Folks normally assume that speaking with a tax attorney means they're in for a fight with the IRS. Although that's certainly one reason to talk with a lawyer, it's far from the only time you should consider talking to one.
How often should you consult with a tax attorney, though? Here are four ways you can determine if it's time.
Major Changes in Income
Tax attorneys can tell you how to navigate the potential pitfalls of moving into a different tax bracket. If you just got a promotion that bumps you up significantly in income, for example, it's a good idea to think about the tax implications. You might need to look at more deductions to offset some of the bill.
Similarly, downward shifts in income matter too. For example, someone preparing for retirement should think about tax-preferred strategies for investing today in a way that defers tax obligations to their retirement years. This can move the tax hit into years where they have less income, ultimately reducing what they're likely to owe.
Opening a Business
You'll need to keep tabs on the money moving in and out of a new business. While it's important to think about profits and losses, it's also just as necessary for you to consider outflows from taxation. Tax obligations arise from a host of factors, including how a company is charted. You should speak with a tax attorney to learn which structure is right for your new business.
Foreign Income
The government takes a distinct interest when people make money overseas. On the upside, you're allowed to deduct many types of taxes paid to foreign governments on such income. You might even end up with no U.S. tax bill if the other country collects more than you'd have to pay to the American government. However, you'll still need to track the tax payments and report them to the U.S.
New Tax Laws
One of the biggest reasons to at least touch base with a tax attorney once a year is to learn about new laws. Most of the time, these have fairly small influences on tax bills. However, you might see an increase if the government ends an old deduction.
Similarly, there might be a shift that favors something you want to do. For example, a person who wants to install a solar power system on their house will also want to check out potential local, state, and federal credits. Keep up with the codes and try to plan your financial decisions around these changes.
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