Documents such as 1099s, and W2s will soon be arriving in our mailboxes and tax preparation will get underway. Here are some questions you might want to ask your tax preparer as you meet with him or her:

1. What changes in the tax law have been enacted during 2016 that will apply to my situation and affect my tax liability?
2. How do changes in my family makeup change my tax situation?  Of course births, adoptions, deaths, marriages, separations, and divorces can all have an impact. You should also consider the importance of you or one of your dependents reaching a certain age-milestone. Some key ages to consider are: 18, 19, 24, 26, 59 1/2, 65, and 70 1/2. If anybody in your family passed one of these milestones, be sure to bring it up and ask whether it impacts you this year.
3. How will a major purchase, such as a car or additional residence, affect my taxes?
4. Do I have any remaining loss carryforwards from last year that I might take this year? Net operating losses, capital losses and charitable contribution carryforwards can be significant and important to reducing taxes this year.  Typically, preparers will keep track of the carryforwards for you, but it is still worth asking this question, especially if you have a different preparer this year.
5. Am I eligible for ROTH conversion this year–and is it recommended?  A ROTH conversion allows you to convert a traditional IRA to a Roth and avoid future taxes and required minimum distributions. The ability to do a conversion is dependent on income.  Advisability is another question. The drawback is that all the taxes have to be paid in the year of conversion.
6. Should I increase my retirement plan contributions?  In many cases, final contributions are allowed to be made up until the time of filing the tax return or its due date.  Don’t forget the catch-up provisions for those age 50 or older.
7. Am I eligible to setup and make contributions to a SEP, SIMPLE, or solo 401(k)?  These retirement plans generally allow for larger contributions than a traditional IRA.
8. Do you have any recommendations for reducing my taxes this coming year?
9. Should I change my tax withholding and/or estimated payments for the current year?  If you owe taxes, most professionals will recommend that you increase your withholding to a level that will preclude a penalty for next year. Usually that is 100% or 110% of last years actual tax bill. However, if your income is expected to drop, some preparers are reluctant to advise that you withhold or pay in less than last year for fear that doing so would cause a penalty.  If you expect changes in income, up or down, those changes should be discussed with your preparer and appropriate adjustments be made.
10. How can I authorize you to discuss my tax return with my financial advisor?  Conversation and open information sharing between tax practitioners and investment advisors can assist in minimizing your tax burden. Written authorization is now required to enable tax preparers to disclose any information about your tax return with other parties, including your financial advisor.  Obtaining that authorization while the return is being prepared will eliminate having to go back and do it later.

January 3, 2017