Effective Tax Planning Builds Trust with Clients

Article excerpt

Fourth quarter 2004 is upon us, and that means it's time for accountants to turn their attention to tax planning. Although the conscientious tax accountant talks with his or her clients throughout the year, most only start the formal process of meeting with clients' and making year-end adjustments during the final three months of the year.


Michael M. Eisenberg, CPA/PFS, is proactive in contacting his clients. Taking his role as a trusted advisor to heart, the Los Angeles, Calif., practitioner says, "I don't want my clients to have any surprises on April 15."

Most tax accountants begin the process with last year's return. It is important that client information is accurate, an area where high quality tax planning software is invaluable. Baltimore, Md. CPA Lyle K. Benson, CPA/PFS recommends that practitioners ensure their software takes into account AMT, while performing rigorous, accurate calculations. His firm, L. K. Benson & Company, chose BNA Tax Planning (www.bnatax.com), a package that handles multiple years, multiple cases and all states. Benson stresses the importance of incorporating investment planning into the overall financial planning process. According to Benson, "Tax planning and investment planning go hand in hand."

Most experts agree there should be fewer complications in the planning process this year than last year; most of the provisions of the President's 2003 Tax Act remain unchanged for 2004. Nevertheless, tax rules are never simple, and tax accountants must examine each client's tax picture on an individual basis. New York City-based Phyllis Bernstein, CPA/PFS, president of Phyllis Bernstein Consulting, Inc., shared two tax tips she recently discussed with clients:

1. Tax Savings for Moving Expenses

Clients who qualify can deduct moving expenses for them and their belongings as an adjustment to their income, even if they do not itemize, providing a large break for taxpayers. The requirement is that the move must be connected with a change in their place of work, and the new job location must be at least 50 miles farther from their old home than was their old job location.

2. Tax Savings for Adoption

If clients adopt, they can generally claim a credit of up to $10,390 (2004) per child to help cover expenses. If the credit wipes out their tax for the year in which they claim it, the unused portion can be carried over to future years. …