Tax reporting is an unpleasant chore and always a bit daunting. There are the same questions each year, some new questions, too, and of course the last-minute “fire-drill” requests. Here are some new items that should be on your task list for the 2016 tax reporting season.
Review Accounting Elections With Clients
It is always a good idea to review the default accounting selections on your clients’ accounts (or group of accounts), and to make sure that no changes are necessary. Especially considering the number of accounting selections available today for various asset types, you might be surprised by the number of options if you haven’t reviewed this information in a couple of years.
Furthermore, make sure that your clients are aware of the default accounting selections for their accounts, particularly if they work with a CPA who is not connected with your firm. We all hear stories of past accounting selections being questioned by the individual who is doing the client’s taxes. This doesn’t have to be a tense situation if there was previously full transparency in sharing this information.
1099 Delivery Schedule
For a number of years, a significant frustration with tax reporting was the limited information regarding the delivery of tax reports. Today, your firm should be fully aware of the 1099 delivery schedule, including details about specific securities that can delay a final report. You also may have access to detailed information regarding revisions prior to your client receiving the revised statement.
Advisors also have access to multiple reports and data exports of clients’ tax information to better assist with managing the workload of tax season. If these reports and services are not familiar to you, you are definitely missing out on some efficiency opportunities as well as tools for providing your clients with better service and support. Take a moment to check with your custodian, your reporting software solution and other partners to ensure your firm is utilizing all the tools available for handling tax season.
When a 1099 is revised, especially when it is late in the tax season, a good first step is to understand how material the revision is and the number of clients that will be impacted. Unfortunately, revisions will happen, and the faster your firm can respond, the better you can deal with the situation.