Mark Twain once said that the “only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.” Now, now, Mr. Twain. Someone whose only money-making invention was a self-pasting scrapbook (so says PBS.org) perhaps would have had more meat left had he known better to prepare for tax time and ask questions beforehand, no? Just sayin’.
So, we asked CPAs Fred Slater and Ellen Minkow, partners in MS 1040 LLC in New York, just what clients should be doing and asking months before that unavoidable April 15 deadline—as in, now.
What are the best ways to get organized for tax season?
Ellen: At this time of year, your mail starts getting heavy with investment information. People get concerned about capital gains, offsets of losses, taxable dividends and interest, and IRA distributions. And people who have married can be in a different [financial] situation than they were before. If someone died, you have issues concerning income changes, Social Security, IRAs and pensions.
They should do what’s like a health checkup to make sure what’s needed to be done all year has been done or should be done if it hasn’t.
They’ll get their tax organizers in late December but that’s already too late. I do a Thanksgiving letter. It wakes people up: What are you thankful for this year and do you have any changes you want to discuss?
Fred: From the accountant’s viewpoint, look at who prepared their returns last year. Did they have trouble getting information from the client? Should the person be getting financial planning? You don’t see this as much with high-end clients because they know there’s an advantage to preparation. But those who make more than $100,000 but less than $350,000 don’t always see the advantage or understand that by doing a little of the work in November and December with the accountant is beneficial for both.
What issues arise over a state of residence? Can your client prove it?....
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Source: Terry Sheridan (www.accountingweb.com)
