RTS #035 Here comes filing season

It’s begun. The majority of W-2s, 1099s, and 1098s have been sent out or are electronically available. The IRS is officially accepting 2023 tax returns through their e-file system. The chances of you getting a response from a CPA or EA have plummeted. It’s tax filing season.

For financial advisors, this time of year creates huge opportunities if you are proactive. The first is to help your clients have less pain during tax filing season. If you sent a 1099 Letter for 2023, that is a great start, but the work isn’t over. 2023 was a terrible year for amended 1099s, so maybe it’s just recency bias, but a great way to help your clients during tax filing season is to monitor your custodian for any changes to 1099s.

Most clients aren’t trained to be on the lookout for these and won’t know what to do with them when they get them. Tax preparers are heads down cranking returns out and likely won’t even think to ask clients if they have an amended 1099. You can be a tax season hero for your clients (and take a huge step to building stronger relationships with their tax pro) if you are the one proactively identifying and providing the updated information. Getting the return right the first time is way better than having to amend.

Rockstar level of being involved in tax season for your clients is being able to review drafts of returns before they get finalized. Advisors are often in a unique position to see more of a client’s financial life and identify things that are missing or wrong from a tax return that a tax pro just won’t have context for. This is exactly why, at RTS, we share draft returns with our Premiere Members for every client. It’s not that we don’t trust our work, reporting documents from custodians are often lacking in good information and clients aren’t always reliable to relay everything we need to know. It can be very challenging to build a relationship with a tax preparer (let alone all of the dozens your clients likely use) to be able to be inserted into the process. But if you can get it done, it’s powerful. Start with your top clients or the ones with the most complicated tax situations, and build from there.

The second opportunity is relationship building with CPAs in your network or that you’d like to have in your network. PLEASE don’t start asking CPAs out to lunch this time of year. Right now isn’t even the right time to “pay for an hour of their time”. But, it is prime time for adding value to their process through sharing relevant and timely information. It’s also a great time to set yourself apart from the sea of Advisors out there and send them things that might actually help them get through this time of year. Comically large bottles of aspirin and consumable baskets come to mind. That might feel like a shameless plug for buying gifts for accountants, but even when I was still working in huge firms the teams would talk about the companies, by name, who sent memorable gifts during the filing season.

What can you do about it?

Make sure you have a filter for all communications to CPAs for the next 2 months. If it’s relevant to this year’s tax filing, send it in the simplest way possible. Lead with the action that needs to be taken, “Amended 1099 for a mutual client”, and provide as much information as you can. Don’t wait for a phone call, in-person meeting or Zoom, they aren’t going to happen. Everything else (except the gift baskets), can wait.

Happy Tax Planning!

About The Newsletter

The tax code is 80,000+ pages and Google has 875,000,000 results when you search “Tax Planning”, so each week we are going to help you wade through all of that noise and get to the Relevant Tax Stuff.