It happened again
I’m endlessly optimistic by nature, but even I reach a point where I just have to accept that some things will always be the same. And with the tax filing season ramping up, here’s what I’m trying to resign myself to: clients will never fully understand their tax documents…
You may think that’s obvious. You might even think “Steven, that’s exactly why CPAs like you have a job, why are you complaining?” But here’s why it matters: tax reporting documents like 1099s DON’T provide all the information a tax preparer needs to file an accurate tax return. So if all the CPA gets is the default tax form at the end of the year and the client isn’t even aware what may or may not have been reported, the chances something gets missed or reported incorrectly are pretty high. Even for a single taxpayer, with any luck they will file 50+ tax returns in their life, that’s a lot of chances for something to get missed.
And, of course, the IRS is more focused on the money you OWE THEM as opposed to any money they might owe you, so getting a tax form wrong in your favor will almost always get caught, a mistake in the IRS’s favor could get missed forever. You might not see it because you aren’t preparing tax returns, but we come across situations every single year where clients would have double-paid taxes if it wasn’t for the proactive relationship we have with the Financial Advisors we work with.
Already this week, I was on a call with a client who was convinced that I had everything I needed to prepare their tax return because “you have the 1099s from Schwab, that’s everything you need!”. The RTS team knows (aka it’s built into our process) to reach out to the advisor in these situations but most tax preparers aren’t doing that. Thankfully, this advisor had already given us the context for the situation, and we were all set.
1099s are hardly the only culprit, but they can create some real problems. Best case scenario, you are sending information to your clients tax preparers when planning takes place and then following up with a 1099 letter right before tax season. Even if you didn’t take those steps for this year, you can still add value and be a resource for your clients by simply letting them know you are happy to be a resource for them. That may sound overly simplistic, but taxes are a mystery to most of your clients and the simple act of saying, “We’re happy to answer any questions your tax preparer has on the accounts we manage for you” can completely change your clients experience at tax time.
It’s the little things, consistently applied over time, that make the biggest difference.
Happy Tax Planning!
P.S. It is tax filing season, so please take note that I did not recommend you call all of the CPAs/EAs in your network to invite them to lunch to tell them all about how proactive you are going to be…consult a calendar before consulting an accountant 😉
