4 Steps to Avoid Complications During Tax Season
Tax season can be extremely stressful with the vast amounts of work that have to be done as a tax professional. At the same time, it can be extremely rewarding and a chance to show new clients what you're capable of. If you want to do your best this tax season, here are four things to avoid complications.
1. Ask Plenty of Questions One of the most common mistakes that tax professionals make is not getting in depth enough with their clients. Many people simply don't know all the different areas of the tax code and because of this, they may not think to bring up an important detail to their tax professional. If you don't think to ask the question, there's a good chance that your client isn't going to tell you about it. If you are going to associate your name with a tax return, you must do the best you can to uncover all the details of your client's financial lives.
2. Understand the Deductions The tax code is full of items that can be deducted as a business expense. If your client does anything other than work as a W-2 employee, there's a good chance that many of their expenses can be deducted from income. The benefit of this can be substantial, as it may significantly decrease a client's taxable income. At the same time though, don't
take for granted that someone wants to decrease their taxable income. Ask questions to find out the client's preferred tax strategy in case they need to show a high income for an upcoming loan approval or some other factor.
3. Guard Client's Sensitive Information Carefully Tax season is one of the biggest times of the year for identity theft. With so much sensitive information being transmitted to the IRS, it's easy for identity thieves to assume identities and commit fraud. It's up to you to ensure that all of your client's personal data is secure. Don't leave client's records out in the open and always keep them locked up when not using them.
4. Allow Enough Time to Make the Deadline It's easy to put things off to handle later. Humans are natural procrastinators and if we can do something later, it's likely to get pushed off. When you have many clients you have to plan ahead enough to make sure that you have the necessary resources to get them all taken care of by the April deadline. If there are any clients that aren't going to have their documents together in time, it may be wise to talk to them about filing for an extension with the IRS. By strategically working with some clients to extend their filing deadline, while also getting things done well before the filing deadline, it increases your chances of success. Overall, tax season will undoubtedly be the busiest time of the year for any tax professional. How you handle it can separate your business from the masses of professionals that tax payers have to choose from. William Doonan is a tax law and legal expert in New York.