Update: If you are reading this after you got my e-mail I just realized I forgot to update the subject line of the e-mail. Same name. Same website. 🙂

This post is mainly for clients to let them know what I will be working on this week in the office.

• The window for filing amended returns for 2016 to claim a refund closes on April 15, 2020. I have one of those to prepare. These must be prepared for paper filing, signed, and mailed so they are time consuming and must be done with a great deal of care. That’s what I’m working on today.
• To date the #taxpro community has not received guidance on an automatic deadline extension (to July 15, 2020) for Form 8938. This form is required if your foreign bank account balances meet certain thresholds. To protect the rights of my clients who may meet those thresholds (basically any client who files an FBAR) I will be filing Form 4868 (Request for Automatic Extension) to ensure that if you are required to file Form 8938 you have until October 15, 2020 to do so. I will be filing those forms this week (hopefully today, but we’ll see).
• I have a client who needs some prior year returns filed to avoid having to file a Tax Court Petition (expensive process). I will be working on those.
• I will be working on returns that have been in my office, mostly completed, for over a month. This includes some returns with multiple state returns, returns with complicated Schedule As (Itemized Deductions), and one estate return that whose extended deadline occurs in May. So if your return came in towards the end of February, or earlier, and you’ve been wondering where it is, it’s being worked on this week and early next week.
• I will be filing returns for those of you who have signed your e-filing authorizations and doing the office paperwork that closes out your return processing.
• I will be doing review & signature appointments for some of you.
• I hope to, by the end of the week (time has been blocked out on Friday), be preparing NM GRT returns for myself and applicable clients.
• I will be doing blog posts to keep you all updated on the Economic Impact Payments (stimulus checks); new rules for RMDs and retirement account distributions; NM State unemployment (plus a little bit for neighboring states in which I have clients); and what’s going on with the new Small Business Administration loans (hot mess) and a new tax credit that could be a better option. The short version is that for most of my Sch C clients your help won’t start until at least this Friday because most of you don’t have W2 employees—it’s just you.
• I have a standing meeting on Tuesday morning and another 2-hour class on the new law Tuesday at noon.

As you can see from this list there’s not a lot of time available for processing “regular” returns. Once the really old, really complex ones are finished, I will be getting back to what is still in the office. The earliest date on those is 3/6. The latest came in around 3/20. A couple may have come in later. If you are reading this, you may have also read the e-mail that says that I work much more slowly without Cat in the office helping. She is doing what she can from her home office and as this situation evolves I am working on processes that allow her to do even more while still maintaining the necessary security precautions.

I am doing my best to continue processing returns on a first-in, first-out basis. I want to thank all of you who have let me know it is OK to extend your returns through October 15th and I will be filing those extensions probably in May (we have until July 15th).

#fullambo out #stayfrosty

I recently read that 95% of small businesses fail within the first 5 years due to either bad management, under capitalization, or some combination of the two. Tax issues for small business owners have the same roots. Bad record keeping is often a sign of bad management. Mileage is one of the most highly scrutinized and most common areas on which small businesses are examined (audited). If you are a small business owner who isn’t keeping good mileage records you may be leaving money on the table. Worse, if you are audited, legitimate business mileage expenses may be disallowed because of your failure to keep adequate records.

The Self Help tab of the Tax Therapy website (Get Organized and Get Answers) offers additional resources to help you track and substantiate your business mileage. In a nutshell, your business mileage log should be contemporaneous (done at about the same time or shortly after you make the drive) and should show the date of the trip, the business purpose of the trip, and the miles driven. It is really common for people to not record the business purpose of the trip on the mileage log. It’s a lot easier to do this when you record the miles than it is to try to re-build that from an appointment calendar!

Finally, a great way to record your starting and ending odometer readings for your annual mileage total is to take a picture of your odometer with your phone on January 1 and again on December 31. If you haven’t taken a picture of your odometer this year, it’s not too late. It won’t be perfect, but it will be close and it will help you get into a really good habit! I hope that one of your New Year’s Resolutions, if you are a small business owner, is to improve your record keeping! It’s easy to do once you make a habit of it. And it’s one of the simplest ways to make sure your start up stays up!

I mentioned in the last post and the one before that that during tax season we require a non-refundable deposit at the time of your intake appointment. Some of you may be wondering why we do that. The short answer is that one tax season I got burned by several “clients.” They came in during season to have their taxes prepared and when they didn’t like the results or didn’t like the amount of follow up and due diligence I was doing they decided to go elsewhere. This was after I had already done a lot of work on their returns. So 1) I was not paid for my time and 2) I was not able to take on clients who really did want to work with me. Lesson learned.

“Onboarding” makes the process sound super complicated, but it really isn’t. All paid preparers have to do a certain amount of due diligence for each tax client. At a minimum we have to check your ID to ensure you are who you say you are and collect the information necessary to prepare your tax returns. At a new client intake appointment (what happens when you get onboarded during tax season) we do the following:

• ID Check for taxpayers and dependents
• Engagement Letter & Privacy Policy Signed
• Notice Assurance Program Opt In or Out
• Client Interview & Question/Answer Session
• Basic Review of Prior Year Returns
• Collect your W2s, 1099s, and other information needed to prepare your return
• Send you home with a list of missing items and information

During the off season I am happy to meet with potential clients and do an ID check, return review, and basic client interview for free. I am happy to spend some time discussing your needs and expectations.. We then send you a reminder at the beginning of tax season to request an organizer. In the meantime, if you have found someone else or have decided to do your own taxes and don’t call for the organizer, it’s not really a problem. We are sorry we didn’t earn your business, but we understand.

During tax season we are less understanding. The preliminary work required to bring in a new client takes 30 minutes to an hour (sometimes more if the tax situation involves a business or complex investments). During tax season our work time is limited and much more valuable (it’s like surge pricing for Uber). So, if we are going to spend the time getting to know you and your situation we want to make sure that you are serious enough about having us prepare your tax returns that you get all the way through the e-filing process and that if you don’t we still get paid for the time spent processing your return.

I’ve said it before but it bears repeating. Tax Therapy is a small business and this is how I earn my living. I appreciate the opportunity to show you just how valuable a good #taxpro can be but to make my business work, I have to stick to the processes and policies that work for me. Right now we are still accepting new clients with a non-refundable deposit. If you are still looking for a #taxpro and would like to schedule an intake appointment please get in touch!

Still shopping for a #taxpro? Give #TaxTherapy a call!

Are you thinking of going from doing it yourself with box software to hiring someone to help you? Did your preparer from last year retire? Get indicted? Die? Hey! It happens!

Right now we are still taking appointments for potential clients who are evaluating their options. We will be doing this for a few more weeks.

It’s kind of a moving target, but once tax season really gets going (usually shortly after e-filing for individuals opens) we can’t provide appointments for people who are not sure about having us do their tax returns. We will still take new clients (but we have a flexible deadline for that as well) but we will require a non-refundable deposit to schedule an intake appointment and before we start processing your returns.

I know it seems really early but at Tax Therapy the needs of our existing clients are always given top priority. We are a small office (it’s just me and Cat) and we want to make sure that we can do a great (thorough and accurate) job on all of the returns we have in process and expect to have come in during tax season. By the time March 10th rolls around I’m already looking toward moving returns out of the office, rather than bringing them in. And by March 20th or so I’m already making plans for summer notice clinics, extension season, and next filing season!

I answered a few calls last year from people who seemed to really want me to do their taxes but needed to get in right now. That’s just not how this office (and many other small offices work). When I suggested to one such caller that they visit one of the many large franchises in the immediate area, they didn’t want to do that. Unfortunately, if you wait until late March to try to find someone to “do your taxes” that may be your only option. And it isn’t a bad option! Large tax franchises are set up and staffed to meet the immediate needs of most new clients. Most small tax practices are not. So evaluate your needs and if you want to #shoplocal and #shopsmall then you need to shop now!

Are you ready?! We are. Reminder postcards for returning clients and new clients who onboarded over the summer and fall will be mailed tomorrow. On Monday, Cat will be here to start answering calls and e-mails and getting organizers delivered. The organizer contains our annual engagement letter, a copy of our privacy policy, and an interview and other supplemental forms to help you remember and collect all of the information we need to do your tax returns!

If you are reading this and are still looking for a #taxpro, I am still taking “shopping” appointments. Once tax season really gets going though I don’t have the availability to meet with anyone except new and returning clients. If you’re sure here is where you want to be then I’m happy to bring you in as a new client during tax season but I do require a non-refundable deposit to do your onboarding and accept your information for processing. If you aren’t sure or have any questions feel free to call or e-mail the office. We are happy to help.

The IRS is opening e-filing for business returns soon and e-filing for individual returns will open a couple of weeks after that. Here at Tax Therapy we are about ready to open our season for new and existing clients. Existing clients will receive a reminder postcard and e-mail letting them know that they can call to request their annual tax organizer (engagement documents & client interview). New clients can call to get an organizer and set up a new client intake appointment. Please note that new clients coming in during tax season (as opposed to during the summer and fall) must pay a non-refundable deposit equal to the base price of a federal Form 1040 before we will accept their return for processing.

And it’s a doozy! Every year Kelly Phillips Erb (a.k.a. The Tax Girl) posts a list on Forbes.com of the Top 100 Must-Follow Tax Twitter Accounts. For 2020, I’m on it! Mostly this list is for tax professionals (nerds) rather than taxpayers but it is an honor to be included and as you can see, I’m really excited!

I’m also excited that tax season is basically here. I am still accepting new clients. Cat will be ready to send out preliminary paperwork starting the week of January 13th. I will start processing paperwork the following week. That is also the week I expect that the IRS will open e-filing for the 2020 tax season. So if you are looking for a #taxpro, please get in touch.

For most taxpayers once the balance due is paid or the refund comes in they stop thinking about taxes. This article provides a great explanation about why tax time is the worst time to ask the important questions or to try to find a new taxpro. In general, if the year holds “potentially taxable events” for you (marriage, children, retirement, college, lost job, new job or promotion, buying or selling business property) the time to start planning is now, not January! The same thing goes if you are considering changing from a DIY option to hiring a #taxpro or switching #taxpros.

Most #taxpros spend November and December installing and testing our software and doing refresher classes on tax law changes. Plus, most of us also have lives outside of the office and like to spend at least some of the holiday season with our friends and families! In January those of us who also offer bookkeeping and payroll services are busy doing end of the year close out work and preparing W2s and 1099s. Even those of us who don’t offer bookkeeping and payroll are usually busy getting ready for tax season: updating engagement letters, refining our client interview process, updating office policies and processes, training new staff, etc. By February we are working on returns (returns for partnerships and S-corporations are due on March 15th, not April 15th!). By March, when many taxpayers start to feel the deadline approaching and decide it’s time to “do their taxes” #taxpros are slammed with work. Many of us are not accepting new clients or, if we are accepting we will require you to go on extension. If you call us on or after April 1st looking to come in as a new client 1) we will hate you (we are totally burned out by the end of March), 2) we may laugh at you (but we don’t really think your request is funny), 3) we are going to either insist you go on extension or refer you to a shop (often one of the large franchises) who is set up to handle last minute walk ins. Note: Yes, we do consider two weeks before the filing deadline “last minute.” By April 1st (and, no, we don’t think the tax-related April Fool’s Day pranks are funny either—please don’t call saying you are being audited or levied if you aren’t) we are almost completely focused on getting returns out of our offices, not bringing them in. We are adding last minute documents to mostly completed returns. We are booking review and signature appointments. We are even planning for next filing season. We are rarely actively looking for new business.

The best time to find a #taxpro is actually summer through early fall. We have had a chance to recover from the April 15th deadline push. We may be busy working on returns on extension (especially if it is close to the September 15th deadline for partnerships and S-corps or the October 15th deadline for individual returns) but typically we are less busy than during the first part of the year. We will have time to review your situation thoroughly, answer what questions we can at your initial consultation, research questions for which we don’t have the answers, and we can give you an idea of our office process and what to expect and the documents we will need to complete your returns. It’s much less hectic and, at least in my office, a bit less formal when new clients come in for “onboarding” during the summer. You will also have a much wider range of appointment times available because existing clients for the most part don’t book appointments in the summer unless they are having a “taxable event”. So, whether you are an existing client ready to do some tax planning or a potential client wanting to find out more about the office, the time to call or e-mail is now! Give us a call at 505-352-0058 or send us an e-mail at info@taxtherapy505.com and we will be happy to schedule a consult.

Remember this post about “quick questions”? What is true for tax return preparation is even more true for audit and collections representation. When you call the office because you have received an IRS notice (you are being audited, or levied, or your taxes have been adjusted) the solution to the issue raised in the notice is often not simple. It is basically “lawyer work.” Indeed, only lawyers, CPAs, and Enrolled Agents have unlimited representation rights before the IRS. Hiring a professional to represent you before the IRS is not inexpensive. And in this office it is much more expensive than simply having your tax returns prepared by a competent professional (me). I often tell callers who think my preparation fees are expensive that “Rep rates are three times prep rates.” You may find someone to “do your taxes” for less money (and of course you can do them yourself)—but if you have to pay someone to answer IRS notices it can be more expensive in the long-term than just having them done correctly in the first place. In any case—answering tax questions is often like answering law questions and the attorneys at Wolf, Baldwin, and Associates have written this excellent post on why, as in the tax world, there are no “quick questions” in the law world either.