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A Calm End To A Tough Tax Season

person holding paper versions of IRS Form 1040, 1040A and 1040EZ in front of their face, mostly obscuring it.

From chilly Maine to temperate Hawaii, hundreds of thousands of tax preparers will spend the upcoming weekend virtually chained to their desks in a last-minute scramble ahead of next Monday’s federal filing deadline.

It should not be that way. It need not be that way. At my firm, it is not going to be that way.

The client service staff at Palisades Hudson Financial Group has been working as hard as ever throughout this tax season, and harder than in some past years. The new tax law has created complications as well as opportunities even for longtime clients whose situations we know intimately and whose data is well-organized and accurate. Then, of course, there are new clients – this season brought more than the usual share – who look to us to make sense of a tax code that seems designed to defy logic, and to apply it to their individual circumstances so they can comply with the law without paying excess tax or needless penalties and interest.

It is a complicated job, especially for our staff, because we are a high-powered practice that focuses on clients with complex situations. Most of the returns we prepare require meticulous attention to detail while still keeping the big picture in sight, even under the pressure of deadlines and workloads. All of our returns get at least two sets of eyes on them – a preparer and a reviewer-signer – and the more challenging ones get three, with the last review focusing mainly on the high-dollar items and the opportunities to save taxes going forward.

This does not sound like something that should be done at the last minute by an exhausted, sleep-deprived professional, does it?

I never thought so, not even when I first entered the tax profession decades ago as an associate at Arthur Andersen in New York City. When I became a manager there, I instituted a rule with my tax team and my clients that we would have all returns completed at least one week before the deadline, or else they would be extended. This gave clients an opportunity to review our work before anything was filed, and it gave staff who had not had an entire weekend off since the dead of winter two much-needed consecutive days to rest on the final weekend before April 15.

Other managers, and even partners, at Arthur Andersen were shocked. Some predicted clients would never put up with it. But of course, they did. Once you explain the situation, why would anyone want to do it differently? The rule stuck until I left that firm in 1992, and it has applied at my own company ever since. There are always a couple of stragglers who test the limits, but nearly all of our clients appreciate our approach and the relative calm it brings to managing their tax affairs.

Taxpayers are not penalized for requesting an extension and do not need to offer a reason to do so. It is an easy choice to make, especially when you consider that if an error on a return is in your favor, chances are decent that the Internal Revenue Service will catch it and you will end up paying that extra tax later, with interest. If the error is against you, chances are good that you will never find out. My firm is sometimes hired to review previously filed returns for errors, and we find them with considerable frequency.

Filing your taxes when required is an important responsibility of every U.S. resident, regardless of whether you are a citizen. It is also a responsibility of every U.S. citizen, regardless of where in the world you live, a rule that has tripped up many an expatriate. (If you live abroad, the law gives you until June 15 to request an extension or file your return.) Depending on your situation, filing can be a straightforward task you can handle yourself, or it can be maddeningly complex and involve such large sums that professional advice is essential.

But here’s the thing: A tax deadline is never a surprise, and it should therefore never become an emergency. If you deliver your information to a preparer right before a deadline, and if your situation is not a relatively simple one, you should expect and even encourage the preparer to file an extension. Demanding an immediate turnaround on your return is not in your own best interest, and it certainly is not in the best interest of the professional whose reputation may be on the line.

If your 2018 tax returns are complete or if you have already obtained your extensions, congratulations. You, too, can enjoy a peaceful spring weekend this week. If not, don’t panic – but don’t delay either. Get help if you need it. Avoid a last-minute rush by getting an extension of time to file, although you still should do your best to estimate and pay your tax liability by next week to avoid exposure to interest and other possible penalties. Then, get all your information together and get help from a professional who has the time, energy and skills to give you the service you need and deserve.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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