Tax Advice

8 Smart Questions to Ask a Tax Accountant at Tax Time (U.S.)

If you Google the phrase “questions to ask tax accountant” you’ll be inundated with list after list of questions and articles that might not pertain to business owners like yourself. To give you a hand, we spoke to accountants (we know a few 😉) and created this focused list to give you the 8 most important things you should ask accountants or tax preparers come tax time.

And, if you don’t talk to your accountant very often, maybe it’s time to start. Your accountant can provide strategic tax advice, answer your income tax questions, and educate you on the most relevant tax changes every tax season. This helps them help you make the best decisions for your business, not just as part of tax planning, but year-round. And of course, they will help you get the best tax refund possible on your tax return.

Treat your next meeting with your tax adviser as an opportunity to not just file your income taxes or chat about tax credits, but to make sure you’re getting the support you need to continue growing in the years to come.

Here are 8 questions to use as a starting point with your tax professional, so they can give personalized answers to guide you through the tax preparation process and beyond.

1. What Information Do You Need From Me?

There’s a good chance your tax preparer will contact you well in advance of tax season asking for specific information, but if not be proactive!

No one wants to drag out the process of filing taxes when really, you just want your tax return, being organized is the best first step to prepare for tax season. Ask your accountant what they need from you and get prepared as early as possible.

Organize your receipts, financial statements, tax return forms, and any additional forms you might need, and then get up to date with your bookkeeping. They will probably want things like income statements (Profit and Loss Report), Balance Sheet, Cash Flow Statement, and many other reports necessary to file your taxes.

All of this won’t necessarily lower your total tax bill, but having it on hand will help reduce the back-and-forth with your accountant or tax preparer, and make it easier for them to find tax credits and deductions that might apply to you.

You can also link them to your FreshBooks account with unique accountant access, so they can generate the free tax reports that they need.

2. What Are the Rules for Some Common Business Deductions I Can Make?

As a business owner deductions are king! You can deduct certain expenses from your federal income taxes to reduce your tax liability, which means you pay less in taxes and get more back on your return.

You won’t want to forget to take all of your allowable deductions! Your accountant knows your business and can offer tax advice on which deductions you should be able to take. Identifying and tracking deductions year-round should be a big part of your financial planning to ensure you get the most out of your tax returns.

Some common tax deductions you might have are:

Home Office Deduction

Assuming you’re self-employed, you may run your business from home. If so, you may be able to take an income tax deduction for the amount of space in your home that is occupied by your business. To qualify, you’ll need a separate space regularly used exclusively as an office.

Internet and Cell Phone

If you use the internet and a cell phone for your business, you can claim them as a business deduction. But keep in mind that if you use your internet and your cell phone for both business and personal use, you can only deduct a portion of your bill from your taxable income—more specifically, the percentage that is allocated to your business.

Travel Expenses

If your business has you on the road, you can take an income tax deduction for travel expenses that take you away from home. Your accountant can give you more advice on what’s allowed, but some deductible things are your transportation, lodging, and meals, which will all help create a healthier tax return. Keeping an organized list of itemized deductions or using accounting software to track expenses can really save time at tax time.

Vehicle Expenses

Do you drive your car for your business often? You’ll likely be able to take a deduction for the business use of your car. The Internal Revenue Service (IRS) allows you to choose the method that makes the most sense (standard mileage rate or actual expenses). Work with your accountant to pick the best approach to reduce your taxable income, and how to properly track these itemized deductions.

3. Do I Qualify for the Qualified Business Income Deduction?

The Tax Cuts and Jobs Act (TCJA) brought about more tax efficiency and many new changes for business owners. One big change was the qualified business income deduction. The qualified business income (QBI) deduction allows some sole proprietors, S corporations, partnerships, trusts, and estates to deduct up to 20% of their qualified business income.

There are deduction limitations and tax brackets based on your income, but tax professionals can provide more information on whether you qualify for the deduction based on your tax situation and how much it will be.

4. What Are Some of the Other Changes from the TCJA I Should Know About?

The QBI wasn’t the only change that came from the TCJA. You’ll want to ask your accountant about other changes that affect your business. A few changes that may impact you include:

Meals and Entertainment Deduction

As of 2024, small businesses can deduct 50% of eligible business meal expenses. These include meals with clients, during business travel, or provided to employees during meetings. However, stricter documentation requirements under the Tax Cuts and Jobs Act (TCJA) mandate detailed records of the business purpose, attendees, and nature of discussions.

The temporary allowance to deduct 100% of restaurant-purchased business meals for the 2021 and 2022 tax years has expired. Meal expenses, whether purchased at restaurants or elsewhere, are now back to being 50% deductible unless they fall into specific categories of fully deductible expenses, such as:

• Company events: Expenses for team-building activities or employee-only events, such as holiday parties, are fully deductible.
• Public food giveaways: Meals or snacks provided at public events for promotional purposes are also 100% deductible.

Entertainment expenses, like tickets to sporting events or shows, remain non-deductible. However, meals purchased separately during these events may still qualify for a 50% deduction if appropriately itemized on receipts.

Always keep itemized records for review with tax experts and for audit purposes, including receipts, dates, and descriptions of business purposes. This can ensure compliance with tax law and can maximize allowable tax deductions.

Bonus Depreciation

Bonus depreciation, which previously allowed 100% deductions for qualifying property, is in a phase-out period. As of 2024, bonus depreciation is set at 60% which means businesses can immediately deduct 60% of the cost of eligible assets purchased and put into service. By 2027, bonus depreciation will no longer be available. This phase-out applies to assets such as equipment, software, and other tangible property with a recovery period of 20 years or less under MACRS.

For businesses needing accelerated tax benefits, Section 179 deductions remain an alternative. In 2024, Section 179 allows for immediate expensing of up to $1,220,000, with a phase-out threshold starting at $3,050,000 of total purchases.

Sound a little confusing? Not to worry, that’s why you’ll be discussing it all with your tax professional.

Net Operating Loss (NOL) Carryforward

Currently, businesses can no longer carry back NOLs but can carry them forward indefinitely to offset future taxable income. The carryforward amount is generally capped at 80% of taxable income for a given year. The temporary changes under the CARES Act allowing carrybacks for tax years 2018-2020 have expired, making the indefinite carryforward rule the standard.

Your tax time meeting with your accountant is an opportunity not just to file your taxes, but to make sure you’re getting the support you need to continue growing your business in the year to come.

5. What are Some Common Tax Credits For Small Businesses?

Small businesses in the U.S. can take advantage of various tax credits to reduce their tax burden and reinvest savings into their operations. Common credits include:

1. Research and development (R&D) tax credit: Encourages innovation by offsetting costs related to developing or improving products, processes, or technology.
2. Work opportunity tax credit (WOTC): Provides a financial incentive for hiring individuals from targeted groups, such as veterans or long-term unemployed individuals.
3. Small business health care tax credit: Covers up to 50% of health insurance premium costs for small businesses that provide coverage to employees and meet certain criteria.
4. Energy-efficient commercial buildings deduction: Rewards businesses for making qualifying energy-efficient improvements to their facilities.
5. Disabled access credit: Helps businesses offset expenses associated with making their facilities accessible under the Americans with Disabilities Act (ADA).

These credits not only reduce taxes but also encourage practices that drive innovation, inclusivity, and sustainability. To determine eligibility and optimize savings, talk to your tax professional.

6. Anything Else I Can Do to Reduce My Tax Liability and Improve My Return?

This is probably one of the most popular income tax questions. While the tax preparation process will likely be over by the time you meet with your accountant, you may still be able to reduce your tax bill. Talk to your accountant about what other options are available to you. One of the most common ways to reduce your tax liability after the tax year is over is to contribute money to an individual retirement account (IRA) or Simplified Employee Pension (SEP) IRA.

Talk to your accountant to see if this is a strategy you can use and how much you can contribute to your retirement account. There are contribution limits based on tax bracket, your business income, and age, but it’s a great way to improve your tax return.

7. How Can I Improve My Tax Planning This Upcoming Year?

Working with a certified public accountant isn’t just about filing federal, state, and local taxes. A good accountant knows more than just the tax code and can offer tax advice and help you strategically plan for a healthy business in the years to come. Ask your accountant if they offer advisory financial services on top of preparing tax returns to help you assess and grow your business.

You may specifically want to ask them about:

Cash Flow Analysis to Help Find Opportunity Areas

If you’ve ever nervously checked your bank account, you know that cash flow can be one of the most difficult aspects of running a small business. Your accountant can likely help you analyze your cash flow issues and suggest tax tips and improvements so you don’t feel the crunch each month.

Financial Forecasts and a Business Budget

Do you know where your business is headed? Your accountant should be able to help you put together financial forecasts for the upcoming year. You may also want to ask them to help you create a budget so you can make informed decisions about where and how to spend your money, and invest in your business throughout the year.

Advice on Estimated Tax Payments

Are you sending enough money to the Internal Revenue Service each quarter for your taxes? Send them too much and your tax refund money essentially becomes an interest-free loan for the government that year. Send them too little and you could owe money plus run the risk of facing an underpayment penalty. Your tax preparer can look at your current taxable income and your projected taxable income to ensure that you’re sending the IRS the right amount each quarter this year.

8. Is This Still the Right Business Structure for Me?

Depending on how your business is growing, it may be a good idea to determine if the business structure you have is still the most advantageous for you. If you started as a sole proprietor, it might be time to discuss whether becoming a limited liability company (LLC) or an S-corporation would be a better choice.

Or perhaps you are an LLC, but for income tax purposes, being taxed as an S-corporation might bring you substantial savings. If you’re planning to take on investors, it also might be time to look at incorporating. Talking through your business plans with your accountant can help you assess whether your current business structure is still the right choice.

Ask the Right Tax Questions to Get the Most out of Your Accountant

Meeting with your tax preparer is an opportunity that you should take advantage of—not something to rush through or avoid. Beyond filing taxes to get the best tax return possible, they can help you make sense of the income tax rules and the numbers needed to help you grow your business, as well as personalized tax advice for more complex tax situations.

Make use of this relationship to ask the most pertinent tax preparation questions you have. It’s always helpful to have another adviser in your corner.

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This post was updated in December 2024.