Complete pre-year-end planning for select clients.

• Author: Mendlowitz, Edward

Pre-year-end planning for clients starts in late October and continues through December. Generally, the meeting with the client should last no longer than one hour. There are several approaches to the pre-year-end planning meeting. This column describes three and also addresses cross-selling opportunities.

Tax Projections Review

There are different types of tax season clients. Projections should typically be prepared for those:

* With higher incomes;

* With uncertain and varying income;

* With unusual transactions during the year;

* Subject to the alternative minimum tax; or

* Whose returns are affected by yearend actions.

Many clients obviously need projections, while others' needs may not be so clear, so it is important to alert clients when to contact the firm for a projection. It is also a good idea to prepare projections for most of the new clients obtained toward the end of the year.

Why prepare projections?: Preparing projections serves as a tool to guide clients on how they can reduce taxes by accelerating deductions or deferring income. It also provides an opportunity to review a client's financial situation and allows concentrated, unrushed time to discuss a client's financial affairs. Some clients may be able to avoid underpayment of estimated tax penalties by increasing year-end withholding. Further, projections provide a road map that a reviewer can use to compare to the actual return, to make sure there are no overlooked items. Finally, a well-prepared projection can avoid a potential shock and a last-minute scramble for funds if the calculated balance due is higher than expected.

When to prepare: Projections should typically be prepared twice a year for most clients: once when the tax return is prepared, and again toward the end of the year, when the "results" are known. When the return is being prepared, the interviewer should ask the client questions about expected current-year income or changes from the previous year. This is needed to determine estimated tax payments and serves as a guide to the client's current-year situation. Usually, the interviewer should be a higher-level staff person or a partner. If the information is sent in without an interview, the preparer (usually a lower-level staff member) should call the client to find out the information needed for the projection.

Meeting: At year-end, a partner or manager-level staff person should meet with the client to discuss the situation for the year and the expected...