Tax Season is Upon Us!

January 2024

2023 was a relatively boring tax year, and after the last few years, we’ll take it.

In broad terms, the federal income tax changes in 2023 involved adjustments mainly due to inflation. These included an increase in the standard deduction for all filing statuses, adjustments in the tax brackets and marginal rates, an increase in the Alternative Minimum Tax exemption amount, and a rise in the maximum Earned Income Tax Credit. These changes generally aimed to keep pace with inflation and affect tax returns filed in 2024 – that’s now!

Massachusetts (our home base) had a few changes in the tax realm. With the passage of H.4104, the punitive income tax rate applied to short-term capital gains was decreased from 12% to 8.5% – still a fair amount higher than the standard Mass income tax rate of 5%, but not quite so dramatic. Also included in the bill, was an increase to the estate tax exemption from $1,000,000 to $2,000,000 – this was certainly a welcome change as the previous exemption was archaic as it was set nearly 25 years ago and not indexed to inflation. One “loop-hole” that was closed was the ability to file your Mass return separate from your spouse if you filed Federal jointly… this was a neat little strategy for high income folks, particularly with the passage of the “millionaires tax” (which occurred last year). It was a pain for us, but worth it. Other Mass changes: increase to the EITC, expansion of the child tax credit by eliminating the two-kid cap, and an increase to the rental reduction from $3,000 to $4,000 (saves you $50, but every $$$ counts!)

As we enter Tax Season 2024 (tax year 2023), we want you to feel assured that your financial journey is in capable hands. Trust is at the core of our relationship, and it’s a responsibility we take seriously. While you’ve entrusted us with the task of managing your taxes, it’s important to understand that this trust extends to the protocols we’ve carefully established. These protocols and procedures are the result of meticulous planning to ensure the best outcomes for both you and our team. Your confidence in our expertise allows us to navigate the complexities of tax season with precision. We’re here to deliver exceptional results, and by adhering to our protocols, we collectively contribute to financial success. Thank you for entrusting us with the tax portion of your financial well-being.

Please find below information that will help us all have a successful and frictionless tax season.

2023 Tax Year Filing Season Tax Preparation

As we continually strive to be a paper-free company and in an effort to help keep the Cape green – we will be using email, our website, our secure portal, and our blog to keep you informed as well as provide questionnaires and checklists for the upcoming tax season in lieu of sending documents via snail mail.

Our questionnaires and checklists serve as essential tools that not only provide you with a list of the source documents and information necessary to prepare your tax return, but also help us gain a complete picture and a better understanding of your 2023 story so that we can follow-up with the appropriate questions and do the best job possible for you.

Completing and returning the interview/questionnaire with your source documents is a critical element of accurate tax preparation and therefore is a required step for all clients.

As the world (and the tax world in particular) continues to increase in complexity, it is of paramount importance to receive your input on events and circumstances that have occurred during the year. We do not care how you fill out and return the form… printed out and filled out by hand and dropped off is almost as good as using the fillable function and returning it digitally (as long as we can read your handwriting!). Completing the questionnaire should not be an onerous endeavor… we suspect that it shouldn’t take longer than ten (10) minutes. Please note, we cannot begin to prepare your returns without this critical information.

If you take a couple of extra minutes to double-check that you are sending us complete information, it will save a lot of time and we will be able to complete your tax returns sooner! Many people send in “most” of their documents, but a couple of items are left out. Please keep in mind that we will not work on your file until we have all your documents. Using the checklist is a great way to ensure that you didn’t forget anything!

Things do change – so make sure to note any important changes as well. For example, if you moved – make a note to that effect: “We moved to 123 Main Street, Anytown, USA – but… we kept our house in Whereeverville and now it is a rental”. Did you get a new job in 2023? Did you have a child? Did your student loan get sold to a different lender? Yada, yada, yada. These notes allow us to quickly address what needs to be changed and if they are not present, it has the potential to slow the process down.

Sending completed information benefits everyone. We can’t stress this enough – our staff CANNOT begin to work on your returns until ALL necessary documents have been received by our office. Thank you in advance for your cooperation!

How To Provide Your 2023 Tax Year Source Documents

Client Portal: Our client portal is a secure place to upload all your tax related documents – it is simple and easy to navigate. The portal lends the opportunity to upload your documents right from the comfort of your own home and receive confirmation when we receive and download them. If you haven’t registered, or need assistance, no worries! Just call the office or email and we can help you set it up within minutes! This is the fastest and most secure way to share your sensitive tax documents with us.

Secure Dropoff: While we recommend uploading documents virtually through our portal, if there is any reason you need to drop off documents in a physical format you can do so by using our secure drop box located at the rear entrance of the building. The secure drop box is routinely checked throughout each in office workday.

Please note we kindly ask that you don’t send unopened mail, and that you DO NOT staple your source documents together. All source documents are scanned into our system and electronically stored with hard copies being returned to our clients. Staples slow the scanning process down.

Mail: You can still send your documents via mail – although we don’t recommend. If you choose this route, please be sure to take into account the additional time it will take for us to receive documents and please try to have your documents fully complete and organized so we don’t run into that infamous snail mail time crunch.

Please note we kindly ask that you don’t send unopened mail, and that you DO NOT staple your source documents together. All source documents are scanned into our system and electronically stored with hard copies being returned to our clients. Staples slow the scanning process down.

Email: Questions you have about your filing or return can be answered by one of our team members via email; however, we do not recommend sending personal or financial information through this line of communication due to its unsecure nature.

Please send us your completed information as early as possible ~ including the interview/questionnaire. For clients who submit their information after Monday, March 18, 2024, (c.o.b.) we cannot guarantee that we will be able to complete the returns by April 15th. They will be placed on extension. (As always, we will make every effort to complete your tax returns by April 15th, but it is much less likely if we do not have all of your information by March 18th.)

What Does it Mean to File an Extension?

Extensions are quite common due to the ever-increasing complexity of the tax laws. I place both my business and personal returns on extension, without fail! An extension is a form filed with the IRS and the State to request additional time to file your tax return. The extension period is six (6) months, which extends the due date for submitting your final tax returns from April 15th to October 15th. It is common practice for CPAs to set a cut-off date for clients to submit their tax information so that they can plan their workload and ensure all client returns and extensions are completed by April 15th.

If we are going to file an extension for you, we will discuss whether you owe more tax than you have already paid during the year. If you do, a payment is required by April 15th with your extension. This payment can be made electronically with the filings of your extension. It is important that we have accurate bank account information for you on file to ensure that the payments to the IRS and State are made in a timely manner.

Completed Returns

When your tax returns are ready, we will contact you immediately to coordinate delivery (our standard medium is over our secure and encrypted portal). Our standard “turn-around” time for individual returns is 15 days (once all information is received). Placing multiple calls, emails, or texts to the office to check the status of your tax returns slows our process down. We appreciate your patience and ask that you keep this type of correspondence to a minimum.

Signature Pages (e-file forms) and Payment

If you are filing joint tax returns, both parties must sign the e-files. Our office utilizes RightSignature, allowing you to virtually e-sign the appropriate documents. Payment of your invoice is required at the time of delivery of the completed tax returns. Important: We cannot submit the electronic files to the IRS and State without signed e-file authorization forms and full payment.

As always, we look forward to working with you again this year. Please do not hesitate to call our office if you have any questions. We appreciate your business and continued partnership.

Please find the Individual Interview here