Keep your accountant on their toes and check your returns. You should always check your income tax returns before signing and ask your accountant about any questions you may have. Accountants are people too and mistakes do happen, so make sure to at least take a glance at your returns before signing.
I wanted to point out one thing that is often easily missed by accountants. Did you know that Arizona offers a credit for taxes paid to another state or country? Most people and accountants know about the tax paid to another state, but it is all too often that taxes paid to a foreign country get missed on the AZ income tax return. Typically it is overlooked because the amount is small and most likely came through on your brokerage account. Most clients don’t even realize they have foreign taxes paid, but there is an easy way to check. Look on your federal income tax return to see if you have a federal Form 1116, which is the form to claim a foreign tax credit on your federal return. Or just check line 48 of your 1040, because federal Form 1116 may not be required to file. If you have a federal foreign tax credit then you probably should have an AZ Form 309 as well (assuming you’re an AZ resident). If not, you may want to ask your accountant –why not?
This could be big or small amount, but a credit is a credit. Let me repeat this, a CREDIT*, NOT a deduction. This is one item on your AZ income tax return that you can check at a glance to make sure it wasn’t missed. Who knows, you may surprise your accountant and catch something that they may have missed.
*A credit is dollar for dollar reduction in your overall tax liability.
By Chris Morrison, CPA