What Does a Personal Accountant Do for You?

A personal accountant serves as a dedicated financial professional, offering tailored services to individuals and families. Their overarching role involves analyzing financial records, tracking income and expenses, and managing liabilities to promote financial well-being. They assist clients in navigating various financial complexities, ultimately helping them make informed decisions regarding their money. Personal accountants can work independently, for accounting firms, or financial planning firms, adapting their services to meet diverse client needs.

Tax Services

Personal accountants provide comprehensive tax services, beginning with the preparation and filing of annual tax returns. They identify eligible deductions and credits, which can significantly lower an individual’s taxable income and potentially increase their refund. Common deductions include mortgage interest, student loan interest, health savings account (HSA) contributions, and self-employment expenses. Tax credits, such as the Earned Income Tax Credit (EITC) or the Child Tax Credit, directly reduce the amount of tax owed, dollar-for-dollar.

Beyond annual filings, personal accountants engage in proactive tax planning strategies for future years. This involves analyzing an individual’s financial situation to minimize tax exposure. They advise on income tax planning, such as deferring income or accelerating deductions, and capital gains tax planning. Ensuring compliance with federal tax laws and regulations is a continuous effort, as accountants help clients maintain accurate financial records to avoid penalties and audits.

Financial Planning and Management

Personal accountants extend their expertise to broader financial planning and management, helping individuals gain control over their financial lives. They assist in budgeting and cash flow analysis, meticulously tracking income and expenses to provide a clear overview of financial health. This detailed analysis helps clients understand where their money is going and identify areas for improvement.

These professionals also guide clients in setting and achieving various financial goals, such as saving for a down payment on a home, funding education, or planning for retirement. They help organize personal financial records, advising on what documents to keep and for how long, ensuring that important information is readily accessible and securely stored. Additionally, personal accountants can provide guidance on managing personal debt, helping clients develop strategies to reduce liabilities and improve their overall financial position. It is important to note that while accountants offer guidance on financial structure and goal setting, they typically do not provide specific investment recommendations; that role generally falls to licensed investment advisors.

Handling Unique Financial Needs

Personal accountants offer specialized support for unique or complex financial situations. They can provide support during an IRS audit or other tax inquiries, helping clients understand the process, gather necessary documentation, and represent them if authorized. This assistance is especially valuable given that audit rates can vary by income level and often require detailed record-keeping.

Accountants also offer guidance during significant life events that have substantial financial implications. This includes navigating the financial complexities of marriage, divorce, or receiving an inheritance, where asset division, tax implications, and financial adjustments are paramount. For instance, they can help assess the tax basis of assets during divorce or trace commingled inherited funds. They also assist with the financial aspects of selling a major asset, such as a home, by considering potential capital gains taxes and applicable exclusions. They can also provide basic estate planning support, helping to organize financial documentation for wills and trusts, ensuring a smooth transfer of assets without providing legal advice.