With this year’s tax season looming, CPA and accounting firms are busy making sure that their clients are well prepared for what lies ahead. With the continual changing of tax laws and regulations, and unavoidable errors due to fast approaching deadlines, penalties and non-compliance are always a risk.
To prevent penalties and promote accuracy, many such firms find outsourcing tax preparation services to be immensely helpful, along with the following 10 tips:
1. Get necessary documents together early
Encourage clients to gather together essential documents like income statements, expense records, previous tax returns, and investment and retirement contributions well in advance of the filing date, to ensure none are missed, and all are included.
2. Take advantage of e-filing
Electronic filing has a number of advantages, such as helping to reduce mistakes, giving immediate confirmation and quicker refunds, and for taxpayers earning less than $84,000, they can do so free of cost.
3. Check personal and financial information
Even the smallest of errors can cause a tax return to be rejected, or delays to processing, so be sure to check such information as social security numbers, legal names and bank details.
4. Make the most of deductions and credits
Minimizing your clients tax responsibility is made easy when you ensure that their taking advantage of all the deductions and credits they’re lawfully entitled to, such as business deductions and education credits, or retirement contributions and health savings accounts.
5. Don’t make common errors when filing
Errors such as incorrect filing and not signing and dating paper returns, can easily lead to penalties, audits or a delay in refunds.
6. Think about filing for an extension
If it doesn’t look likely that a client’s return will be filed in time, an official extension of up to six months can be applied for.
7. Keep up-to-date with tax laws
This should be a given if you’re an accounting or bookkeeping professional, but tax laws change frequently, and if you’re not proactive about following them, you could easily get caught out.
8. Beware of tax scams
Be sure to warn your clients to be mindful of such scams as phishing emails and phone calls, fake IRS representatives, and identity theft.
9. Be wise when managing tax payments
Payment planning is essential for clients owing money, and this can be done via electronic payment, instalment agreements, or estimated quarterly tax payments.
Keep proper records for future reference
It’s a good idea to encourage your clients to keep copies of all tax returns and supporting documents for a minimum of 3 years, should the IRS identify a discrepancy, or to make financial planning and applying for loans easier.
Don’t let tax season overwhelm you; instead, choose tax return preparation outsourcing