EDITORS’ PICK
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A few weeks ago during a consulting assignment I stumbled on a “new way” to review tax returns. I’ve written books and many articles on reviewing tax returns, presented numerous CPE programs and webinars, and was interviewed on many podcasts. Yet, I’ve just discovered a new way to review tax returns.
I believe the purpose of a tax return review is to make sure the return is accurately prepared, nothing has been left out, there are no red flags that would cause an audit, and that all tax benefits and planning opportunities have been taken advantage of.
This is a tall order and I know many firms have trouble accomplishing all of these goals. Many profess they do, but it just doesn’t work. The most important part of the review is where all tax benefits and planning opportunities have been taken advantage of. Many firms believe it’s to make sure all of the client’s data was entered correctly. When time and energy are spent checking the data entry, they are not giving the brain time to review issues and planning opportunities because they used the reviewer’s time inappropriately. My suggestion is to use tax comparison worksheets for the client data, with spot checks on some larger items, and then have the reviewer think about the return and how to make the client richer. This is the real professional service the client is paying you for.
My new method is to look at the return as if it were the prior year’s return of someone you are trying to get as a client for this year. Identify all the issues you would tell the client that were wrong or missed, or what tax and financial planning opportunities you would have advised the client about. Make that your review method. Try it on two or three of your larger tax returns and see whether you come up with anything. If you do, then perhaps you need to re-look at your review process and make some changes.
I call this the “trying to get a new client method.”
Using my SmartProof tax comparison worksheets is also an effective tool to use to review. If you want details about this, email me at GoodiesFromEd@withum.com and just put SmartProof as the subject. No messages necessary.
Most firms are already hot and heavy in tax season, but it’s not too late to make some changes. Try my “new” method and see what you find out.
Good luck with tax season.
Do not hesitate to contact me at emendlowitz@withum.com with your practice management questions or about engagements you might not be able to perform.
