As we look to close the books on another successful year, 2019 presents some interesting circumstances for tax advisors. This will be the first tax filing year under the Tax Cuts and Jobs Act (TCJA) that was put into law on December 22, 2017, and your clients will be surprised when they realize their refunds are smaller than in the past.
Many people rely on their tax refunds each year for a variety of reasons. And when it’s smaller than they thought or they owe money, they tend to blame the tax professional. They feel like something was either done incorrectly or was overlooked.
In reality, the client may not be receiving a refund for a number of reasons, none of which are directly the tax advisor’s fault. The deduction they have been accustomed to may have gone away due to the change in payroll tax deductions, the client’s inability to take SALT deductions or some other change in the new tax law that is not beneficial to them.
To help your clients adjust to the new reality, I recommend the following:
1) Send out an email and remind them changes may be in store for their upcoming tax filing due to the new laws taking effect.
2) Be transparent and show them how their refund has changed. Explain why the change has taken place.
3) Tell them how to avoid this for next year, and make sure they implement the recommended changes.
Most people are aware that this coming year will exhibit changes in their tax situation because of the new laws, but they are unsure how it will affect them. It's best to be honest. This may result in you spending some additional time with them this year, but, at the same time, it may solidify your relationship.
There may be opportunities, prior to the thick of tax season, for you to look at your client list, identify those who may have a potential issue and schedule time to review their personal situation. This short meeting will allow you to circumvent having an unhappy client or one that is looking for a new tax advisor. They, for their part, will be happy you are being so proactive.
This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.
Lawrence Sprung CFP® is the President and Founder of Mitlin Financial, Inc. He entered the financial industry in 1996 and continues to be inspired and energized by the challenge of helping his clients achieve and even surpass their financial goals.
Mitlin Financial, Inc. is an SEC Registered Investment Advisor (RIA) that prides itself on...