Mentor RIA Consulting - Allowing you to focus on what you do best

Recent Posts

Sales Incentives: Who Really Pays?
Could an IRA Trust Work for Your Plan?
Is the Pandemic Changing Your Plans?
Form CRS: Prop or Flop?
Using 401(k) Loans for Short Term Liquidity


RIA Business
powered by

My Blog

Wait for It

About this time each year, we hear from advisors and accountants frustrated with customers who are pushing to file their income tax returns as soon as possible. More than a few of these customers have not yet received all of the documents they will need for an accurate filing, and many of them complain about the advice to wait to file and the need to wait on those documents. High on the list are the annual K-1 forms issued, for example, by trusts to their beneficiaries and partnerships to their partners. Just like many 1099 forms, these forms almost never are completed in time for the first or even second wave of filing.

The most important things to remember in this situation are few but critical. First, understanding that no matter how much one complains it will not hasten the arrival of the desired forms will help to encourage the customers to wait despite their impatience. Second, the accuracy of the return is necessary to a smooth filing and processing. Guessing as to the amounts to report (which may happen without the form in hand) could lead either to underreporting and problems with the IRS or over-reporting and thus overpayment of taxes. Neither approach seems to be very useful to a taxpayer even if their only focus is getting that return done.

Finally, a big question for the customer as taxpayer is – why the rush? There is no big prize for being an early filer; in fact, this year the concern for fraudulent filings has led the IRS to delay refunds until mid-February. If it is a large refund a customer is expecting, they should be able to answer the question why they overpaid over the course of the year through withholding and estimated payments. That approach is nothing more than providing the government with an interest free loan while foregoing the use of one’s funds in the interim. Certainly, if it is a payment that is due, there should be no hurry to finish since we have until mid-April to pay the balance.

Bottom line, the next time a customer complains about delays in tax filing, either ignore them or challenge them to explain why they feel the need to complain. A little patience, helped along by some education you can provide them, should do the trick.

0 Comments to Wait for It:

Comments RSS

Add a Comment

Your Name:
Email Address: (Required)
Make your text bigger, bold, italic and more with HTML tags. We'll show you how.
Post Comment
Website Builder provided by  Vistaprint