-member LLCs, general partnerships, limited partnerships – they all file Form 1065. Partnership returns are more complex than most people expect, especially when you get into special allocations, guaranteed payments, partner capital accounts, and the Section 199A deduction. If you’ve got a partnership with multiple owners doing different things, the return can get complicated quickly.
C Corporation Returns (Form 1120)
C Corps are less common among our client base, but when they show up, they tend to be complex – multiple shareholders, accumulated earnings considerations, reasonable compensation issues (from the other direction), and the ever-present question of double taxation. We also see C Corps in the context of holding companies and tiered structures.
Business Tax Prep Services
The key with all business returns is that the return quality is only as good as the bookkeeping that feeds it. Garbage in, garbage out. Period. Full stop. That’s why we push so hard on clean books throughout the year – not because we love debits and credits (well, some of us do), but because a clean general ledger makes for a clean return, which makes for a defensible return if the IRS ever comes knocking.
High-Income and Complex Returns
If you’ve got adjusted gross income above $250,000, multiple income sources, investment portfolios, stock options, or deferred compensation – your return needs someone who understands how all these pieces interact. Alternative Minimum Tax considerations, Net Investment Income Tax (the 3.8% surtax that sneaks up on people), phase-outs on deductions and credits, estimated tax payment optimization – these aren’t things you want handled by someone who primarily does straightforward W-2 returns.
Standard Individual Returns
Not every return is wildly complex, and that’s fine. We prepare individual returns for clients across the income spectrum. But even a “standard” return benefits from having a preparer who knows your full picture. Did you change jobs? Move states? Get married? Start a side business? Sell investments? Each of those events has tax implications, and catching them proactively is what separates good preparation from data entry.
Multi-State Filing
If your business has employees, customers, or property in more than one state, you likely have filing obligations in each of those states. Nexus – the legal threshold for when a state can tax you – used to be straightforward. Physical presence meant nexus. Now, thanks to economic nexus rules and the post-Wayfair landscape, you can trigger filing requirements based on revenue alone. We help clients sort through which states require filings, how to apportion income, and how to avoid penalties for non-filing in states they didn’t even know were on the radar.
Pass-Through Entity Tax (PTET) Elections
This is one of the most elegant workarounds in recent tax history. After the Tax Cuts and Jobs Act capped the state and local tax (SALT) deduction at $10,000 for individuals, states started creating pass-through entity tax elections that let S Corps and partnerships pay state tax at the entity level – effectively circumventing the cap. It’s legal, it’s IRS-approved, and it can save you thousands. But you have to elect in, and in most states, you have to do it before year-end. We make sure our clients don’t miss it.
Sales Tax Compliance
Sales tax is a different animal from income tax, but it’s increasingly landing on our clients’ desks – especially those selling products online or across state lines. We help with registration, filing, and making sure you’re collecting and remitting correctly. Because the penalties for getting sales tax wrong are not gentle.
Rental Property Returns
Rental properties generate their own unique set of tax reporting challenges – depreciation schedules, passive activity rules, material participation tests, the Section 199A deduction for rental income, and the interplay between rental losses and your other income. If you’ve done a cost segregation study (and if you own investment property, you should at least evaluate one), the accelerated depreciation needs to flow correctly through the return. We prepare returns for landlords with one property and portfolios with fifty. The complexity scales, but the principles don’t change.
1031 Exchange Reporting
If you’ve done a like-kind exchange, the reporting requirements are specific and unforgiving. The exchange needs to be properly documented, the deferred gain needs to be tracked, and the replacement property’s basis needs to be correctly calculated. We’ve seen exchanges blow up on the return because the preparer didn’t understand the mechanics. That’s an expensive mistake.
Tax Return Review & Second Opinion
Maybe you already have a preparer. Maybe you’re not sure they’re catching everything. We offer tax return reviews where we go through your prior-year return and identify missed deductions, incorrect elections, and strategic opportunities. It’s not about throwing your current CPA under the bus – it’s about making sure nothing is being left on the table. Sometimes we find $500. Sometimes we find $15,000. Either way, you walk away knowing.
