Last weekend I suddenly realized - I have 2 weeks to the end of tax season - and none of the returns which are due by April 15 are done, most not even started - and only 1 was almost finished. Panic was about to set in - then I looked at my list. I have a dying accounting practice - literally, my clients were from my dad or from my boss and are older than me with a couple of exceptions.
It is an extremely small practice, but I have clients in 4 (US) states - well, I did, but that is another story - I now have in clients, that I know of, in 3 states. My dad was an accountant for an avant garde art gallery at one time and he had many clients who were “modern” artists. My boss had a couple of clients who were writers. Between the two groups I have had clients in 7 states other than my home state and clients in Paris, France and in Auckland, New Zealand. (At one time I had a client in Hawaii and the clients in Paris - one was 6 hours ahead of me and one was 6 hours behind and I would confused as to which was which. The solution? I telephone (pre-Internet days) all of them at 3:00. Which 3:00? It did not matter - it would either be 9 am or 9 pm - not too early to call and not too late to call. Just when I thought that I had the time difference dealt with - a client moved to New Zealand - 16 hours off and a different day!
I do the returns in the order I receive the information. If, though, I have returns that have to go out of state and others that are local, when it gets down to the end - as it is now - I have to get the out of state returns done first so they can be mailed to the client in time for the client to look over the returns, come up with any money they need to pay and get the return out timely on their end. Local clients I can always hand deliver the return. (My dad used to hand deliver returns - he and I (long before I was old enough to work) would go out at night and drop off returns at his clients. I loved doing that with him.)
So a return that has to go across the country was mailed out on Monday - plenty of time in advance. I spent yesterday afternoon preparing extensions for 2 clients who have requested them - I mailed the extensions out to the tax offices that they have to go today. I worked up estimated taxes (for 2019) for one client today and they will go out to him tomorrow. (Estimated taxes are paid by people who do not have taxes withholding on parts of their income due to the type of the income and I have to estimate what their income/taxes will be next year for them.) Normally one has to have 90% of their tax prepaid when the return is due, by withholding and paid estimates to avoid a penalty - or if one’s tax went up a lot in the year the estimate has to be equal to or greater than 100% of their tax for the prior year - in some cases 110% of same. I have to calculate and guess how much the clients need to pay as estimates for the coming year without them overpaying a lot, but also enough that they will not have a penalty at the end of the coming year. These will go to the client (again out of state) tomorrow in the mail.
I have another client who owes taxes for past years. Her husband had been ill and they were also moving to another state so the past several years’ taxes have been a bit late in being filed. She always gets a refund so there is no penalty for filing late, although I always file extensions for her, but she files long after same is over. Last year I went after her to give me info so I could do her return for 2014 so she could file it or she would lose her refund - I prepared the return and also her 2017 - so we started to catch up. I need to do her 2015 return this year so that she does not lose her refund from same. Big problem - the land near her home broke through a retaining wall and she cannot go home - even just to get the papers needed for her 2015 return. I filled in a form for her so that IRS will send copies of what they have for her for 2015 - but it is getting close and I have not received the papers from them. Luckily she had mailed or emailed me the forms she had from their pensions when I made the estimates for 2015 so I have that information. Her other income is Social Security and a tiny bit of bank account interest. Today I looked up what percent Social Security went up in 2015 compared to 2014 so I could estimate out what her income would have been (turned out it was the same amount for both years) and then estimated what would have been withheld on it. I also took her 2014 and her 2017 interest income to figure out what she probably received in 2015. (2016 also has to be completed so I don’t have the info for same.) If I don’t receive the information by tomorrow I will do the return with the info I have, which should be a close estimate of everything. She will have filed timely before she loses her refund. If it is wrong - well, IRS will compare it to their records and correct the numbers before sending her - her refund.
How do I keep track of all of this and make sure all the needed information is on the forms and correct? I have two things that help greatly.
First, I have a pocket file holder - nice plastic one that sits on the floor next to my desk. It has sections in it. A file folder is slightly too large (by maybe half an inch) across to fit in as one is just suppose to use each pocket as a file. I want to be able to pull out the entire file and know everything is in it. I cut one end off of some file folders - just enough for them to fit in the holder. Problem solved. I used to use removable labels when I had a lot of clients so I could reuse the cut folders during the season. Now each client has a folder with their name on it.
When a client mails tax papers to me - whether all of the papers needed or some of them - I put them in the matching folder - in the file holder. I just take out that folder when I am ready to work on their return. Our information for our personal return and for our business returns go into two of these folders also (one is for our return and one is for the business returns) - in this case the year end forms received go into the folder and I when I move last year’s personal bills into a box (in the office closet) at year end, I put the sections of the bills into the matching tax return information folder also.
Second, most of my clients have fairly ordinary returns. So I wrote up a form for myself to fill in the all of the info that might be involved in clients (or our) returns - a section with various types of income listed with lines for the info, a section for taxes paid, estimates and withholding, another section for deductible expenses, and one for adjustments to be made to everything for the state return (if there is one) for the client. Across the bottom is room to write which returns have to be filed by the client - left side Federal, right side state, so I can check that I have all the needed forms for client to file. This information form is changed as needed - when the requirement to have medical insurance under ACA came into being - I added a check box at the top to check off that client has medical insurance. The back of this form is blank so I can list things if there are several of the same item to be totaled. If there are too many to fit, I add a piece of “columnar paper” (paper with columns to list money amount) and use that. This system has worked well for well over a decade and I will keep using it to keep clients’ info organized for their taxes.
Then when I am done with the clients’ returns I have to do the hard returns. Ours and our corporation. They have to be done together - or at least I have to break out some of the figures between the two before doing the return. These at least I have until midnight, April 15 to finish and mail.
Some people find all of this overwhelming when I talk about it. I grew up in a house with both parents who were accountants - although most of the time only dad was working when I was growing up - mom was a stay at home mom until I was in college. (They did have to come up with tuition - after scholarships and loans were subtracted - to pay tuition for the 3 of us.) Husband did not understand this at first - everything was secondary to “tax season”. My parents anniversary is during tax season (when they married it was ending a month earlier than it does now). My mom’s birthday is during tax season (she just turned 90!). Even husband’s birthday falls during tax season - but his I cannot ignore.
So at this point unless something odd happens, I should be done in time - even with time off to write this post and next week’s post and do something for husband’s birthday (and having gone to a birthday party for mom given by my sister). Then - payroll taxes are due by the end of the month!
THOUGHT OF THE WEEK -
If you have a repetitive task - daily, weekly, monthly, quarterly or annually - figure out how you can make it more automatic to do. This is true whether it is a task around the house such as cleaning or laundry or changing towels - I change the sponges and scrub pad in the kitchen every month at the change of the month to remind to do so. I change all the towels on Mondays (new start to the work week). I then change the bathroom towels (in both bathrooms) on Thursdays also - why Thursday? It is about the middle of the week - and we have garbage pickup on Thursdays - so the kitchen towels are changed on the same days as the garbage is picked up. I change the kitchen towels again on Wednesday and Friday - why not Thursday? Well, I like to change the kitchen towels more often as I am working with food that is raw and may have microbes in it and then touching the towels. Why Wednesday and Friday? - Well Monday, Wednesday, and Friday which are every other day.
You have to decide for yourself when to do what and figure out how to remind yourself what to do. It helps a lot to have a schedule and check off lists.
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