initial document requests
The 1-800Accountant team typically ask for a copy of the client's SS-4 or EIN if possible.
The SS-4 is a valuable document as the information contained on the SS-4 allows us to:
Determine the current entity type of the client; if a return is filed with the wrong entity type, the return would typically get rejected by the IRS.
Information from the SS-4 such as the Name, Address, State of business, etc allows us to preliminary prepare draft returns and tax extensions ahead of time.
The information indicates other crucial elements such as whether the client may have registered / will register for payroll as well.
Information regarding the client's industry will allow us to enter it into our system to further enhance our Advisory process from the start.
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prior year return
We typically ask for a copy of the client's prior year individual tax return (if they filed one).
The prior year return allows us to:
Check for any tax carryovers such as losses from stocks that could not be utilized in the prior year, but may be potentially utilized in the current year.
Check for changes in sources of income to advise the client of any significant shifts they should be aware of. For instance, if they have income that is not subject to withholding in year 2, that was not present in year 1, the client may need to know more about estimated taxes.
Check of other sources of income and deductions that the client may have forgotten to mention to us. For instance, let's assume a year 1 return has deductible mortgage interest. We are preparing a year 2 return and the client did not mention mortgage interest, we may inquire if they have any mortgage interest in year 2, in order to make sure the client does not lose out on valuable deductions.
Tax Authorization form
We typically send the client a Form 8821 - Tax Information Authorization and if the client prefers, a Form 2848 - Tax Power of Attorney.
Form 8821 - Tax Information Authorization
This form allows us to pull transcripts from the IRS. We typically ask the client to sign this form, in case we ever need it in the future. For instance, if the client never received their mortgage interest statement, or lost their prior year's return, we can pull the information from the IRS.
Form 2848 - Tax Power of Attorney
We also ask the client to sign this form protectively. This allows us to contact the IRS on their behalf.
Typically, we use this form to abate late filing penalties if the client was unresponsive and was unable to file a timely tax return.