Tax Season 2014: Your Quick List of Best Practices

A common best practice that is overlooked during tax season is double-checking retirement contributions. Too often, contributions need to be “re-coded” to reflect the proper contribution year (2014 versus 2015), or the contribution mix between employee and employer is miscalculated. Ideally, you want to catch these errors early to avoid any additional frustration or concerns.

Fire drills during tax season are hard to avoid. It is expected that your firm will receive a number of last-minute requests. Given this pressure, it is important to remind your staff of your firm’s security policies. It is too easy for staff members to rush responding to a request and forget to encrypt information they are emailing to a client. Furthermore, you should review with your staff the permission or authority required to receive information on behalf of a client. Just because someone says, “I’m the accountant for your client and I need some cost basis information,” it’s not enough to release the data. Of course your staff wants to be helpful, but it is still important that they closely follow your security policies.

Advisory firms that successfully leverage technology throughout the year continue to be an efficient firm during tax season, too. Products like their imaging system, portfolio reporting, CRM, website, etc., all serve important roles in helping these firms provide excellent service and support during tax season. In fact, these firms might feel tax season is not much different from any other time of year, and that is a great overall goal for all firms.

How Many of Your Clients Use Tax Reporting Software?

Do you know how many of your clients (and which ones) use tax reporting software like TurboTax? It is important to have this information because these clients will likely create permissions in the software to electronically download their tax reporting activity and details directly from the custodian of their accounts, essentially bypassing any tax information that you might be sending them separately. If everything is reconciled, there shouldn’t be many problems. However, it is important to recognize the source of the data, especially as it relates to “uncovered”—meaning “unreported”—cost basis for positions that were acquired prior to the IRS reporting mandate. Therefore, remember to include specific guidance for these transactions in any of your tax communication materials.