My Time As A TurboTax Ask A Tax Expert
October 2011. There I was staring at Craigslist searching for roles, projects, gigs and jobs that I could use to supplement the income from tax work that would soon begin with our new office. One role in particular struck me; one where you would be giving tax advice remotely during tax season. This sounded right up my alley but I was skeptical. “This is on Craigslist? Is this legit? What company is this for?” Long story short – it was legit and it was being offered by the fine folks at Intuit, the same company behind the TurboTax brand. So now what?
I applied for the role and shortly after Christmas I got the call that they would like to speak to me. After what I’ll call a “challenging” computer assessment (which I thought I crashed and burned in) I got the call inviting me to join the team. I happily accepted and got ready for a month of training and then a month of working on the floor taking calls and chats from customers. Boy, was the fun just about to begin!
Our training cohort (Wave 7) had about 30+ individuals in it from all walks of life, geographic locals and disciplines (Attorneys, CPAs and Enrolled Agents). Some were like me who were “relatively” new to the tax game while others were battle tested veterans who had been in the industry for 20+ years. Want to talk about feeling like a rookie? I can say that I truly appreciated learning some things from the people who had seen it all, knew the specifics of the IRC regulations and could rattle off IRS publications and forms as easily as someone who is fluent in a second language.
Training flew bye with the blink of an eye and before I knew it, it was time to jump into the pool and either sink or swim. The first few days were a little stressful as I became acclimated to how the phone and computer interface operated with my equipment (in particular my headset). Yet after a few days, taking calls was pretty seamless and that’s when I began to really experience what the role had to offer.
When it comes to operating a tax practice, every office is a unique animal. What I mean by this is that the nature of the clientele AND the preparer are usually interlinked. If you are a newer preparer such as myself, the chances of your client base containing a significant amount of retirees is probably not high. Thus, the number of returns that I would work on that would involve retiree topics (e.g. annuity payments, required minimum distributions, IRA to Roth conversions, etc) would be limited. But what happens when you are connected to taxpayers who have questions from all over the country, across varying social economic groups and from all ages? You learn!
During my time on the floor, I handled numerous questions ever single night. Some would come in that I had an “expert” working knowledge of while others made me want to scream in terror as I had no idea how I was even going to tackle it. Yet, the questions that terrorized me in my initial discussions with customers proved to be my biggest learning moments. I remember the question about an individual who had bartering income and needed some help figuring out where to report it. There was the question from a New Jersey taxpayer on why their Federal NOL wasn’t showing up on their state return. And then there was the one about the mixed use property and a Section 208A ordering of expenses.
In each one of those interactions I had to learn something in a short amount of time. Sometimes I was learning about the tax law, sometimes tax forms, sometimes the software itself. In addition to learning, I had to ensure that the guidance I provided to the taxpayer was sound and grounded in fact. Lastly (but certainly not least) I had to ensure that the taxpayer understood what I was conveying and agreed that I had actually solved their issue. Individually none of those things are complicated nor stressful. However, when you combine them all and repeat the process several times within a few hours, let’s just say that you have to stay on your toes!
As I write this post, April 17th 2012 is coming to a close and the clock is swiftly ticking towards the deadline to file on time. Over the next few days I will begin to transition out of the Ask A Tax Expert role as well as wind down the office for the offseason. Yet in looking back, I think I have to admit that I was fortunate to find that ad on Craigslist that one October day. Through this experience I had the opportunity to meet some really nice professionals, challenge my tax knowledge and learn about things I might not have touched for years to come. And just like the work I do in my practice, I had the opportunity to really and truly help make a difference in the lives of several individuals.
The work I did was not life or death surgery. Yet if you ask the callers whom I helped resolve their issues, you might get a different take on what they think I did! To all my ATE colleagues, it was a pleasure working with you and I hope our paths cross again in the future. To all the folks at Intuit, thanks for allowing me the opportunity to participate.
Until next time.
Our 1st Tax Season
Okay, so the title is a little misleading given that we’ve been around since 2005. But this post is supposed to be a look back on our first “retail office” tax season. As posted earlier, we had a pretty eventful time getting the office set up once we decided we were going to launch it this season. We outlined some goals for ourselves, plotted the course of action and set off on our journey. So what happened?
While the season still technically has a few days left (returns aren’t due until April 17th) we think we have a pretty good read on the past three months. While we didn’t hit our target numbers on a few fronts, we didn’t do too shabby given that we were essentially starting this location with zero brand recognition and it was its first year of existence. In the end we engaged roughly 55 clients, processed 65+ individual and business returns (not including accompanying state returns), secured two recurring accounting clients and performed a host of accompanying services.
What Went Well
Delivering exemplary customer service. Without having a major brand name on your office, you’ve got to figure out a way to differentiate yourself from all the other tax shops. While CPAs prepare and review the returns that come through our doors, for most customers this isn’t that much of a selling point. But what we did find out is that if we upped the service level by doing a few simple tasks (e.g. explain the return to the customer line-by-line, display a genuine interest in their situation, promptly answer any post filing questions), the customer felt that they got more from us than their past preparer. Result? A happy customer that tells us they’ll be coming back!
Leveraging our networks. We all know someone. “You need your car fixed? We’ve got a guy for that!” The most successful marketing for a financial services firm is word-of-mouth; preferably from satisfied customers. When you’re looking for services from professionals such as accountants, doctors, etc. you tend to ask the people you know who they’d recommend. Thus, we continually engaged our network to let them know this was our first season with the new office. We also asked them to mention us to their friends if they liked us, thought we were competent, liked our work, etc. Remember, it’s not always what you know but who you know.
Sourcing alternate work from Craigslist. Craigslist has a reputation of being a mythical land where everyone is a scammer looking to take your money. While there is some truth to this, in reality there are plenty of people who are just looking for a deal and someone who can provide it for them. We didn’t get any tax work from Craigslist ads, but we did get some quick bookkeeping, business plan and other types of one time work. We’re not talking thousands of dollars here, but the income did help keep the cash flowing into the bank account between tax clients.
Being persistent. This is pretty simple. You’re new, you need revenue and you’d better not give up. Sales don’t just fall from the sky, they take time and cultivation. This is particularly true if you are a new business and customers don’t know who you are. Someone might want to come into our office because they are dissatisfied with their current provider. However, they might have some concerns as this is the first year they’ve seen our office. For us this may mean a few phone calls, a face to face and ultimately a follow up visit where the client finally engages us. Point is it often takes multiple contacts to seal any deal. Be persistent and professionally pursue all potential clients until you either 1) win their business or 2) they decide you’re not a good fit for their needs. Reaching either of these two outcomes is the ONLY acceptable option.
What We’ll Change
Marketing efforts. For the 5000 door hangers we distributed in the neighborhood, only one client was generated. In general, we started our marketing late in the season (i.e. January), probably didn’t do enough “multiple contacts” with community marketing and didn’t spend enough to generate a meaningful ROI. With that said, we’ll start our community efforts around September in 2012, but will also do more “year-round” marketing (e.g. newsletters, client recognition, etc) as well as increase our marketing spend.
Independent sales force. One thing we employ in our company are independent sales reps. These fine people generate leads and get a commission for doing so. While we had good results with this program, we fell a little short of expectations. The main reason for this was we didn’t recruit a big enough sales force nor did we do it early enough. Come mid 2012, we’ll change this which should help us hit our marks next year.
Hours of operation. If the theme of the previous two points was we didn’t start early enough, then this one would be we didn’t stay late enough. Due to the transition from Corporate America to Main Street America, the office hours designed maybe weren’t as good as they could have been. While the office was open until 6:30PM during the week and 5PM on both weekend days, it could have been later. This would have allowed us to potentially capture more of the “after work” crowd who just couldn’t get to us before we closed shop. We’ll probably move to later hours in 2013.
So what does 2013 hold? Well, we’ve already executed our lease renewal option for the remainder of 2012. This means the office WILL be back in 2013! Hopefully some of those potential clients who wanted to visit us but thought that we were “fly-by-night” will see we’re here for the long haul and stop in next season. Through making the changes outlined above, we’ll attempt to double in size and continue what we hope will be a pretty sustainable growth trend. Lastly, we plan to make our client engagement even more frequent, more personal and more value additive. Will 2013 be more successful that our 1st season? Only time will tell but we’re thinking so.
Until next time.
Relationships and Money
Q: My girlfriend and I are in a rather serious relationship and I am thinking about asking her to marry me. One thing that bothers me is that we tend to argue a lot about money – our views are just different. I’ve been told that money can ruin a marriage so I’m just not sure what to do at this point. Any ideas?
A: It seems like most people in relationships argue about money to some degree. Some argue about spending too much, making too little, not saving enough – the list is almost endless. Yet, at some point you’ve got to stop and ask yourself, is it the money that’s the problem or is it just the result of another issue?
The primary reason that couples argue about money is that they fail to gain “alignment” regarding a particular situation. He wants the Chevy Camaro and she wants the Lexus IS – the two items aren’t aligned so let’s start WW III to see who wins! Arguing in general isn’t healthy, and it sure won’t solve any money problems that you’re having. The key is to figure out what the problem is and solve it. In the above case the problem is: we need a car without too hefty of a monthly note. Once the focus is shifted to addressing that problem, then we can address what car we can afford.
Here are some ways for people to constructively talk, not argue, about their money:
Is it really the money? As stated above, the cause of most “money arguments” isn’t really the money itself. It could be related to one person making more than the other. It could be that you all are sharing expenses but not in a way that is “even” according to how much you individually make. When you figure out what the real problem is you should address it and not the money. For example if you make 55% of the monthly income and she makes 45%, why not try splitting the joint bills that way? You’ll both be shouldering your appropriate amount of the expenses and it may make you feel as if you are really being treated as equals.
Don’t shout, talk it out. Shouting gets you nothing but a night on the couch and some high blood pressure – both of which are unnecessary. When you have differing views about a particular item, ask some questions to find out what the issue is. Make sure that you listen to what the other person has to say before you respond. Most of all just make sure that you are respectful of the other person’s views. No one likes to feel as if his or her opinion isn’t important. Besides, you wouldn’t yell at your boss so why would you yell at someone you love?
Set the goals and then put them on autopilot. Let’s say you both want to buy a house and agree that you should be saving up for that gigantic down payment. But when she gets your joint credit card bill she sees that you charged $500 on new stereo components for your car. Then you all argue about who is dedicated to the goals and why one person is holding you both back. Sound familiar? The easy fix is once you set goals, automate their funding so neither of you has to worry about it materializing. Set up a separate bank account, have the money deducted from each of your checking accounts and call it a day. Automate to eliminate the arguing.
Make it a family affair. Family finances are not the sole responsibility of one person – no matter who the breadwinner is. Couples have to make it a priority of discussing THEIR finances TOGETHER – this can’t be stressed enough. So once a month the two of you should sit down and go over the money earned, bills paid, expenses incurred, progress towards goals, banking statements, etc. If you all see something that starts an argument, take a step back and look at your long tem goals. How does whatever you all are arguing, excuse us, talking about fit into your long-term goals? By putting your finances into the open, you all shouldn’t be surprised by something when you see the bill for it.
Work out the kinks BEFORE not AFTER the wedding. Don’t think that the words “I do” will solve anything that you have a problem with now – it will just make you committed to those differences. If you have concerns about your partner’s approach to finances, or vice versa, make sure you all realistically confront those differences. If one person is a spend thrift and the other person is Ebenezer Scrooge, you all need to figure out if there is some type of middle ground between you two. If the other person doesn’t want to change, you might want to reevaluate the relationship. Simply thinking that not discussing the issue will make it go away is like hoping that a bill collector just forgets your phone number – it ain’t gonna happen! Besides, if you don’t address the problem now and you all do have very different perspectives, then you are setting yourself up for one stressed-out marriage – we know some good therapists if you want the numbers.
Dealing With Adversity
As I started to get up off the ground I began the usual “check and see if anything is hurt” routine. I’ve fallen off my bike dozens of times before so it’s usually no big deal. Only problem this time was the fact that something “was” actually hurt. I stood there looking (in disbelief) at what appeared to be a dislocated wrist. “Maybe if I just pop it back in place everything will be okay?” is what I was thinking. Too bad I’d later find out that it was broken.
Two weeks prior to the above escapade, I crumpled in the front end of my car when a lady decided she wanted to stop in the middle of the intersection on a green light. She had no insurance and the damage wasn’t worth me paying the deductible from mine. A few weeks prior to that some other random challenge raised it’s ugly little head. What’s going on in my life? Who did I make mad? Why are all these “challenges” presenting themselves? Why is this happening NOW, when we’re trying to grow the business? Why, why, why?
The next time an obstacle presents itself to you, you’re probably going to consider one of these four routes:
Escape You feel as if the challenge is too much for you so running away feels like a good option. Only problem with this is that the obstacle isn’t really gone. It’s just waiting for you to find it again so it can continue to apply its unwelcome pressure on your life.
Conformity This is the “okay, you win” approach. When faced with an obstacle you are really at a point where you are “stuck” so-to-speak. You can’t move forward (easily) and you probably can’t go back to the way things were. If you conform, you’re really just a notch above escaping. What you’re saying is “a known evil is better than an unknown one. The challenges of life are just too overwhelming. Conformity, surrender or assimilation are the only realistic options.”
Fight One approach is to fight whatever the challenge is. You can do this via denial, obstinacy or just flat out refusal. While it may appear that you are winning by not giving in, the reality is you are not making any progress or solving the situation.
Belief Call it meditation, reflection, prayer or spirituality. While the aforementioned will help comfort the soul and mind, they are only a part of the answer. Wanting something to be different will typically not change the situation by itself. Change takes more than just desire.
This brings us to the option not listed – moving forward. Let’s face it, life is difficult. However, our attitude is what determines whether we benefit from misfortune. The same furnace that melts gold also hardens clay. When faced with the heat of life you can either become hardened, callous and cynical or you can let it hammer, forge and shape you into a better and stronger person. Case in point? Dick and Rick Hoyt.
When I was younger I never really understood all those adages like “when the going gets tough, the tough get going.” Yet then again, I also thought that “making ends meet” was some type of weird food process. Anyway, the point is that all of those sayings have a point which is, you have to move forward.
I got up off the ground, drove myself to the ER and got my arm fixed. I’ve adapted my computer to work with my left hand, which isn’t my dominant one. I’m counting down the days to when I can start rehab. But most importantly, I’m grateful that it’s not worse. Be thankful for whatever situation you are dealing with because someone far worse off would give anything to be in your shoes.
Advantages of Investing With Pre-Tax Dollars
Q: My employer offers several “pre-tax” investing options. I have considered enrolling in one, but was curious if they are really worth all the hype people make about them?
A: When it comes to investing, there is no such thing as “is it worth it.” There are few things in life that will provide you with a greater benefit than investing in your financial future. Having a sizeable and secure asset base allows for many things. Some of these include peace of mind, reduced anxiety, freedom as well as the knowledge that you will be provided for in the future. There is no worse feeling than having the desire to do something but not being able to because of financial limitations. So when it comes time to retire, you don’t want to be forced to prolong the daily grind because you don’t have enough cash.
The current tax law encourages making certain investments on a pre-tax basis. Some of these investments include 401(k) plans, deductible IRAs and SIMPLE plans; all of which are funded through payroll withholding arrangements. Yet many people fail to take full advantage of these investment vehicles for various reasons.
Investing money on a pre-tax basis has two major benefits that tend to be overlooked. These include becoming a disciplined saver and investing a greater amount of money when compared to investing on an after-tax basis. When individuals enroll in any of the programs named above, the amount they stipulate to be invested is automatically withheld from their paycheck. Therefore, the participant doesn’t have to remember to make a contribution because it’s done automatically. This is especially beneficial for those who tend to procrastinate or let money burn a hole through their pockets. Plus, the individual tends to not miss the deducted funds because they never see the money.
Where the true benefit can be seen is in the differential between the amounts available to invest, as well as the return on investment. Let’s say, for example, an individual contributes $11,000 of their gross wages to their company 401(k) plan through payroll deductions. This amount will not have federal or state taxes withheld when the contributions are made. Also, when they receive their W-2 form around January of the next year, this amount will not be included as income. Consequently the tax liability calculated on their income tax return will be lower because the income base will be smaller.
The employee will also benefit from their pre-tax investment with regards to growth. Because their $11,000 was not reduced by tax withholdings, it is larger when compared to an after-tax equivalent. This larger amount forms the base for the investment to grow or compound over time. In turn, a larger investment base leads to faster growth over the life of the investment and a bigger payout when the funds are eventually withdrawn.
In comparison, if this person had made their investment using after-tax dollars, two things would be different. First, they would have only $7,920 to invest because the original $11,000 would have been reduced by tax withholdings (assuming the person was in the 28% tax bracket). Because of this smaller investment base, the growth that would occur would be smaller when compared to the pre-tax base. Second, the $7,920 could be further reduced when it came time to pay income taxes. This would arise because the person could have to include any returns earned (like savings account interest) as part of their income base on their tax return. The result? The tax liability calculated could be higher, triggering increased tax payments.
Yet despite all the good things about pre-tax investments, there is one primary downside. No matter how hard an individual may try, they can not entirely escape paying taxes. Although pre-tax dollars aren’t taxed when the funds go into the plan, they are taxed when they come out. Furthermore, not even death can alleviate the tax obligation on these saving plans. Whatever remains in the account at the time of your death will be taxed prior to distribution to your heirs. Yet in many people’s eyes, the benefits of investing with pre-tax dollars tends to outweigh all the above.
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