Monday, August 15, 2011


Generally I only hear from my 1040 clients during tax time, except for perhaps a Christmas card, and, of course, if they hear from their “Uncle Sam”, “Uncle Chris” (Christie), or “Uncle Andy” (Cuomo). Several are personal friends, so I do see them in various social settings during the year. And I will occasionally run into a client on the street or in a local store or restaurant.

There are, however, times during the year when I want to hear from my clients. Unfortunately I do not always hear from them at these times.

As I say in the memo I send out with finished returns –

If something of major tax consequence happens during the year . . . send us the details via email or postal mail ASAP.”

What do I mean by “something of major tax consequence”?

· You sell a rental, investment or vacation property.

· You sell stock from ATT or some other company with a history of splits and spin-offs.

· You make a big score in the stock market.

· You take a “premature” distribution from a pension plan or IRA that is not rolled over, or are the beneficiary of a deceased person’s IRA or pension plan.

· You marry or divorce.

One of the reasons I want to know if any of these situations occur is because you may need to make an estimated tax payment, or change your withholding, to avoid being penalized for “underpayment of estimated tax”.

In some cases I want to know before you “do the deed”, such as when you take a distribution from a pension plan or an IRA, so I can advise you of the amount of federal tax to withhold from the distribution.

In the case of a divorce the specific distribution of assets and the wording of the divorce agreement can be very important for a variety of tax-related reasons, especially if there are minor children and/or a variety of types of property and investments involved, so if your divorce attorney is not “tax savvy” you should contact me before the agreement is finalized.

Here is another reason why I want to know about such actions when they happen. During the actual tax filing season (for me February 1 – April 14) time is extremely precious. So if there is anything I can do during the “regular” year, such as determine the cost basis of real estate or stocks sold, it will save me valuable time during “the season”.

I would expect that most competent tax preparers feel the same way as I do – and would want you to contact them during the year if any of the situations I have listed above occur. So please contact your tax preparer during the year when they do.


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