What is your "go to" checklist when reviewing a return?

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#1
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I'm specifically referring to when a prospective client sends in their prior year's tax returns and you want to come back to them with some great tax savings ideas / strategies. Here are some of my go-to's:

- Look for late filing / underpayment penalties
- Would they benefit from being an S Corp
- If they already are an S Corp, see how "reasonable" their comp is
- Have they taken advantage of depreciating their real estate investments (i.e. component depreciation, bonus, 179)?
- Are they writing off health care premiums
- Are they taking a home office deduction, depreciating office equipment, writing off portion of mortgage, utilities, taxes, etc.
- Writing off vehicle usage for business?
- Did they write off their prior year accounting fees?
- Look for any glaring mistakes on the return
- If we get multiple prior years of returns, look for proper treatment of carryforwards
- Are all dependents on their returns
- Also try to get a hold of their books to see if they agree to the TR and if anything weird is going on there.
 

#2
CathysTaxes  
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If they're a SCorp would they be better off as a sole proprietor?
If CCorp would they be better off as SCorp.
Cathy
CathysTaxes
 

#3
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taxaflaxa wrote:when a prospective client sends in their prior year's tax returns and you want to come back to them with some great tax savings ideas / strategies


I normally don't approach it like that. For me to do that, it would have to be a whale. When I review a prospect's returns, it's after we've had a conversation and determined that we're a good fit and would like to move forward. Reviewing the returns is primarily to obtain a more reliable estimate of their compliance fee and not to determine how much value I can add, as we both already have a general concept of that. If anything is glaring during the review, I do bring it up.

Most of my best ideas come after preparing and reviewing the current returns in-depth and having the closing conversation with the client. Prospects and clients know I'm happy to do a consult anytime during the year on entity structuring or what reasonable comp may be. And those services do have separate fees. I don't really know how'd you'd determine with certainty (certainty, not probability) that anyone would benefit from an S Corp based on a cursory review of their prior year returns alone. There are moving parts. Reasonable comp, forward looking assumptions, etc.

How much time does it take you to review the prior three years on average? I normally don't dedicate more than 5-10 minutes per prospect. Even an extra 15 minutes per prospect would be a significant (unpaid) time investment during the year based on the number of prospects that get to the submission stage.
 

#4
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Perhaps add IRA/retirement options to your list.
 

#5
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New asset purchases (boats/airplanes/vehicles/water heaters/solar panels/hybrid or electric vehicles/electrical chargers), etc.
 

#6
ATSMAN  
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This is just how I work. Others may disagree.

When I take on a new engagement, I have a long meeting with the client to figure out what his goals are and if I will be the right fit. Once that is determined I look at the prior return for obvious omissions/mistakes etc. I then prepare the current year return and before that is finalized, we get into any reason why a prior return should be amended. Returns with NOL are problematic often times.

I try to keep i simple. Once we have identified areas that need more scrutiny, then the work begins and I have sometimes recommended that all open returns to be amended.
 


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