Timing and knowing where to find the resources needed is key when managing the
ever-changing tax rules that can affect many. The simplest way to notify clients of
the changes to the tax code would be by email. Sending out a quarterly email with
important dates and new tax code changes can help clients stay up to date with
tax laws. Every client has different situations that arise or big life changes like
getting married, having a child, or starting their own business. Knowing where to find
the resources is the key. Having an accountant that can provide that will help with
the changes. There are other options like mailing, calling clients, or adding it to the
business website and these are good but to maximize time email I believe would be
best. There will be some clients that prefer a certain way to connect and
communicate and that should be discussed and notated.
Tax codes change all the time, some that have taken place in the past have been
changes in the individual income tax rates. Changes in the itemized deduction. The
Trump tax bracket created new income tax brackets that changed what many
Americans pay in taxes. In 2022 the standard deduction for the married joint was
$25,900 and now for 2023 it has gone up to $27,700. a In the instance of capital
gain tax rate 2022 vs. 2023, an example short-term gains are taxed as ordinary
income, while long-term gains are charged at either 0%, 15%, or 20% based on
filing status and taxable income. For married filing joint the range has changed by
0% ($0-$83,350 in 2022 and $0-$89,250 for 2023). All these changes are relevant
and can affect the taxpayers. It is important people understand the changes and
where to find them. Another change is the Earn Income Credit (EIC) for 2023 will
also see a bump and see an increase of $7,430 for qualifying taxpayers with 3 kids
or more.
It is important to let clients know about tax law changes that affect them so they
can plan their taxes properly. Clients should be aware of what changes apply to
them so they can adjust what they do throughout the year to match these changes.
There are different ways to talk to clients about this, like meeting in person, calling
them, sending emails, or writing memos. There are rules for tax services, but
because advice should be tailored to each taxpayer's needs, there is no set way to
communicate or record advice in SSTS No. 7. Because there is no specific rule, the
tax professional needs to choose the best way to communicate based on the
situation and the client.
I think that using emails is the top choice for sharing tax advice with clients. Emails
give the information in writing, so clients can read it again whenever they want. It
is also easy for clients to ask more questions quickly. Emails have a time stamp,
which helps with keeping records, and they reduce the chances of clients getting the
wrong idea. Written messages also have the benefit of creating a lasting record and
might be a simpler way to explain complicated topics to clients.
A big change for this year's taxes is the adjustments made for inflation. Inflation has
been a major topic lately and it has had an impact on taxes. Because of this, they
released something called Revenue Procedure 2021-45 to let taxpayers know about
these changes. While most of the changes would affect taxpayers, one thing
mentioned in this procedure is that the amount of income used to decide how
much the Lifetime Learning Credit gets reduced for couples filing taxes together is
not being changed for inflation. This might be important, but I do not think it's
necessary to tell a client about it, even if they're married and filing taxes jointly.
Even though it is part of the tax change, it should not really change how a
taxpayer files their taxes or their current situation.
Reference:
NerdWallet, Orem, Tina, Parys, Sabrina, October 19th, 2022,"2023 Tax Changes: IRS
Issues Inflation Adjustments"2023 Tax Changes: IRS Issues Inflation Adjustments -
NerdWallet
Sawyers, R., Gill, S. (20200127). Federal Tax Research, 12th Edition. [[VitalSource
Bookshelf version]].
