The tax prep market for seniors promises to expand in coming years, thanks to both simple demographics and complex and changing tax laws.
Brenda Hendrickson, accountant, tax specialist, QuickBooks Pro advisor and Certified Senior Advisor answered our questions on one of the field’s most promising markets.
How would you access the growth of the senior market for tax prep over the next five years?
Hendrickson: The growth of the senior market has increased in the past few years and will continue to grow as more and more Baby Boomers retire. Most of the growth is still though asking for referrals from satisfied clients, networking with elder-law attorneys, presenting to senior groups, writing articles and columns and branding your company.
What’s unique about the tax prep needs of this market?
Henrickson: Preparing returns for this market is challenging. It not only is the preparation of the return but tax planning for the future that’s important to seniors. They see a big shift in income from mostly wages to more unearned and pension income. These fixed-income assets need to last sometimes for decades.
What’s the biggest challenge facing senior taxpayers?
Henrickson: Seniors have numerous tax challenges, such as, “I thought I would be in a lower tax bracket after retirement” or “Where am I going to live because I can’t afford this house anymore?”
“Will I have enough income to last my entire life?” is the biggest challenge.
What’s the most challenging aspect of working with senior tax prep clients?
Henrickson: Not only are there challenges working with seniors, but rewards as well. Preparers need patience and empathy. Patience to repeat concepts, and empathy to understand and appreciate their unique lives. Seniors usually end up dedicated clients to those who respect them and take time with them.
What other issues are seniors concerned with?
Henrickson: Another important issue they’re concerned with is, “Where will I be living?” There are many choices depending on physical and financial constraints: Stay in their home; use reverse mortgages to stay in their home and pay expenses; age 55-plus active communities; nursing homes; condos; their children’s home.
You’d be surprised how many people, not only seniors, do not have a will. Other documents are also important to an estate plan: power of attorney for health care and for property, and a living will and living trust are among others.
Brenda Hendrickson is the owner of Brenda Hendrickson CSA, an accounting firm in Cedar Grove, N.J., and the author of How to Be a Frugal Millionaire.