Life changes and significant milestones happen every day. With the passing of another year, a lot can happen that can affect your client’s lives as well as their tax returns. As the person in charge of preparing their financial statements, you need to be aware of these milestones that play a role in how taxes are computed.
To be able to produce accurate financial statements for your clients, making sure to keep updated on their life changes will greatly help. Meeting with your clients more than annually will ensure that you are kept up-to-date when it comes to the specific changes that can affect their tax returns.
When it comes to filing taxes, your clients need to be aware that certain life changes may affect how their taxes are filed. Here is a list of the crucial milestones clients can go through in between the times you meet with them for taxes:
Getting married can change the way your clients file their taxes because in most cases, they will choose to file a joint tax return. As their tax preparer, you will need to look at their specific situation and advise them about how to file as a couple.
A divorce will affect how tax returns are filed. To state the obvious, once the divorce is final, a couple is no longer able to file a joint tax return. However, if the divorce has not yet been finalized at the end of the calendar year (on December 31st), the divorced couple may still be able to file jointly if they wish. This may be recommended if it is more convenient for the couple. You should look into their situation and advise them accordingly.
Changes in a person’s employment status – whether this means starting a new job or ending your employment at an old one – can have dire effects on the computation of an individual’s taxes. This is especially true if the salary of the new job will be much higher or lower than what they used to receive with previous employment.
If parents welcome a new baby into their lives, they will also be entitled to receive a new type of credit to be added to their tax return. This credit is called the Child Tax Credit and it covers expenses for children under 17 for up to $2000.
Just like having a biological child, adopting a child will also entitle new adoptive parents to the Child Tax Credit. They may also be entitled to other types of tax credits and it should be your job as the tax preparer to advise them of such.
No matter how much the lives of your client change, filing their tax documents accurately is a must. Along with keeping your client records up-to-date, having an automated tax software will help speed up the process and ensure that the computation is done right.
If you are looking for a reliable software to use as you prepare your clients’ tax returns, Consider using Keystone Tax Solutions! This is a tax software for preparers that will automate the process and make it easier to compute taxes. Try the software today!
Enjoy Unbeatable Unlimited Year Round Customer SupportGet Free Demo Now