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5 things to tell your clients before they file their taxes

4 min read

We’re almost halfway through tax season, which means that even clients with the most amazing procrastination skills will have started at least thinking about filing their taxes.

In fact, some of your accounting clients may be ready to press that final “enter” on their taxes. Even if tax advice isn’t your business’ main focus, it’s almost inevitable around this time of year that clients ask your opinion about their tax returns.

Should they present you with complicated and highly individual issues, your best bet may be to send them to a professional tax advisor (in case you aren’t one, of course). But if they have general questions about deadlines, charitable donations, or tax deductions that don’t require specialized tax knowledge and expertise, feel free to help them out with a suggestion or two. Or five.

1. Look for non-taxable income options

No, we’re not talking about tax evasion. Non-taxable income is completely legal and even encouraged by the government.

Income transferred to flexible spending accounts (FSAs) and health savings accounts (HSAs) is non-taxable. However, this income can and should only be spent in a certain way, and sometimes within a certain time period. For example, an FSA allows clients to spend on purposes like child care, health care or transit, while HSAs are solely for the purpose of health care.

Income transferred to flexible spending accounts (FSAs) and health savings accounts (HSAs) is non-taxable. However, this income can and should only be spent in a certain way, and sometimes within a certain time period.

Whether your clients are business owners or individuals, the option is open to them, since both employees and employers can benefit from using FSAs and HSAs. Advise clients to check out the rules, different providers and packages, and choose a plan that best fits their spending habits.

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2. Deductions, deductions, deductions

Both businesses and individuals can make use of tax deductions. In the case of individuals, health care, mortgage, property tax, and many other expenses are tax deductible. While itemizing deductions is not always necessary as there’s a standard deduction amount anybody can apply for, itemization may further increase the amount of money you get back.

Businesses can make use of deductions as well. Office equipment, IT developments, charitable donations, employee bonuses, or even office parties are tax deductible. Make sure your client maximizes their deductions before filing their tax return.

3. Make use of tax credits

Tax credits have the same effect as deductions: they lower the amount of money taxpayers’ have to pay to the government. However, tax credits are more valuable because instead of lowering the taxable income, tax credits diminish the actual amount of taxes to be paid.

There’s a variety of tax credits available. From child care to retirement saving or buying an electric vehicle, taxpayers can apply various tax credits to their returns

There’s a variety of tax credits available. From child care to retirement saving or buying an electric vehicle, taxpayers can apply various tax credits to their returns. Check out the options and draw your clients’ attention to the most promising ones.

4. Keep records organized

While this piece of advice can’t help your clients for tax season 2019, now would be a good time to point out how important a good filing system is.

If your clients still spend most of tax season fishing crumpled invoices from the back of their drawers, it’s time you had a little chat with them about organization.

While filing is nobody’s favorite activity, organized and up-to-date records can help save time and money. After all, who likes finding forgotten invoices that they could’ve claimed on their tax return – three years ago?

Suggest some kind of accounting software to your clients. But if they lack the willingness (or the budget) for software, even a simple spreadsheet will do, provided your clients record all their relevant invoices on it.

5. Plan for taxes

Again, this piece of advice will be more useful for the future than tax season 2019, but now is as good a time as any to let your clients know how effective tax planning works.

While tax season is usually just short of three months, tax planning should take up the whole year. Before each major financial move (i.e. purchasing new equipment, donating to charity, contributing to pension funds, etc), clients should consider how the move affects their taxes.

Can they deduct the amount? Can they claim tax credit for it? Bearing these in mind allows for more tax-conscious spending, which in turn will minimize your clients’ taxes and increase their savings.

Planning includes budgeting as well. If your clients tend to owe taxes at the end of each financial year, it’s best if they budget for it ahead rather than scrambling for cash at the last minute.

Conclusion

Tax season is a great opportunity for accounting clients to have a thorough look at their finances. While paying taxes is usually not a joyous activity, tax season can remind clients that planning their finances with a mind on eventual taxes can help maximize their savings and minimize the actual amount of taxes due.

Instead of a last-minute scramble and countless missed opportunities, let tax planning be a smart, year-round financial activity.

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* This blog provides general information and discussion about global business payments and related subjects. The content provided in this blog ("Content”), should not be construed as and is not intended to constitute financial, legal or tax advice. You should seek the advice of professionals prior to acting upon any information contained in the Content. All Content is provided strictly “as is” and we make no warranty or representation of any kind regarding the Content.