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Demand for CPA Audits Explode
Demand for CPA Audits and Reviews Expected to Explode
Author Sidney Kess, CPA, J.D., LL.M
Income Deferral Strategies
In 2013, there is a new, harsher tax landscape for high-income taxpayers. The top rates on ordinary...
Retirement Income Can Impact Medicare Surtax on Net Investment Income
Taxes and Retirement Income Individuals may receive a variety of income when they retire. Different...
22 Tips That are a Win-Win for College Savings Plans
The cost of tuition and related costs are continuing to rise at a greater pace than the rate of inflation,...
15 Tax Relief Tips for Casualty Event Victims
This year has seen the occurrence of dramatic casualty events across the country, from tornados in...
Uncertainty in Business Tax Planning
As summer wanes and autumn arrives, businesses and their owners would like to plan now to save on...
Tax Changes for 2012 and 2013 Resulting from Health Care Law
The U.S. Supreme Court declared the individual mandate in the Patient Protection and Affordable Care...
Employees Tax Obligations
Do you or your clients have household help? A nanny or babysitter? Cleaning person, domestic worker,...
The Sid Kess Approach
I have had the honor of meeting and shaking the hands of several well-known people over the years....
Tax Tips for 2012 and 2013
Estate and Gift Taxes: 2012 and 2013 Estate and gift tax planning in the era of uncertainty is very...
Inflation Adjustments for Tax Rules in 2012
Tax rules change annually due to legislation, court decisions, and cost-of-living adjustments (COLAs)...
Spring 2013 Statistics of Income Bulletin Now Available
WASHINGTON — The Internal Revenue Service today announced the availability of the spring 2013...
Apple's dirty little tax secret
Cathy Kearney, an accountant in the Irish city of Cork, lives with her husband and children in a large,...
IRS Should Take More Aggressive Action to Address Travel Card Misuse
The IRS Should Take More Aggressive Action to Address Travel Card Misuse WASHINGTON – Although the...
CPAs Hard to Find for SSAE 16/SAS 70 Audits
Service Organization Control (SOC) engagements are seen as a growth area for CPA firms. John McLaughlin,...
CPA Fraud Examiner
Robert Gralla is a CPA, Certified Fraud Examiner and Certified Forensic Accountant who has experience...
4 Tips on Bond Portfolios for Tough Times
The extraordinary measures taken by the United States Federal Reserve to stimulate employment growth...
Crowdfund & Small Firm Auditing
The signing of the Jumpstart Our Business Startups Act (JOBS Act) in April of this year has put the spotlight...
Crowdfund CPA Audits & Reviews Expected to Explode
The need for CPA audits and reviews is expected to explode based on the Jumpstart Our Business Startups...
A Sit Down with IRS Commissioner Faris Fink
As part of the ongoing series to learn more about the faces of the IRS, CPA Magazine Editor T. Steel...
Preparing With The Tax Stars
Gail Rosen, CPA, is president of Gail Rosen, CPA, PC in Martinsville, New Jersey. She has been a practicing...
Author Julie Welch, CPA/PFS, CFP
Avoid 50% Penalties on Distributions From Your Retirement Plan
When it comes time to withdraw money from a retirement plan, you should consider both nontax as...
Don’t Assume Social Security Benefits Are Taxable
Up to 85% of Social Security benefits can be taxed. However, it is possible that no Social Security...
23 Year-End Tax Tips
Time Your Income and Deductions - Accelerate income in light of the elimination of the Adjusted...
10 Ways the American Opportunity Tax Credit Reduces College Cost
The costs of higher education may be offset with two credits: the American Opportunity tax...
Capital Gains for Noncorporate Taxpayers - 2012
Julie Welch (Runtz) is the Director of Tax Services for Meara, King & Co. She graduated from William...
Consider the Ways to Get Money Out of Your Retirement Plans
Periodic Payments Many retirement plans allow you to take annuity payments. For example,...
Deduct Your Tax Return Preparation Fees Against Your Business Income
Many people cannot deduct their tax return preparation fees because the fees are miscellaneous...
Tax Action Plan 2012
Use this Tax Action Plan to note the ideas that will benefit clients now. Income 1. Take advantage...
Reducing Tax Investing In Rental Real Estate
Although the deduction of most “passive” losses is limited, you can reduce your taxable income...
Deducting Your Client's Home Office Expenses
Generally, the only expenses you can deduct for your home are interest and real estate taxes. However,...
Author Martin M. Shenkman, CPA, MBA, PFS, J.D.
Life Insurance Planning Post-ATRA
Insurance has, and will always remain, an integral part of many estate plans, regardless of the status...
CPA's Role in Estate Planning Post-ATRA
Introduction SALY (same as last year) can be a recipe for disaster if you don’t verify the...
21 Tips for S Corporations with Trusts and Estate Shareholders
There are over two million S corporations. In 2012 there has been a tremendous shift of wealth to...
10 Tax Tips on Reimbursement and Ways You May Access Assets in a Domestic Asset Protection Trust
If you are considering making large gifts in 2012, you may be concerned about whether you can have...
13 Tips On 2012 1040s Impact of 2012 Gift Planning
2012 was one of the most significant years in estate planning history. While the outcome of the election,...
LLC Checklist
LLCs are ubiquitous in planning but there are a myriad of tax issues and complications in spite of...
Handling 2012 Gift Tax Audits at the IRS Appeals Level
Introduction How you plan and address the avalanche of 2012 gifts, the filing of 2012 gift tax returns...
Checklist: FLP and FLLC Planning
Introduction Family limited partnerships and family limited liability companies (collectively,...
Gift Tax Returns Checklist
- Non-Acknowledged Gifts: Many clients make “informal” gifts to children and perhaps others that...
Form 1065 Partnership Tax Checklist
Practitioners dealing with partnership tax returns face a myriad of complex tax issues. Additionally,...
Author E. Martin Davidoff, CPA, Esq.
Protect Your Client
You can view the first half of this article by visiting http://www.cpataxmag.net/davidoff-stories/42-e-martin-davidoff-columns/869-steps-to-effective-irs-audit-resolution....
Steps to Effective IRS Audit Resolution
When taxpayers receive the dreaded notice that their business is going to be examined by the Internal...
The American Taxpayer Relief Act of 2012
On New Year’s Day, Congress completed its compromise to avoid the fiscal cliff. Here are the...
Offers In Compromise Improving
On May 21st, the IRS announced major revisions to the Offer in Compromise program (http://www.irs.gov/newsroom/article/0,,id=257542,00.html)....
IRS Appeals in Collection Matters
The most underutilized arm of the Internal Revenue Service with respect to Taxpayer collection issues...
Dealing with the IRS Regarding Collections, Penalty Abatements and Examinations
In practicing before the IRS regarding collection matters, penalty abatements and examinations, I...
New IRS Procedures Claim to Provide 'Fresh Start' for Taxpayers
Over the past several weeks, the IRS has made some significant changes in collection policies and...
IRS Rules of Engagement: Under Promise and Over Perform
In practicing before the IRS regarding collection matters, penalty abatements and examinations, I...
IRS Rules of Engagement No. 10: Never Let Deadlines Pass
In practicing before the IRS regarding collection matters, penalty abatements, and examinations, I have...
Rules of Engagement: Dealing With IRS Installment Plans
In practicing before the IRS concerning collection matters, penalty abatements and examinations, I...
Amy Walsh
KPMG Herbalife Partner Resigns: A Case Study on Preventing Auditor Insider Trading
When KPMG audit partner Scott I. London accepted an envelope of cash from his golf buddy in the parking...
Still Have an Undisclosed Foreign Account? IRS Rattles Its Saber and Sweetens the Pot for Taxpayers to Come Clean
Touting the $5 billion in tax revenue generated by its offshore voluntary disclosure programs, the...
United States Continues Its Siege Against Swiss Banks
On February 2, 2012, the United States government made an unprecedented move in its unrelenting investigation...
Dodd-Frank Whistleblower: What Independent Auditors Need to Know
The SEC in May issued its final rules implementing the new whistleblower program of the Dodd-Frank...
Author Jerry Love, CPA/PFS
When Should You Begin Drawing Social Security?
This is a question that I am frequently asked by clients. Should they start as soon as they turn 62,...
Small Business Gets Tax Credit for Providing Health Insurance
The Affordable Health Care Act (AHCA) is being called the most historic overhaul of the U.S. health...
10 Tax Tips On Implications for Debt Forgiveness
In general, if you are liable for a debt that is reduced, canceled, forgiven, or discharged, you must...
14 Tips to Inderstand the Fundamentals of Annuities
An annuity is an investment option that many people find difficult to understand and frequently turn...
The HSA Alternative for Small Business to Address Health Care Costs
It seems that one topic that is on the forefront of every small business owner's mind this summer...
Defending the "hobby loss" Rule with a Business Plan
Internal Revenue Code Section 183 (Activities Not Engaged in For Profit) limits deductions that...
Student Loans Exeed Country's Outstanding Credit Card Debt
This is the time of year when many students will be graduating from college and anxiously looking...
Can Anyone Fund Their Own Retirement?
One thing that anyone active in a tax practice understands is that you must adapt to an ever-changing...
Financial Planning Starting with Form 1040
Without a doubt there is a wealth of information we already know about our clients’ financial status...
How to Turn Over Your Business Without Going Under
It has been estimated that approximately 90% of the businesses in the United States are closely held....
Golfer Sergio Garcia's Victory Over the IRS
The IRS has created an “Issue Management Team” within its International Individual Compliance Group...
Expanding Your Practice with Quickbooks Consulting
QuickBooks Consulting (QBC) fits neatly in the category of expanding your practice because it is one...
How to Create a No-Equity Partner Position in Your Small to Mid-Size Firm
Most firms are faced with the dilemma of keeping long-term managers who are major contributors to...
Tax Humor
They’re the 1% no one aspires to join: the small percentage of taxpayers who get audited by the IRS....
Tax Humor: The IRS Motto
IRS MOTTO: "We're not happy until you're not happy!" “Ignore them and they’ll go away” is...
CPAs Expand Into SOC 2 After Death of SAS 70
After SAS 70 audits were used improperly the AICPA replaced the standard with SSAE 16. While attempting...
Top 6 1040 Tax Software Solutions 2012
Changing 1040 Software Vendors If clients are the heart of tax season then 1040 tax software is the...
CPAs are Ready to Perform Reviews for Crowdfunded Startups
Reviews of financial statements will be in the eye of the storm when the JOBS (Jumpstart Our Business...
Financial Planning Starting with Form 1040
- Details
- Written by Jerry Love
Without a doubt there is a wealth of information we already know about our clients’ financial status because we prepare their tax return. If we step back to see the forest instead of the trees there is much more the tax return is telling us about their overall financial well being and could lead to expanded services.
It is very important at the outset of this column to emphasize that all tax professionals who wish to offer services to their clients that are beyond tax compliance and tax planning, need to be familiar with Treasury Reg. Section 301.7216-2(n). These Regulations permit the tax return preparer to use their client list to send a newsletter to clients containing, “tax information and general business or economic information or analysis for educational purposes.” However, 7216 explicitly states that the client list may not be used to “solicit any service or product other than tax return preparation services.” You can find more information at www.pfp.aicpa.org.
You can use the tax return to identify personal financial planning needs of the client. It gives you an overall picture of clients’ financial situation and can uncover opportunities for planning that client should consider.
Items to consider include:
1. What is their ratio of investment income to their total income?
2. If they have a high level of income but little or no investment income, do they have a high level of debt or high level of consumption or a combination?
3. As you review their investment income, do they seem to have diversified investments?
4. Is there an appearance that the client’s assets may be low yield investments or at the opposite, concentrated in high-risk investments? Do they need assistance in defining their risk tolerance and/or assistance in understanding the principles of risk/reward?
5. Do they have a high cash balance in a limited number of financial institutions? Have they considered their balances in light of the FDIC insurance limits?
6. Have they established an emergency savings fund?
7. Are they maximizing their participation in a 401k or similar deferral plan?
8. Do they have an option to participate in a Flex Plan?
9. If they are self-employed, have they established a retirement plan? Is their plan structured to give them the maximum contribution possible?
10. If their primary investment and retirement is based on a closely held business, do they have a strategy for developing its value and have a succession plan to realize that value?
11. If they are self-employed, have they considered the opportunity to have dependents employed in the business?
12. Do they have children under age 18? Do they have plans to send them to college and if so, do they have a strategy for funding part or all of that cost?
13. Will they potentially have any financial responsibility for other family members whether that might be parents, siblings, adult children or grandchildren?
14. Is their spouse active in the business and if so, have they explored the compensation to the spouse including fringe benefits and retirement plans?
15. If they have an IRA, have they considered converting it to a Roth IRA? Have they considered funding the maximum non-deductible IRA in addition to their retirement plan funding?
16. Do they have items reflected on Schedule C, F or E that may be a drain on their overall cash flow and diminishing their liquidity? Have they considered the long-term benefit of the venture and how it may be contributing or hindering their financial goals?
17. If the client has been successful in the accumulation of assets and developing their net worth, do they need estate planning? Do they have plans to make significant charitable contributions during their lifetime or at their death?
18. Has the client considered their potential needs relative to life insurance whether it may be to provide income replacement or to provide cash to pay either estate taxes or fund a buyout of their closely held business?
19. If they are self-employed does their health insurance qualify to be deducted on page 1 of Form 1040?
20. Does the client qualify for a Health Savings Account? Have they considered using the HSA as an additional vehicle to accumulate tax deferred dollars for their retirement years?
21. Do they have disability insurance? Will it meet their needs?
22. Has the client given consideration to long-term care insurance and how to address the potential future medical expenses they may encounter?
23. How much is their annual mortgage interest expense? Do they have more than one mortgage? Do they have home equity loans or home equity line of credit? Do they need to evaluate their cash flow and consider a plan to reduce their overall debt?
24. Are they high-income taxpayers who are living paycheck to paycheck and putting their financial security on the back burner?
25. On Schedule E, what type of entities do they have? Do any of these give rise to concerns for unexpected liability?
26. On Schedule D, do they have a large volume of trading? Does their portfolio contain unrealized gains or losses?
This column and list is not an all inclusive list. For a more extensive list, refer to http://www.aicpa.org/InterestAreas/PersonalFinancialPlanning/Resources/TaxPlanning/DownloadableDocuments/AnalysisofaTaxReturnforPFP.pdf.
As indicated, this short column cannot give an in depth discussion of everything to consider when reviewing the Form 1040 and although the above referenced list gives more guidance, neither will replace a scheduled time to explore financial planning topics with your client. Clients both want and need to explore financial planning in more depth.
