Tax Season Tips

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Anyone who has ever prepared their own taxes knows how daunting of a task it can be.

According to a Forbes article, the basic 1040 instruction manual now runs over 179 pages long!

Tax codes are complex. They are so daunting, in fact, that the average person can’t complete it on their own. Eighty to ninety percent of Americans either contract accountant or use tax preparation software to file their taxes. It’s especially confusing when dealing with deductions relating to dependents, educational expenses, and even alternative energy use.

A few factors are important to consider when filing your taxes. Firstly, you ought to get  started on your tax returns immediately upon arrival of your documents. The more organized you are, the better you will be at collecting the necessary documentation required to successfully fill out your W-2’s. Since time is money, knowing when your deadlines are is especially important. This year, the national deadline will not be on April 15, but rather, Monday April 18.

If you need more time to file however, you can request a 6-month extension until October 18.

Let’s take a look at some of the fundamentals of taxes that you should be aware of this season. Hopefully this clarification makes filing taxes less of a headache, especially if you’re still new at this!

 

Deductions:

If you are an educator, don’t forget that Congress recently passed a permanent tax break benefitting elementary and secondary school educators. The tax break is especially valuable as it can be deducted from their total income, rather than as a miscellaneous itemized deduction.

If you are filing Form 1040 and itemize your deductions, you are given the option between deducting your state and local incomes taxes or your paid local sales taxes. For people living in states with no state income tax, this is a vital tax break. Regardless of where you live, this break applies to taxpayers in all states. Many folks fail to check whether this is a better option than the state-income tax deduction, so make sure to choose wisely. Of course, don’t forget to save your receipts!

Charity deductions serve a pretty important purpose for individuals of higher-income levels. However, if you are choosing to deduct charitable donations, make sure you are aware of the proper record-keeping rules. Martin Hall, partner in the Boston office of Ropes & Gray LLP cites a law that requires getting a contemporaneous written-acknowledgement. Claiming charity deductions and failing to have these documents at the time of an audit will lead to trouble.

 

Excess Social Security:

For higher-income earners who worked two or more jobs in the past year, excess withheld social security taxes can be a problem. In 2015 the maximum amount of Social Security Tax withheld should not have surpassed $7,347. If more was withheld, you are in the right to claim the excess amount as credit. For example, if you worked for two different employers and the sum of the social security taxes withheld for that year surpassed the mentioned amount, you can claim the extra amount as a credit.

 

Reinvested dividends:

Keep records when you reinvest your dividends into new shares. This very important tip is often overlooked.

 

For more information, please see Wall Street Journal’s recent article for more finance tips. Good luck this tax season.

 

Successful Client Relationships

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Being a CPA is all about building your relationship with clients. Your clients are your business!

When you are manage someone’s personal finances and taxes, you are more than just a financial advisor, you are responsible for information and the solutions that deeply impact a person’s life.

Build trust to keep clients content and happy.

This is why you need trust. Yes, your clients want clear answers to their financial questions; but what will keep them coming back to is your relationship.

How can you accomplish a successful client relationship?

Here are 5 tips for success.

1. Be Authentic and Honest from the start – Many professionals neglect their emotions, but it’s important to respond to your intuitive instincts in your job. This is true in establishing yourself with your clients. Consider, what kind of client do you work best with? What kind of relationship are you setting up at the very beginning?

2. Communicate – It’s so important to share your own energy with clients, especially when things are going well. This passion can be exchanged in something like a simple email, stating, “I’m going to spend some extra time working on answering that question you asked me last week. Would you like to meet on Friday?” Just being available makes your work more trustworthy.

3. Develop a Strategy – Know what system works for you. If you’re organized and reliable, clients will rely on you. Always plan ahead so you can over-deliver and make your client happy. Some new accountants struggle with organization. Remember that communication comes first. If you’re going to be late on a deadline, keep these matters honest and open with your client.

4. Be unique – There are plenty of accountants in the world, so what makes working with you special? Become the solution to your client’s problems. Thus, you eliminate competition by providing unequalled service.

5. Go Above and Beyond – This goes back to #1. If you strive to be authentic and honest with your work 100% of the time, you will be able to excel in all of your projects with clients.

Ten Reasons Why 2015 is a Great Year to Be CPA

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Accountants always must be prepared for the future of finance. The new “The Anticipatory Organization: Accounting and Finance Edition,” educates CPAs about future trends.   With a critical eye, business opportunities are always around the corner.

The Maryland Association of CPAs and the Business Learning Institute held an event to introduce the concept to a select group of accountants. At the event, the CPAs identified a number of “hard trends” that best symbolize the opportunities for accountants.  Here’s what made the list:

1. As baby boomers retire, the number of qualified peer reviewers will significantly decrease. The Maryland Association of CPAs believe that this number will effect everything, leaving firms with niche specialties pick up new business and new opportunities for new CPAs. Firms can also benefit with new niche specialties.

2. Changes in Title IV regs have opened opportunities for crowdfunding. Businesses can embrace crowdfunding, but will need expert advice on what is required in reporting.

3. The entry costs of starting a new business will decline, so more people are developing their own companies. The need for advisors for these micro-businesses is subsequently growing.

4. The number of clients serving global customers will increase. As the number of clients serving customers abroad increases, they’ll need help with taxes, contracts and overseas accounting issues.

5. The Hispanic community increasing in the U.S. population. Estimates of Hispanic buying power is in the trillions of dollars. Developing products and services with them in mind is good for business.

6. Also as population increases, transportation congestion will grow. Firms with flexible work from home policies will be one step ahead in recruiting.

7. Data security issues will affect more and more companies and people so firms will need to build services that provide cybersecurity consulting and services.

8. The amount of data needed and produced is growing. will increase. This offers host of opportunities; an obvious one is services in litigation support.

9. Remote-work capabilities are improving. New hardware and software can help increase your client base as well as just help your employees work elsewhere.

10. 3-D printing is the future, and it is already being used to efficiently create new products. Firms could offer a 3-D printing service and expertise to customers for parts and prototypes.

This article was originally posted by Mark Draughon on his blog.  Stay tuned for more updates.