Not long ago, I came across a practice advertising that their clients didn’t need to be involved in preparing their returns at all. The pitch was, essentially, “We don’t even have to talk. Just drop off your info and we will do your return.” I’m sure that style of tax preparation works for some clients. I’m equally sure that practitioners who approach tax season that way miss a huge opportunity to provide real value to their clients.
Let me give you an example: I recently worked with a woman who owned a small hair salon—just her and one other woman. This client had fairly low income, low enough that she should have been eligible for the Earned Income Tax Credit. However, her previous accountant hadn’t claimed the credit on the prior returns she brought in.
After asking a few questions, I discovered that she was reporting passive income for subleasing a stall to the other stylist she worked with, and she was not allocating any of the other overhead costs. As she did not own the building, this was really a sublease arrangement. Although this reporting helped her avoid some self-employment taxes, it also kept her from being able to claim the much more valuable EITC. Once we repositioned that sublease income into her business activity, we drastically improved her tax situation.
We would have completely missed this opportunity if we had just churned out this woman’s return without taking the time to examine her situation. Tax season is hectic, and the temptation is strong to use last year’s return as a template. After all, if the client didn’t have any life-changing events last year—if they didn’t start a new business, didn’t have a baby, didn’t get married (or divorced!)—having comparable tax outcomes should be expected, right?
Don’t give in to that temptation. Take a minute to really examine your client’s situation and see what you can do to add value. The situation described above turned out to be valuable to both me and my client. Not only did I get to look like a hero to my client for saving her a great deal of money on her taxes, but I also brought in extra revenue by amending several old returns for her. That’s a clear win-win.
I sincerely believe that the best tax pros are those who don’t see themselves as just tax preparers. They see themselves as tax consultants and work hard to develop a relationship as a trusted advisor to their clients.
If you want to position yourself as a consultant (instead of just a preparer), I have two suggestions for you this tax season. First, double check your client’s return to see if there are any opportunities you may have overlooked. Second, tax season is a great opportunity to start a conversation with your client about the changes they can make this year to help them lower their tax bill next year. This conversation changes a rearview tax interview into a forward facing planning session and encourages your clients to keep you updated as changes occur.
Want to learn more about how to get more out of tax season? Check out this article about how to get the most out of your seasonal staff this tax season.