Tax Pro Q&A: Tax Season Productivity Tips

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This month’s Tax Pro Q&A focuses on how tax practitioners can be more productive during tax season. Recently, I sat down with Andrew Poulos, EA, who owns his own firm, Poulos Accounting & Consulting, Inc., in the Atlanta area.

Andrew may be well known to Intuit tax accountant customers because he has authored a number of articles on form of ownership, tax efficiency, software and a variety of other topics. He also has been featured nationally on Fox Business News and One America News Network, and has been quoted in USA Today and other publications. Andrew is also founder of the Poulos Children’s Cancer Foundation.

Scott Cytron: What is your #1 tip on how to be more productive for tax season?

Andrew Poulos: I truly believe that using technologies is the key to being productive during tax season. Whether it’s using secure online portal, Evernote, Dropbox or other tools, tax season can be smoother and more productive if you get your clients acclimated to providing their documents electronically. It saves time on tax return preparation, as well as overhead expenses. Life is much better for everyone in the office when you have your clients providing their tax documents electronically.

SC: Tell me three to five issues that are particular to business owners for tax year 2015.

AP: First, business owners will face added reporting requirements with the Affordable Care Act, which will add time and complexity to their record keeping.

Secondly, with the Sec. 179 increased deduction limit of $500,000 expired as of 2014, business owners at the moment don’t know if they will be able to write-off accelerated depreciation or bonus depreciation for computers, machinery, vehicles and other assets they may have purchased in 2015 for business use. I believe that Congress will extend the Sec. 179 deduction and bonus depreciation before the end of the year, but there is no telling what they might do.

A new issue that business owners will face, which many are probably not aware of at the moment, is the increased penalties for late filing of information returns. Filing late W-2’s and 1099’s, which oftentimes isn’t a big concern to business owners because they may not have many information returns to file, or may not view it as a big deal, will incur significant penalties. The penalties have increased from $30 to $50 for late filings within 30 days of the due date, and from $60 to $100 for late filings after 30 days and prior to Aug. 1 of the due date, and from $100 to $250 for late filings after Aug. 1. This is per W-2 and 1099, not the penalty for the total batch of information returns that are filed late.

The IRS is adding a great deal of pressure on business owners with these penalties, so timely filing of all returns is imperative.

SC: What kinds of issues are affecting individuals for tax year 2015?

AP: For 2015, individuals should be careful with their charitable contributions. They need to keep accurate and adequate records when making donations because the IRS is increasing their audits in this area. They are conducting more correspondence audits, which makes it easier and less costly for the IRS to scrutinize charitable donations to make sure individuals are being honest and keeping good records due to all the scams with fake charities.

Another issue facing individuals for 2015 is the new deadline to file the FinCEN report for individuals who have foreign bank accounts, or signature authority on foreign bank accounts. The deadline has been June 30 to file the FBAR report for the prior year, but starting in 2016, the deadline is April 15. This is a significant change that will catch taxpayers and tax preparers by surprise if they are not aware of the change.

Another matter that individuals will face for the year is the expired deduction for mortgage insurance premiums paid with their mortgage. This deduction expired in 2014, so unless Congress extends it with any of the tax extender legislation they might pass by year-end, taxpayers who are homeowners and pay mortgage insurance won’t get the deduction for 2015.

Individuals who have children in college won’t get the deduction for qualified tuition and related expenses unless Congress extends this law retroactive to Jan. 1, 2015. As of today, this deduction expired at the end of 2014.

There are quite a few tax law changes and expired deductions that are up in the air at the moment. The next few weeks will be telling of what kind of tax season it will be for everyone.

SC: How do you manage to keep your head above water during this busy time?

AP: After 20 years in the industry, I’ve learned to manage the workload and stress. Unlike many tax preparers who only prepare taxes, I provide accounting, payroll, tax preparation, tax representation and consulting services, so it can be challenging during tax season. I have transformed my business the last few years to be more tech savvy and use technologies to service my clients remotely and not meet as many clients face to face. In the course of a year, I probably meet less than a dozen clients in person. Most of my work is done remotely over the Internet, which allows me to manage my workload and to work with clients across the country and internationally. I have implemented technologies and policies that allow me to work differently that most tax and accounting professionals in the industry.

SC: What is the latest you’ll let an individual or business client bring you their tax records for the April 15 deadline without filing an extension? How did you choose this date?

AP: The latest that I will let an individual client bring their tax records for a timely filing is April 1. For business clients, it’s different because tax return deadlines are on a different schedule if they are an S corp or corporation. Therefore, with my business clients, I try to reach out to them and get them started by mid-February. These dates are selected based on my experience with the workload and the time I have to allocate to each client’s needs.

SC: What is the number one mistake you see business owners making in their books? How about individuals?

AP: The biggest mistake I see business owners making every year is bad recordkeeping, and the lack of consulting and tax planning during the year, which leads to problems during tax season! Either bad books, or lack of recordkeeping, is very common. I see it all the time where business owners spend money on expenses that may not necessarily be deductible, or may pose challenges that the owner doesn’t realize because there was no planning or consulting with an accountant or tax professional.

SC: Last question: If you were stranded on a desert island with access to only one kind of technology, what would it be and why?

AP: Very good question. I would say my iPad would be my technology that I would have with me if I were stranded on a desert island. Hopefully, I would have some Wi-Fi connection in a perfect world, so that I can connect remotely to my office computer to get work done, and communicate with clients by email.

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