Insights on Key Trends in an Evolving Profession: AICPA ENGAGE 2018 Conference Speakers Share Expertise on Financial Planning, Recruiting, Audit Innovation, and Automation

By Polyak, Ilana; Adamek, Drew et al. | Journal of Accountancy, August 2018 | Go to article overview

Insights on Key Trends in an Evolving Profession: AICPA ENGAGE 2018 Conference Speakers Share Expertise on Financial Planning, Recruiting, Audit Innovation, and Automation


Polyak, Ilana, Adamek, Drew, Farr, Liz, Carlozo, Lou, Journal of Accountancy


Experts in a variety of accounting disciplines presented guidance at a huge gathering of accountants at the AICPA ENGAGE 2018 conference in Las Vegas in June. Seven AICPA conferences joined forces to present attendees with a vast array of choices and important learning opportunities. Here are just a few of the topics that were covered during presentations at the conference.

PLANNING IDEAS FROM FORM 1040 (AND BEYOND)

By Ilana Polyak

Form 1040, U.S. Individual Income Tax Return, is one of the most important documents that CPAs who do tax work will encounter. In addition to providing a view of the current tax situation, the form also provides insights into planning opportunities, and CPAs may want to make a Form 1040 review one of the first steps in a new client engagement.

"The 1040 always tells us a lot about the personality of a client," said Alpa Patel, CPA, tax partner in the Atlanta office of Charlotte, N.C.-based DHG. "It gives a lot of insight into the individual and their preferences."

During interviews before ENGAGE, Patel and her colleague Tara Thomas, CPA, senior tax manager at DHG, highlighted some of the ways CPAs can use clients' tax filings to uncover planning strategies, including:

Stacking charitable contributions

When reviewing a tax return, pay special attention to any itemized deductions, especially those for charitable donations. Given the changes made by PL. 115-97, known as the Tax Cuts and Jobs Act, clients will likely need to rethink their giving strategies.

The new standard deduction of $24,000 for married couples filing jointly, $18,000 for heads of household, and $12,000 for all other individuals means that many clients will no longer itemize deductions, Patel said.

That presents challenges for charitably minded clients, who may not be able to realize the same benefit for their gifts as before. Depending on the client's charitable goals, you might recommend a strategy known as stacking or bunching deductions, Patel said.

For example, instead of making five $10,000 donations in five consecutive years--which, when combined with other deductions, may not push the donor over the standard deduction threshold--clients can "stack" $50,000 worth of gifts into one year.

Making sure clients' investments are tax-efficient

Another reason to scour the tax return is to figure out whether the client's investments provide the best after-tax return. For example, if a client is projected to be in the 0% capital gains bracket, Patel and her clients look for opportunities to sell appreciated investments in order to maximize the bracket.

Additionally, some clients might benefit from municipal bonds. "You might get a lower return, but [once] you factor in the taxes, you'll get a higher after-tax return," Patel said.

Determining whether they have the right type of 401 (k)

A tax return can also tell you whether a client has been investing in a traditional or a Roth 401(k). This is the first step in evaluating the optimal 401(k) strategy.

Retirement savers like the Roth version of the 401(k) because it allows them to invest after-tax money in exchange for tax-free growth and withdrawals. However, high earners need to weigh the desire for tax-free retirement income against their current tax liability. A traditional 401(k) would allow them to deduct substantial sums.

Reducing taxable retirement income

A Form 1040 also outlines the sources of income that are available for clients in retirement. In the years leading up to retirement, clients should plan to minimize taxable retirement income.

First, anyone with a nondeductible individual retirement account needs to keep track of its basis to avoid having 100% of the distribution becoming fully taxable in error.

"A portion of the distribution from the nondeductible IRA would be tax-free because they have basis," Patel noted. …

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