The following is a list of questions you should expect to answer from your tax advisor:
1) Do I need to be worried about being audited?
2) How can I avoid the audit lottery?
3) What do I do if I get audited?
4) What should my asset allocation be?
5) What’s the best way to convert my retirement accounts?
6) Can I structure an LLC to avoid self employment taxes?
7) What should my charitable giving strategy be?
8) What’s the best way to take advantage of new opportunities in cryptocurrencies?
9) Is it better to pay off my mortgage or invest the money elsewhere?
10) Should I buy a house, or pay off student loans and invest in stocks instead?”
It is the mark of an instructed mind to rest satisfied with the degree of precision which the nature of the subject permits and not to seek exactness when only an approximation of the truth is possible.
This quote from Albert Einstein’s 1921 Nobel Prize lecture is a good motto for your tax advisor. Einstein didn’t know anything about taxes, but he was right about what it is that tax advisors do.
Einstein’s description of an “instructed mind” might sound like a tax advisor who knows everything there is to know about taxes, but that would be someone who has read every word in every book ever written on taxes. That person doesn’t exist, although I have seen a lot of tax returns signed by people who act like they might be that person.
The educated person knows there are limits to what you can know. The tax advisor who thinks she can tell you everything you need to know about taxes probably doesn’t really understand taxes very well.
The knowledgeable tax advisor will always tell you what she doesn’t know, or at least what areas she isn’t expert enough in to give advice. She won’t try to sell you something just because it fits your facts; she will only recommend things she thinks will really help you achieve your goals. And she should never
Tax is an important part of doing business. It can be complicated and confusing. There’s a lot of jargon and legalese that makes things even more difficult to understand.
Here are some tips to make sure you’re getting the best possible advice:
1) Make sure your tax advisor is licensed by the state. Check the list on the IRS website at http://www.irs.gov/licenses/index.html
So let’s say you are a tax advisor, and you have a client who is interested in buying some art. You should expect to get an email like this:
Dear Tax Advisor, I am an Associate Professor of Cognitive Linguistics at the University of Pennsylvania. I recently inherited a collection of paintings from my grandmother, who was an avid collector. However, I am particularly interested in acquiring a piece (or pieces) by the artist “X.” I have already been in touch with several galleries and private dealers, but I have found their fees to be exorbitant. On the other hand, I would like to avoid auction houses if possible because of their fees and the lack of guarantee concerning authenticity. Since you have a background in high-end art collecting and deal with many reputable dealers and private collectors, can you advise me on how best to proceed?
Would you be willing to help me with this matter?
Jane Q. Public
Now that’s a question you want to answer!
The Tax Advisor is an explainer. Our goal is to translate the tax code into plain English, so that you can understand it.
We provide answers to common questions, and a deeper analysis of the questions that don’t get asked as often. If you want to know what the law says, or how it applies to your situation, we are here for you.
We are also interested in discussing proposals for change. As a nonprofit organization we publish everything we do as open source software. You can read through our analysis to see if it’s rigorous and independent, and if you care about any particular question we’ve studied, you can contribute your own analysis to help inform future debate.
There are as many ways to use money as there are people with money. The more you have, the more complicated your finances become. You need help.
If that help isn’t from a person you trust and respect, you’re wasting your money. No one specializes in helping people with their specific financial situation. If someone gives you advice about your taxes, for example, and it’s not advice you would give yourself, what reason do you have to believe he is competent to advise you about anything else?
A good advisor is an expert in his field. A good advisor has a unique set of skills that make him particularly suited to solve problems for your particular situation. A tax accountant who knows nothing about stocks shouldn’t be giving stock advice. A lawyer who doesn’t know much about the internet shouldn’t be advising clients on how to write up S-corporation agreements or offshore trusts.
If this sounds like common sense, it’s because it is. People are generally sensible enough to ignore unsolicited financial advice from random strangers on the internet. They might not ignore advice from someone they’ve heard of and whose opinion they respect.
The problem with the art market is that it is too easy to buy art. The art business has found a way to take money from people who don’t have enough sense not to part with it.
All you need is money. You don’t need to know anything about art, or about whether you’re getting a good deal, or about what you’re going to do with whatever you buy. Art galleries and auction houses have become expert at separating people from their money.
If you want to buy art as an investment, there are plenty of people who will be happy to take your money and give you advice. It’s only fair that they should warn you: the track record for their advice is poor. The art market is like a casino; the house always wins in the long run, but individual players sometimes win big in the short run.
If you want to buy art as something to look at and enjoy, there are also plenty of people who will be happy to help you spend your money. There are even a few people who will help you spend it wisely; if you find one of them, treat her well.* But be careful: most of them make it clear that they think looking at pictures is an activity for morons. They’ll try to prove