[IMGCAP(1)]Effective end-of-year letters and other communication with tax prep clients are more than reminders that those clients should hire you to do 2012 returns. They can also mean more, better-organized clients coming through the door when next tax season heats up, translating into faster return prep and more revenue.
But it’s important to advise clients that “this year is tougher than any previous year I can remember because we are in such turmoil,” said EA Cynthia Jeanguenat, of Horizons Unlimited Tax & Business Services, in Virginia Beach, Va., and a member of the National Association of Enrolled Agents.
“We’ve been receiving a lot of phone calls asking questions about investments and IRA distributions because of the possible tax increases in 2013,” she added. “A large portion of our clientele is in the 25 percent tax bracket and they’ll be directly affected by tax brackets and capital gains rates. They don’t know the best route to go at this point, and unfortunately none of us does, either. The fact they are left hanging is grossly unfair and can be very costly to the largest group of taxpayers.”
Jeanguenat’s firm has issued a number of suggestions to both business and individual clients:
- For business taxpayers, now is the time to check record-keeping to make sure income and expenses have been recorded correctly throughout the year.
- It's time to check business mileage logs. Have you been keeping them up?
- It's time to think about any last-minute equipment or machinery purchases. Do you need a new printer? Fax machine? Office chair?
- It's time to look at supplies. If by chance you have a larger-than-expected profit, now may be the time to purchase supplies for next year.
- For individuals, if you itemize deductions, now is the time to double-check charitable contributions and make any last-minute donations. This is usually a good time to go through toy boxes and closets gathering clothing and toys to contribute to the Goodwill or Salvation Army. Don't forget to make a list of the items as you put them into bags or boxes so that you can determine their fair market value. Make sure you write down that amount next to the items on the list. Then staple your list to the door hangar or receipt you receive from the charitable organization and you'll be ready for tax time.
Preparers can find many online examples of tip sheets to offer their own clients. The consumer-oriented tax-planning tip sheet from H&R Block, for instance, is one model in terms of tone that preparers could use to write their own tip sheets and letters: direct, clear and practical, with a dash of wisdom and direction.
“Schedule end-of-year appointments or buy new prescription glasses or contacts to avoid losing unused money set aside in your flexible spending account,” the tips overview begins. “Contribute to or open a qualified retirement plan by the end of the year (April 15 for IRAs) to lower your taxable income … If you're self-employed, delay your December billings until January to reduce this year's taxes.”
(The second part of this article looks at additional online examples of tip sheets and end-of-year client letters.)