Add it Up

Congratulations if you’ve already filed your 2017 tax returns. Better buckle up; your 2018 return could be full of surprises. As you’ve probably heard by now, the new federal tax law features different tax brackets, deductions, calculations, exemptions and more.

“The rules have all changed,” says Peter LaForte, CPA, the owner of LaForte Financial Services in Stamford and Fairfield. “For people with high state and local taxes, it’s not going to be pretty. We’re going to get clobbered.” Now is the time, he says, to step back and crunch some numbers for 2018. Ask yourself, “Is what I’ve done the best way forward?”

You don’t have to do this alone. That’s what your trusty accountant is for. If you have one, that is. Many financially savvy Fairfield County residents pride themselves in DIY money management, serving as their own financial planners or tax-filers. Others rely on that same family friend who’s been filing their taxes for years. But these might not be the smartest paths to prudent post-tax-reform planning. It’s time for a reckoning.

Ask LaForte what makes a good accountant and he’ll set you straight. “The question is, what makes a good accountant for you? The answer depends on your needs.”

Accounting is a wide-ranging field, with experts in estate planning, small business, audits, corporate work and more. “Hopefully, the CPA knows what he can and can’t do. It’s like choosing the right doctor.”

Start with a recommendation. Ask your friends, family members, financial adviser, banker, attorney or colleagues. Then check the provider’s credentials. “Are they a CPA? Do they maintain their license? You can do this easily online through the Connecticut Board of Accountancy’s e-license lookup. If not, it doesn’t mean they’re bad. But you want to know.”

Don’t cold-call these folks just yet; give them a few weeks to recover after the April 15 filing deadline. Come May, call a few and see who gets back to you. LaForte says his new clients commonly complain that their former accountant went MIA after tax season and didn’t reemerge until fall. “Or they say, ‘I’m not important enough for him. I’m not big enough for him. He doesn’t answer my phone calls.’”

Ask to visit. “Accounting is very personal. Meet him or her in person. Get a feeling of the vibe of the office—some places are complete chaos with huge piles of stuff everywhere!”

Bring your tax returns from the previous two or three years, and ask questions that relate to your situation. If you’re self-employed or have a small business, if you have a lot of capital gains and losses, if you have rental property—all of these factors can tax the wrong accountant. The right one, though, will be eager to help you improve your bottom line. “If you don’t feel comfortable that this person understands you and your needs, keep looking,” LaForte says.

Understand how much the service will cost you, and what you’ll get in return.

Whatever you do, don’t assume tax reform won’t affect you. “The first person I did a projection for…went from itemized deductions in the $70,000-ish range to $24,000, the new standard deduction,” LaForte says. “We have multiple moving parts here. You have to piece it together.”


ASK YOURSELF…

“Did you get the service, time and advice you needed? Did someone help educate you? Did they seem happy to work with you? Did they make themselves available? Were they competent?”“Did you get the service, time and advice you needed? Did someone help educate you? Did they seem happy to work with you? Did they make themselves available? Were they competent?”
–PETER LAFORTE


NEED TO KNOW NOW

EVERYONE

TAX DEDUCTION
The total deduction for state and local taxes (property, income, sales, etc.) is now capped at $10,000 annually.

STANDARD DEDUCTION
The standard deduction increases to $12,000 for singles and $24,000 for married couples filing jointly, up from $6,350 and $12,700.


HOMEOWNERS

MORTGAGE INTEREST
Mortgage interest deduction is capped at $750,000, versus $1 million in 2017.


PARENTS

529 Savings Plans
These plans can be used to pay for kindergarten through high school, in addition to college and grad school.

 

 

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