At a glance
Councilor recognized that an attorney’s taxable income was overstated due to previously omitted pass-through entity (PTE) and foreign tax credits. By accurately claiming these credits, Councilor significantly reduced the attorney’s tax liability.
Challenge
An attorney, earning income across multiple states and countries, suspected their tax liability was too high. After receiving no response from their accountant, they turned to Councilor for guidance in ensuring the accuracy of their taxes.
Solutions
Councilor’s professional services team conducted a thorough review of the attorney’s tax filing. The review uncovered an overstatement in the tax liability. The attorney’s previous accountant failed to properly apply pass-through entity tax credits including a Maryland credit for PTE paid in other states. They also omitted a foreign tax credit the attorney qualified for and neglected state add-backs for various adjustments. Councilor identified and corrected these errors, ensuring the partner greater accuracy in the attorney’s filings.
Outcome
Councilor claimed the attorney’s PTE tax credits in nonresident states and the resident state’s tax credit for PTE paid to other states. The PTE credits lowered their state tax liabilities by $30k. Additionally, Councilor applied the available foreign tax credit, reducing their U.S. tax liability by $21k. Councilor added back various required state additions which improved the accuracy of the attorney’s stated income and reduced their exposure to potential penalties. Councilor’s thorough review of the attorney’s available credit and deduction opportunities saved the attorney from overpaying in the initial filing and in the years going forward.
Questioning the Accuracy of Your Tax Filing? Give Us a Call
Councilor knows how important it is for attorneys that their taxes are filed properly. That’s why we take the time to thoroughly examine your returns for accurate income reporting and the application of available credits. Contact our professional services team today for a consultation about your unique tax needs.
