A couple of weeks ago I was talking with some colleagues about being forced to watch videos to learn features available in new software and just how much I didn’t like that. The videos are slow. I can read faster than that and I comprehend better as well. Usually, I’m going to want to read about something and then maybe watch the video to see how it’s actually done. That’s not how I roll 100% of the time, but in general I’m a reader not a watcher.
I’m considering this in light of recent client pushback concerning my (admittedly lengthy) “help” e-mails. I’m writing volumes of free help information that targets specific issues my clients are having and distributing it to clients along with links to video help and the knowledge base provided by the software. My business is doing tax returns, not doing tech support on my client management software. That said, I want to help when different clients are all having the same or similar problems. So, I write. Why don’t I do video? Because the software has done that. Also because some people, like me, prefer written to video help. So, I’m doing my best to do both what works for the office and what allows me to “meet clients where they are” so to speak.
While the office has always been able to manage contact free service in one form or another (mail, portal, etc.) after last year I decided that we needed to automate some of the more routine administrative aspects of the return preparation process as well as to increase our “one to many” communication. The change was necessary in order to accommodate client volume while still maintaining a degree of personal service and some work life balance for the office staff (me and Cat). We want to be able to focus on tax returns and complex issues, not booking appointments or answering e-mails about the secure portal. Pushback on these changes has included clients leaving and me telling clients that we can no longer meet their expectations and to find a new preparer. Yes. I have fired clients who, instead of asking for help with a specific problem, simply wanted to complain about not liking the changes I am making—to my business.
I get it. Change is hard. No one likes it. Me included. I’m in my 50s and it’s not getting any easier for me to adapt either. But sometimes it’s adapt or die. Last year it became adapt or die for this office. The changes I’m implementing, while causing some short-term pain, will be both beneficial and necessary for the long-term future of my business. So, while it is unfortunate that some clients have chosen to leave or I have chosen to curate them from my client list, I still hope that they find another preparer who meets their needs. Specifically I hope that
- The new #taxpro pays attention to office and internet security
- The new practitioner’s business model meets both their price point and their income needs
- If the new practitioner’s business model is built on working 60-80 hour weeks during tax season (especially during this tax season which has been compressed by an additional two weeks and hundreds of pages of new tax law) that they are able to prepare the return accurately. The cognitive decline that comes from a lack of sleep is a real thing. Tired #taxpros make more mistakes.
- If the new practitioner’s business model is built on doing a high volume of returns at a low price that they spend enough time with you and on your return to prepare it accurately the first time. And if they don’t that they are around in the off season to help you with any resulting IRS or state notices.
Why do I hope this? Because high-volume, low- to mid-price business models are getting increasingly harder to sustain without automation. The Covid-19 related legislation alone is adding 20-30 minutes to each tax return I prepare just to make sure I’m getting clients all the benefits for which they may be eligible and the correct amount of stimulus money. I read about one #taxpro who says he spends his summer amending returns for free because of all the mistakes he makes during season. He works six or seven days a week and ten to fourteen hour workdays. No wonder he’s making mistakes. Then there’s the general cognitive decline that comes with age. I do not have the memory I had when I was 30. Or even 40. I’ve added automations as “brain extenders” because I’m not willing to run the risks that come with cognitive decline when those risks affect your tax returns.
Maybe you don’t care. Maybe face-to-face completely unautomated service is so important to you that you go out and find a relatively young “old school” preparer. Maybe you won’t outlive them. Maybe they won’t also decide that their business model is unsustainable and decide to make changes. Maybe the demands of the job the way they are currently doing it won’t cause them to make errors. Or maybe, just maybe, it won’t be this year and it won’t be your return.
#fullambo out
We’re not quite to the new year yet, but I’m sprinting toward the goal line!
I’m also expecting that many taxpayers will be required to complete a new Form W4 soon. Form W4 is what your employer uses to determine how much federal and state income tax to withhold from your paycheck each pay period. It contains basic information such as your name, address and taxpayer ID number (usually your SSN). The old form used to ask you to calculate how many “allowances” or “exemptions” from withholding you wanted to claim. And there was a worksheet. The higher the number of allowances the lower the withholding. So, to have the maximum amount withheld you simply claimed “Single 0.” The new form doesn’t work that way. On the surface it looks more complex than the old form but my colleague, Sherrell Martin, has done this amazing video that shows that the new form is actually pretty easy to complete and she walks you through how to complete it!
If you are going to use the video to complete your new W4 it will be helpful to first gather the following information:
- The annual salary/salaries for you and your spouse for each of your jobs
- The number of pay periods per job
- The number of children and other dependents that will be claimed on your tax return*
- The amount of your itemized deductions (if you are not taking the standard deduction)*
*This information can be easily found on the comparison worksheet included with your tax return. My clients can find their “comp sheet” toward the top of the left hand pocket of their tax folder (or near the top of their PDF return copy). Even if you don’t use a paid tax preparer, most DIY software provides a comp sheet.
So, gather your information and let Sherrell walk you through the process of completing your new W4. Remember this new W4 and the associated withholding tables are designed to have you withholding the most accurate amount of tax, not the amount that will get you a big refund. You could even end up with a balance due when you file your tax return.
At Tax Therapy we include a mid-year withholding check up with our full-service return preparation. We will do a basic estimate of your annual income, credits, deductions, and withholding to determine if you need to make any adjustments for the rest of the year. And, while helping clients complete a new W4 is not included with tax return preparation, we can help you do that for an additional fee. If you are interested please log into your TaxDome account using the link in the Client Resources tab and send us a message.
Remember when they were doing direct deposit or mailing a paper check? Well someone convinced someone that prepaid debit cards were a better idea. I won’t wax philosophical on the fact that you can’t usually pay rent with a debit card. Instead, I will link to this article from The Tax Girl letting you know that debit card is legit…so don’t throw it away!
Remember when I talked about college students who are dependents (or basically any child over 16) not being eligible for the dependent EIP or their own EIP? Well, that applies to adult dependents too. So if you’re claiming your parent as a dependent and they are wondering where their stimulus money is—it isn’t coming. Because they are a dependent over the age of 16. Yeah—this is a drag.
What’s not a drag is that I have been moving through the returns and Cat may be coming back part time starting next week. Can I get a hallelujah?!
And we are open by appointment for document drop off, return review and signature, and for new client intake appointments.
That’s about it for today!
OK! Still feeling like I’ve turned a corner. Getting returns processed. Cat is finding her “work at home” groove too. We are moving slowly through the stacks that have been here since mid-March when all hell broke loose. I am still having to set aside some of the more complex ones for when I am able to fully focus. When it comes to tax returns it’s a lot harder to fix them than it is to just get them right the first time. So I want to make sure I’m in top form when I’m working on the ones with a lot of moving parts (you know who you are).
If you still haven’t gotten your stuff into the office, that’s OK! Once I feel like most of the backlog has been cleared I will get a bit more pro-active about getting what remains out into the office. I’m hoping that this will roughly coincide with at least a lightening of some of the stay-at-home restrictions. We will see—that’s going to depend both on how quickly I work and how well we do at flattening the curve here in NM.
Again, we’ve got until July 15th and I’m planning on having most of them out well before then unless additional chaos ensues.
Thanks for hanging in there with us!
#fullambo out
When, where, how, I don’t know yet, but remember yesterday’s post where I mentioned the “donut hole” for college-age dependents? Two Michigan senators have introduced legislation to address that and it will probably be part of a larger Phase 4 relief package according to Kay Bell at Don’t Mess with Taxes.
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.