simple tax tips

Personal Planning as Part of Year-End Planning


Our focus in this article to encourage broader personal tax planning for your clients, when one sits down to focus on 2020’s year-end tax plans. We will discuss action steps that may be an important part of one’s year-end personal, financial and business planning.

Oct 26th 2020
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Tax planners and preparers may also see an emphasis on getting-and-staying-organized, which may help all year, not just for year-end work.

Personal Emphasis

The location of important documents should be in writing, since important documents are rarely in one place. Correspondence on a topic should generally be in one place as well. For example, the estate planning attorney’s letters of instructions should be with the will, living trust documents, etc.

The lists herein might help one’s organizational efforts by providing a convenient place to note locations of documents. Following is list is an example of some important personal and financial information:

  • Deeds, leases, first and second homes, business properties.
  • Appraisals, photos of collections, etc.
  • Insurance documents and declarations
  • Passports
  • Business entities, corporate and partnership returns, or at least K-1s for open years

Consider the need for annual returns for closed years when important to establishing the basis of assets or the basis of an owner’s equity. Also ask your clients:

  • Is it time to introduce professional trustees considering one’s health, as well as the needs of various family members?
  • Are there managers capable of running the business or someone with suitable skills and legal authority to run your affairs in the event of lengthy illness or incapacity?
  • What personal training might be appropriate? The training might range from a Master’s degree to more computer training for you or your staff.
  • Is there a safe deposit box?  If so, where?

Business Emphasis

Compensation review and even consideration of termination of employees may be particularly important in the new COVID-19 environment. Some questions you should ask:

  • What benefit plans are currently offered by the company and should the benefit levels be reconsidered?
  • What degree of participation in such plans does the owner have?
  • Are there union considerations?
  • Should the employee benefit plans be audited, or is an audit contractually or legally required?
  • Have all benefit plan tax filings been submitted; e.g., Form 5500 or Form 5500-SF (Report of Small Employee Benefit Plan)?
  • Have obligatory benefit and insurance requirements been satisfied?

The Consolidated Omnibus Budget Reconciliation Act, COBRA, can provide certain employees access to the group plan for a limited time after leaving. In addition, know if discretionary benefit plans should be expanded or contracted in the new COVID-19 environment. This can include, but is not limited to:

  • bonus reviews
  • stock options
  • retirement plans generally (time for plan changes?)
  • stock appreciation rights
  • employee training and education generally

Internal controls often emphasize segregation of duties and clearly understood lines of authority, which may have been altered by COVID-19 considerations. With regard to this, ask your clients:

  • Is it time to consider audited financial statements for the company?  
  • Is it time to review the accounting system to insure information is timely and that comparisons are relevant?
  • Are there unusual pressures that increase the risk of fraud?
  • Should you be engaged to review internal controls? 
  • Has the COVID-19 pandemic caused such changes in the business that new reviews of internal controls are appropriate?
  • Is there more work off-site whereas the system was designed for workers being in close proximity?
  • What planning can be done to minimize seasonality influences regarding cash flow?
  • What steps can help stabilize cash flow?


Year-end is an unusually good time to plan for the longer-term changes ranging from a revised pricing strategy to adding or dropping products or even divisions of a business. It is also a good time for encouragement for having a planning perspective year-round.

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