Simple returns

[JG EA]

I have some simple returns this time of the year. What can I offer them, to make it worth their while to pay me instead of buying one of the many tax prep programs and filing on line themselves.

What do you do?

[Delta]

Simple Returns

Many of the software companies/IRS have been making it more difficult to compete for the simple returns. However, you have to locate your strengths....financial planning, college funding, retirement and market yourself on that level...even to the simple returns. Many of the simple returns are single, yound individuals. At some point they may be in or considering college, buying a home, and yes they need to be considering retirement funding as well. Think about how to market yourself to this target age group and let them know with a letter/brochure. Why would it be helpful for them to sit down with you?

[rosieea]

I have found that many of the so-called simple returns, self-prepared on Turbo Tax and the like, are incorrect, mainly due to the taxpayer putting the information in the wrong place. It's not hard to convince such an individual that they not only need you to do a 1040X, but they'll need you to do their returns in the future. You may want to offer to review self-prepared returns.

[Snaggletooth]

Whole Picture

I stress to some of these "simple return" folks, that as long as they are just working for a company and getting a W-2, they are paying the maximum tax, and the IRS will love them forever. I tell them the only recourse to paying the maximum tax is to change types of income, investments, after-hours activities, etc. Sometimes this advice works, sometimes it doesn't.

Many of these are younger people, and when they become a first-time houseowner, the bank will generally ask for 3 years copies of tax returns. I am able to provide these if I have been retained to do their taxes. If not, I can't help them except to refer them to the IRS. (Most younger people do NOT keep a copy of their return, or if they do, they can't find it)

If the taxpayer is still young enough to be living at home, I encourage them NOT to file on their own until it can be determined whether their parents can claim them. Usually, there is a tremendous net difference in favor of the parents, not only on taxes but on credits as well.

I have a VERY LOW fee for simple returns. None of you want to hear this, but when we're forced into competition, we have to get competitive and that's just the economic facts of life whether we want to hear it or not. I won't compete with zero, but let's face it - these returns can be done in a matter of MINUTES for most of us.

The only way to defray the challenge from the free IRS filing, tele-filing, and do-it-yourself filing schemes is to emphasize what these young people are LOSING by choosing these options. And making sure that we provide a competitive and well-deserved alternative.

[ecb34691]

Simple returns

Agree with Snaggle, we deeply discount children of clients, to get them started in the right direction and also not to mess up the parents return by claiming themselves. As he said, they are SO simple with 1 or 2 w-2's and that's it, e-filed and out the door in minutes.

[Matt Sova]

simple returns

The returns for current clients children are done gratis. As the child gets older and graduates from college and gets his first "real" job I meet with them and discuss how their return may still be very simple, but there will now be a charge (very minimal). I let them know that the main reason they will want this is for financial discussions. In the upcoming years they will want to buy a house, get married, change jobs, etc. All of these will have an effect on their tax situation and I will be there for them.

Keep in mind that as they do these things the cost of the return goes up and everyone is happy.

Matt

[Chief]

Simple Returns

"Tax Software is No Substitute for Tax Knowledge."

[BP.]

convenience

Have you seen the new estimated prep times in the 1040 instructions (p. 79?) According to this, someone using software to do even a simple return could spend a couple days doing their taxes when you throw in the state and maybe a local return. People don't have the time for that.

[Gretel]

Prep.Times

Just got an update on this issue from NSA after a bunch of us have protetest.

IRS CLARIFIES THE NEW TAXPAYER BURDEN TABLES



The IRS has issued a clarification to its new taxpayer burden tables that appear on page 79 of the 2005 Form 1040 Instructions booklet. This clarification is posted on the IRS website. The IRS developed a new model in 2005 to estimate the cost and time it takes a taxpayer to prepare a tax return. This model listed “national averages” for a taxpayer preparing his own return using pencil and paper, for a taxpayer preparing his own return using tax software, and for a professional tax preparer preparing the taxpayer’s return. This model and the resulting tables did not take into consideration geographical and educational variances among other factors. As a result, the tables were misleading and confusing.



In its clarification, the IRS now says, “Because of the numerous variables, these nationwide averages should not be used by taxpayers or tax professionals as a guide for anticipating the cost of time involved with preparing an individual’s tax return.” Mea culpa and Amen.

[Bees Knees]

In other words, they have no meaning whatsoever and we are only doing this because the paper work reduction act requires us to waste time and paper on this meaningless task.

[BP.]

Thanks Gabriele

For posting the info about that update. I copied the chart and it's sitting on my desk, and sometimes I stare at it in disbelief, it's so ridiculous. Now I can discard it and move on!!

[Armando Beaujolais]

Check out the "Uniform Definition of Qualifying Confusion" on page 25-5 of TheTaxBook. It talks about the Paperwork Reduction Act, and other jokes.

[JG EA]

Thanks

for your suggestions. The answer I liked best was of course "Tax Software is No Substitute for Tax Knowledge." I'm sure this was a slam of sorts, but being without knowledge I didn't get it.

Perhaps though it was a slam on the one buying the off-the-shelf tax software. That is exactly my point. If they buy the software, perhaps they will miss something. What is the something they'll miss and can I supply it to my clients so they will be better off? I think and think the whole time they are present, I offer tons of services, but usually the simple return folks are happy with just simple tax preparation.

I remember trying to talk a young couple into letting the IRS fund 1/2 of their IRA deduction and still have thousands left over to buy whatever. They didn't want it. It was then that I realized that people have too much to deal with and can only accomplish something if they are at a certain point to appreciate the accomplishment,

So I've, with the help of this amazing board, answered the question - do the best I can and let it go.

[Joe Btfsplk]

off the shelf software

Some people can do their own taxes with pencil and paper. They could probably use off-the-shelf software to prepare them.

I had to prepare an amended return once for someone who attempted to prepare their own return with Turbo Tax. They did a pretty good job on most of the return, but misunderstood how to enter stock transactions and the IRS sent them a big bill for additional tax. The amended return cleared up the problem.

I have a friend who is a retired engineer who used to prepare his return manually. He did it accurately, but it took him an inordinate amount of time, so he now has me do it. Since he is a good friend and former co-worker, I do it dirt cheap--a 1040, a 1041 and another 1040 for his retarded son, all for less than my usual fee for a much simpler 1040.

[dmj4]

both mileage and depreciation

Four of five years ago I had a man come in that had done his own return and wanted me to check it. He had taken both mileage and depreciation on his over the road tractor trailer truck. That is the last time he attempted to use an off the shelf software.

A few years ago another client depreciated his rental house over 3 years. He had done the return by hand.