It might seem silly that I’d write to you about how to choose the right tax preparer, but think about it like this:
At the same time, there are plenty of reasons that you may find yourself looking for a new tax team – you’ve moved, you’re retired or sold your business and don’t need a big firm to handle your accounts, or maybe you’re just wanting to be “sure” your CPA is the right one for you.
Either way, I’ve created a short list detailing how I’d go looking for a new CPA if I suddenly found myself in the market for one…
- Verify their education and credentials. This might seem obvious, but all too often, I’ve seen men and women who claim to be CPAs – and might actually be competent tax preparers – who really aren’t. Remember, a tax preparer is someone who can do it, not an official title. Your best bet is to look for the education and make your decision from there – A CPA (Certified Public Accountant) has studied and graduated from a university and passed a strict series of exams to have the title. An Enrolled Agent is someone who is licensed by the IRS. They must pass a comprehensive exam, which requires them to demonstrate proficiency in federal tax return preparation, and complete 72 hours of continuing education classes every three years. Lastly, the IRS also runs a voluntary program that recognizes the efforts of tax return preparers who are not CPAs or Enrolled Agents. These men and women will hold an Annual Filing Season Program Record of Completion for these folks who obtain a certain number of continuing education hours for a specific tax year. Each of these types of credentials obviously exist along a gradient, but are the bare minimum of experience you need to look for in tax preparation.
- Check out their business record. The news is always filled with tax preparers that have been arrested for fraud or illicit activities, so take the time to check and verify that a tax preparer is who they really say they are. It might seem great if they can consistently get you a fat refund, but how are they arriving at that number? Are they signing the return or “ghosting” it? How will they represent you in case of an audit? All these things are worth checking out and can be indications of bigger challenges.
- Understand their business model. Nobody likes hidden charges, and shady tax preparation is filled with it. At the bare minimum, any firm handling tax preparation should be able to clearly explain their pricing, any hourly or additional charges, and also be able to provide a breakdown of their costs in terms of hourly or project-based pricing. It might seem obvious to many people, but the sheer number of folks who don’t ask for clarification on the fees involved with tax preparation is amazing to me – nearly every week, potential clients call to inquire about our services, but fail to ask about pricing.
- Stay on top of your game. Once you’ve chosen a preparer, you’ve still got to make sure they are doing what they’ve said they would. Common sense items like not signing a blank return, ensuring your preparer signs your return before filing it, and verifying the account and routing number any funds will be returned to all help to keep “honest people honest” so make sure your always do these.
Lastly, if you do have questions about a preparer or suspect your identity was stolen of misused, your recourse is twofold – in case of a stolen identity, you’ll want to immediately file that information with the IRS - file Form 14039 for identity theft and to report alleged tax law violations, use Form 3949-A. In instances like these, of course, you’ll want to report the problem to the right state regulatory agency as well.
Tax preparation continues to be harder for small businesses, but finding the right team to assist you with it doesn’t have to be!
All the best-
Serious real estate investors don’t rely on intuition—they rely on structured financial strategy to drive decisions and scale efficiently.
Most investors think a property is profitable if: Rent > Mortgage That’s dangerously wrong.
Bad bookkeeping doesn’t show up as an obvious expense. It shows up as: Missed opportunities Overpaid taxes Bad decisions
At some point, your business stops being “simple.” And your bookkeeping setup? It quietly starts breaking.
Taxes are your largest expense as a real estate investor. The difference between average and elite investors? Strategy. Not income.
Most real estate investors don’t lose money because of bad deals. They lose money because they don’t actually know their numbers. And not in a surface-level “I check my bank account” way— but in a true, decision-making, portfolio-optimization way. This single mistake quietly drains cash flow, increases taxes, and prevents scaling. Let’s break it down
If you own between 5–50 rental units, your biggest financial risk isn’t the market—it’s poor tax strategy and bad books.
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Ordinary Income: Ordinary income from investments includes interest, dividends, and rental income. Let's briefly explore each: Interest: If you earn interest from investments like savings accounts, certificates of deposit (CDs), or bonds, that income is generally taxable. It is typically taxed at your ordinary income tax rates, which vary based on your income level. Dividends: Dividends are a company’s earnings distributions to its shareholders. They can be classified as either qualified or non-qualified dividends. Qualified dividends, which meet specific criteria, are subject to lower tax rates similar to long-term capital gains. Non-qualified dividends are typically taxed at ordinary income tax rates. Rental Income: If you invest in real estate and receive rental income, it is generally considered ordinary income and is subject to taxation at your applicable tax rates. However, you may be able to offset this income with eligible expenses, such as mortgage interest, property taxes, depreciation, and maintenance costs. Capital Gains: Capital gains occur when you sell an investment for a profit. The taxable portion of capital gains can be further divided into short-term and long-term gains: Short-Term Capital Gains: If you hold an investment for one year or less before selling it, any profit you make is considered a short-term capital gain. Short-term capital gains are taxed at your ordinary income tax rates. Long-Term Capital Gains: Investments held for more than one year before being sold may qualify for long-term capital gains treatment. At the federal level, the tax rates for long-term capital gains are generally lower than ordinary income tax rates and vary based on your income level. At the state level, while a handful of states tax such gains at a lower rate than the state ordinary income tax rates, most states tax all income, regardless of type, at the same rate. Net Investment Income Tax: In addition to regular income taxes, certain high-income individuals may be subject to the Net Investment Income Tax (NIIT). The NIIT is a 3.8% federal tax on the lesser of your net investment income or the excess of your modified adjusted gross income (MAGI) over a specific threshold: • For single or head-of-household filers, the threshold is $200,000. • For married couples filing jointly, the threshold is $250,000. Net investment income includes interest, dividends, capital gains, rental income, royalties, and passive income from businesses. It is essential to consult with a tax professional to determine if you are subject to the NIIT and how it may impact your tax liability. Strategies to Minimize Investment Income Taxes: While taxes are a necessary part of investing, there are strategies you can employ to minimize their impact: Tax-Advantaged Accounts: Consider investing in tax-advantaged accounts like individual retirement accounts (IRAs), 401(k)s, or Health Savings Accounts (HSAs). These accounts offer tax benefits that can help reduce your overall tax liability. Tax-Loss Harvesting: If you have investments that have decreased in value, you can sell them to offset capital gains from other investments. This strategy, known as tax-loss harvesting, can help reduce your taxable income. Holding Periods: By holding investments for more than one year, you may qualify for the lower long-term capital gains tax rates. Donating Stocks to Charity : By directly donating appreciated stock (that has been held long-term) to charity, you don’t have to recognize a taxable capital gain, but you can still receive a charitable contribution deduction for the fair market value of the stock (if you itemize deductions). This allows for a much greater tax benefit than if you sell the stock and then donate the funds, because you will pay capital gains tax on the gain from the sale!
What Are Cryptocurrency Taxes? Cryptocurrency taxes are the taxes that you owe on any gains or losses that you realize from the sale or exchange of virtual currencies. The IRS treats cryptocurrencies like property, which means that any gains or losses you generate are treated as capital gains or losses (just like when you sell stocks, real estate, or other capital assets). How Do Cryptocurrency Taxes Work? Cryptocurrency taxes work similarly to other capital gains taxes. If you sell or exchange cryptocurrency at a profit, you'll owe taxes on that profit. If you sell or exchange it at a loss, you may be able to deduct that loss to reduce your overall tax liability (although there are certain limitations when claiming capital losses). The amount of tax you owe on your cryptocurrency gains depends on how long the cryptocurrency has been held since the initial acquisition - if you own it for less than a year, your gains will be considered short-term and taxed at your ordinary income tax rate. If you hold it for more than a year, however, your gains will be taxed at the long-term capital gains tax rate, which is generally lower than the ordinary income tax rate. What Do You Need to Do to Comply with Cryptocurrency Tax Laws? If you've invested in cryptocurrency, it's important to understand how to properly report your gains and losses on your tax returns. Here are some steps you can take to ensure that you abide by the law: • Keep Accurate Records - The first step is to keep precise records of all your cryptocurrency transactions. Keeping track of the gain or loss from virtual currency trading is easy if you are using a broker that issues you Form 1099-B (Proceeds from Broker and Barter Exchanges). However, if you don't use a broker who keeps records of your trading activity, you will need to do so on your own. This means that you must keep track of the following: •Purchase Date •Purchase Price •Sale Date •Sale Price Don't forget that sales aren't the only form of taxable transactions. You must report the disposition of a virtual coin if it's sold for cash, traded for another cryptocurrency asset, or used to buy something. It's also important to note that virtual currency splits can create ordinary income, as can airdrops, mining, and staking. • Report Your Gains and Losses on Your Tax Return - When you prepare your tax return, you'll likely need to report your cryptocurrency gains and losses on Form 8949, Sales and Other Dispositions of Capital Assets. You'll also need to include the total amount of your gains or losses on Schedule D of your tax return. • Pay Any Taxes Owed - If you owe taxes on your gains, you'll need to pay them when you file your tax return (and they will be included in your overall tax liability on ALL taxable income). If you don't pay your taxes on time, you may be subject to penalties and interest charges. Conclusion As cryptocurrency continues to become a more popular investment vehicle, it's important to understand how to properly keep track of and report your gains and losses on your tax returns. The IRS is cracking down on these types of transactions, and you don’t want anything to come back and bite you later! As always, if you're unsure how this applies to your specific tax situation, please consult with a tax professional.