Early season mistakes can lead to horrendous disasters, such as a financially desperate client whose tax refund you sent to an incorrect bank account calling the office every day, multiple times per day, for months on end, and so forth and so on.
Not that I have ever or would ever made such a silly mistake, but let’s just say my “friend” has done that a couple times over the years 🙂
Here are a few quick reminders that can (hopefully) help us avoid painful mistakes that often happen during the early part of tax season:
- If applicable, make sure to input Form 1095-A information for the client’s health insurance before finalizing any tax return. The 1095-A is a common early season missing document that can really screw up the tax return if it’s not taken into account (because missing 1095-A info messes up the Premium Tax Credit). While the actual Form 1095-A may not be available until late January or early February, sometimes there are ways to get the amount of the Advance Premium Tax Credit earlier, through the client’s account on the Marketplace. If you know the client doesn’t have any Advance Premium Tax Credit (for example, you know client has health insurance through his or her employer), the 1095 data is much less critical, but even then, let’s take a minute to make sure this “possibly missing information” is taken into account.
- Be prepared for clients with 1099 self-employment income who have absolutely zero bookkeeping. No need to be surprised or “offended” when this happens, we all should already know by now that many “gig economy” / “side hustle” workers don’t do any bookkeeping at all. We recommend using pre-prepared tools and templates (for example, the Lists of Deductions by Job Type provided to Pronto Tax School Members) to quickly and accurately obtain income and deductions related to 1099 income.
- Not enjoying client complaints about the price of your services? Offer a “get your taxes done with no money out of pocket” option. While most price objections are a result of clients not adequately understanding the value of professional tax preparation, early season price objections are often the result of a flat out lack of money in the client’s pocket. If you can help me (your client) solve that problem without “embarrassing me” for not having $250 in my pocket to pay you now, I’ll appreciate that, and I won’t need to hassle you as much about giving me a massive discount.
- Triple check to make sure the refund is going to the right place. With the average tax refund for early season clients exceeding $3,000, and many middle and lower income clients needing $3,000 real bad, the worst possible mistake we can make is to send the tax refund to the wrong place. For examples, sending the refund to an old / closed bank account, or sending the refund to the old mailing address where the client no longer resides.
- Make sure to ask client if the client could be claimed as a dependent on anyone else’s tax return. No loving parent feels affection towards a tax preparer who files their college-age child as a non-dependent when the parent has been paying the vast majority of that child’s bills and was really looking forward to receiving that $4,000 American Opportunity Tax Credit. Let’s ask, “Is there anyone else who was helping to support you during the year and might try to claim you as a dependent on their tax return?”
- VITA and AARP are options. At risk of stating the obvious, some early season clients are financially desperate, or even destitute. Some tax pros respond to this reality by doing certain people’s taxes for super cheap or even free as a form of charity / community service. I don’t feel qualified to tell any tax pro not to do charity / community service if that’s what you choose to do. However, I do think it’s important to realize that financially-challenged clients do have “free file” options such as VITA, AARP, and/or the new IRS Direct File. Making clients aware of those choices and letting them choose a super cheap or free option if that’s what they need can be a form of charity / community service that doesn’t take up your valuable time.
- The “back up element” of tax preparation is, in many cases, the most valuable part of the service. Some clients wonder, “Why do I need to pay you $250 for plugging some numbers in a computer and it took you 15 minutes?” But any client who has ever had a problem after the tax return was filed and the tax preparer did not “back up his or her work” knows that the true value of a good tax prep service doesn’t end when we’re done writing up and e-filing my tax return. If you are a tax professional who does stand behind your work “in case anything goes wrong,” the value of your service is not determined by how much time it took you to fill out and file the tax return.
Hope that all helps!
Speaking of help, quick reminder for you that a Pronto Tax School Membership provides you with significant support resources in case you have questions or need help during tax season.
We want to be the people who have your back 24/7/365 and make your life as a tax professional easier, more profitable, and more fun.
- If you’re an Existing Member, we hope you’ll use your support resources, such as the Tax Preparer Teamwork Group where you can post questions and get same day answers from multiple Mentors and Peers and the Credit Claiming Checklists that you can use to claim tax credits with confidence.
- If you’re a Not Yet Member, click here for Membership details and enroll and then immediately access help from Mentors and Peers, plug-and-play tools and templates, step-by-step video training tutorials, and more.
Here below is a breakdown comparison of the support resources we offer in our two membership plans (Forever Edition vs. Dream Team):
It’s Tax Season, game on, let’s do this!