Do THIS — Not THAT in preparation for the upcoming tax season

Ready or not, tax season 2021 is rapidly approaching. And while we all hope that it will be better than tax season 2020, as John Wooden famously said, “Failing to prepare is preparing to fail.” So, why not hope for the best but prepare for the … unexpected?

In thinking about what you can do to get yourself, your clients and your firm ready for tax season, I asked my #TaxTwitter network for some advice. What kind of advice, you may be wondering?

Wrong advice.

Terrible advice.

On purpose.

Not real advice, because this is 2020 and we all need some healthy sarcasm in our lives, right? Not just me? Good. But along with the off-the-mark advice, I will respond with good advice as well as recommendations for AICPA resources to help you hit the ground running.

Here’s what the voices of #TaxTwitter had to say …

Justin Miller @justinmilleresq

“Good things come to those who wait. #badtaxadvice”

Procrastination can sometimes be rewarded. But this is rarely the case when planning for your financial future. Help your clients understand that major life events present opportunities to discuss tax and financial implications. Flyers on getting married or divorced, welcoming a new child, saving for education and retirement from the new CPA Marketing Toolkit can be great conversation-starters.

Jeanne W @JLWCPA2

“You can deduct anything you want under ‘other deductions.’ ”

While there are situations where items can be categorized as “other deductions,” if you think this is a good catch-all, it could be time to take a look at the 2020 Annual Tax Compliance Kit. This toolkit includes engagement letters, organizers, checklists and practice guides to help you comply with tax laws and effectively serve your clients. And may I suggest a refresher of the Code of Conduct and standards?

Joe Kristan @joebwan

“Don’t sweat it. 2019 software will work just fine.”

While tax practitioners rely on tax software, there is no substitute for education and knowing the tax laws (and asking for assistance when needed). If you have clients who are still unsure of the value you provide as a CPA, maybe it’s time for you to take a few minutes to enlighten them and share your expertise. Use this presentation as a starting point.

Greg Barnhardt @UpperValleyCPA

“To simplify workflow, request a snap of each tax document and then email it directly to your preparer as a .jpg. — preferably one .jpg per email to prevent a cluster #Yourewelcome.”

While we can all appreciate a great picture or a meme, receiving tax data this way is not optimal nor secure. In an ideal situation, clients would send a 100% complete packet of information the first time. But we don’t live in an ideal world. One idea to help is to start by sending your individual clients a year-end planning letter, which may provide them some ideas about what they should be thinking about. The letter can also reinforce the value of your secure company tools for transmitting confidential documents.

Nicole Davis @wifemomcpa100

“Wait until April 15 to send your tax documents to us. We love procrastinators!”

We talked earlier about how planning is the antidote to chaos. Continuing in that vein, your small business clients would likely benefit from a year-end planning letter to help them start moving in the right direction. And if they are moving closer to the deadline in providing documents, you may consider moving them to the “ex-clients” list.

Tax TeleGraf @LoganGrafTax

“Pay the amount due on the IRS notice you received, no questions asked.”

Like everyone, the IRS makes mistakes. And maybe even if they have correctly identified additional tax, a penalty may have been assessed that can be abated due to reasonable cause or first-time penalty abatement procedures. We have templates available that can help you draft a letter to request the IRS take a closer look.

Jeremy Wells, Ph.D., EA @JWellsCFO

“Don’t worry about tax update CPE. The software will figure it all out for you.”

We’ve got you covered if you missed your tax law update course this year because of the 2020 chaos. Register for our Tax Practice Quarterly: 2021 Busy Season Readiness that will take place on Thursday, Dec. 17 (rebroadcasted Jan. 6). Thought leader Tony Nitti, CPA, will get you ready for tax season by discussing topics such as the Families First Coronavirus Response Act, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) and the Paycheck Protection Program (PPP) and Health Care Enhancement Act.

This event is free for AICPA Tax Section members (discounted for AICPA members) and offers two hours of CPE credit. Not already a Tax Section member? Join now for only $160 for the first year ($240 each year after) for over $600 in value.

Mary @AccountingAsArt

“If you’re not sure about an amount, go ahead and let the tax preparer just make up some numbers.”

Ethical issues aside, if this is your line of thinking, take a look at the Tax Section Odyssey weekly video series, which highlights resources available to you, tax research tips and trending tax topics. And yes, there is a tax standard on using estimates.

Liz Farr @liz_farr

“If you got paid in cash, it doesn’t count. If it’s not on a 1099, you can leave it off your return.”

If you have clients that think this way, it’s likely they have received IRS notices. And if they are struggling to pay the tax, there are options. Review the IRS Payment Agreements Guide (an AICPA Tax Section resource), recently updated to include the latest and greatest.

Jeff Kristoff @jckristoff

“Due to the security risks, don’t e-file your return or even use software. It’s best to make sure you or your accountant prepare the return by hand using red ink so the numbers stand out. Since the return is mailed to the IRS, you can just use a regular stamp, but the U.S. Postal Service (USPS) has great holiday options!”

While I especially love the USPS holiday stamps, mailing tax returns that can be e-filed is not a solution, especially while the IRS is still catching up on mail from earlier in 2020 due to COVID-19. Speaking of security, does your firm have a plan for keeping client data secure? Take a look at these best practices that can be implemented as part of your overall security plan. And, document your policies by using our Gramm-Leach-Bliley Act Information Security Plan Template.

Nick Meals @nickmeals

“You think those expenses covered by PPP funds should be deductible? Me too! Let’s deduct them.”

As of the writing of this blog post, the IRS guidance still stands generally requiring non-deductibility of expenses paid with Paycheck Protection Program (PPP) funds if forgiveness is reasonably anticipated. But a great place to keep up with all the latest PPP news is to check out the AICPA’s SBA Paycheck Protection Program (PPP) resources for CPAs and tune in for the AICPA Town Hall Series.

Hopefully, you weren’t tricked by any of the bad advice and learned about some new AICPA Tax Section resources along the way. We’re wishing you a warm holiday season and the best kickoff to tax season.

And, if you want to connect with me and my peers to share some of your client stories, please follow me on Twitter @aprilshowerstax.

April Walker, CPA, CGMA, Lead Manager — Tax Practice & Ethics, Association of International Certified Professional Accountants

Do THIS — Not THAT in preparation for the upcoming tax season

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