Tax season is inevitably a busy time for accountants and businesses as they rush to prepare and file documents to the Internal Revenue Service. Challenges may be on the horizon for 2015 filings. Prepare your clients and your office for the worst with tax preparation advice for clients before the looming deadline.
Taxpayers and accountants will inevitably face challenges during the 2015 tax season, according to an annual report by the National Taxpayer Advocate on AccountingWeb. The level of service is the biggest concern due to budget cuts within the Internal Revenue Service. Although service may be slower than in previous years, accountants can speed up the tax preparation process by preparing clients long before the April deadline.
The tax season should begin at least five to six months in advance for businesses and individuals who file taxes. Notify your clients during the fourth quarter to let them know that decisions made in November and December can drastically change a person's or a company's refund amount, income tax liability and tax status. Send a letter with clear-cut advice and tips for finalizing financials to avoid any surprises for your clients when it is time to file.
Contact clients via phone or e-mail in November or December to request that they begin compiling and organizing receipts, expense reports and a list of assets. Advise your clients about year-end tax maneuvers that can be implemented late in the year. Clients informed after the first of the year or while filing taxes have already missed the year-end benefits and may not remember them for the following year.
Ward off disasters during tax season by advising clients with multiple residences to obtain valid identification within a specific state and establish full-time residency. The Internal Revenue Service often investigates taxpayers and companies with addresses and locations within multiple states. Clients may also need to provide proof of residency during tax filing or audits. Suggest that they maintain utility bills and financial activity documentation within the primary state of residency. Advise your client of the benefits of moving from a high-tax state to a low-tax state months before the tax year ends.
Clients should also be aware of the financial and tax benefits of investing in mutual funds, an IRA or a health savings account before the end of the year and the beginning of the tax season. With the implementation of the Affordable Care Act, penalties for non-compliance may be weighing on the mind and bottom line of businesses and clients. Tax penalties are expected to increase from 2014 through 2016. Individuals with an annual income of $200,000 or more can also expect to pay a 0.9 percent tax rate, as of 2015.
The anticipation of a challenging tax season can be eased with proper preparation and strategic financial moves that offer gains for businesses and individual taxpayers. An accountant who plans ahead and poses helpful advice and reminders to clients provides the best service that may result in repeat business.
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