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Accounting and Tax Planning

Make the Right Choice

The Internal Revenue Service today reminds taxpayers that carefully choosing a tax professional to prepare a tax return is vital to ensuring that their personal and financial information is safe, secure, and treated with care.

Most tax-return preparers provide honest, high-quality service. But some may cause harm through fraud, identity theft, and other scams. It is important for taxpayers to understand who they’re choosing and what important questions to ask when hiring an individual or firm to prepare their tax return.

Another reason to choose a tax preparer carefully is because taxpayers are ultimately legally responsible for all the information on their income tax return, regardless of who prepares it.

The IRS has put together a directory of federal tax-return preparers with credentials and select qualifications (irs.treasury.gov/rpo/rpo.jsf) to help individuals find a tax pro that meets high standards. There is also a page at irs.gov for choosing a tax professional that can help guide taxpayers in making a good choice, including selecting someone affiliated with a recognized national tax association. There are different kinds of tax professionals, and a taxpayer’s needs will help determine which kind of preparer is best for them.


Red Flags to Watch Out For

There are warning signs that can help steer taxpayers away from unscrupulous tax-return preparers. For instance, not signing a tax return is a red flag that a paid preparer is likely not to be trusted. They may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund.

These unscrupulous ‘ghost’ preparers often print the return and have the taxpayer sign and mail it to the IRS. For electronically filed returns, a ghost preparer will prepare the tax return but refuse to digitally sign it as the paid preparer. Taxpayers should avoid this type of unethical preparer.

In addition, taxpayers should always choose a tax professional with a valid preparer tax identification number (PTIN). By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid PTIN. Paid preparers must sign and include their PTIN on any tax return they prepare.


Other Tips

Here are a few other tips to consider when choosing a tax return preparer:

• Look for a preparer who’s available year-round. If questions come up about a tax return, taxpayers may need to contact the preparer after the filing season is over.

• Review the preparer’s history. Check the Better Business Bureau website for information about the preparer. Look for disciplinary actions and the license status for credentialed preparers. For CPAs, check the State Board of Accountancy’s website, and for attorneys, check with the State Bar Assoc. For enrolled agents, go to irs.gov and search for ‘verify enrolled agent status’ or check the IRS Directory of Federal Tax Return Preparers.

• Ask about service fees. Taxpayers should avoid tax-return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of the refund into their own financial accounts. Be wary of tax-return preparers who claim they can get larger refunds than their competitors.

• Find an authorized IRS e-file provider. They are qualified to prepare, transmit, and process electronically filed returns. The IRS issues most refunds in fewer than 21 days for taxpayers who file electronically and choose direct deposit.

• Provide records and receipts. Good preparers ask to see these documents. They’ll also ask questions to determine the client’s total income, deductions, tax credits, and other items. Do not hire a preparer who e-files a tax return using a pay stub instead of a Form W-2. This is against IRS e-file rules.

• Understand the preparer’s credentials and qualifications. Attorneys, CPAs, and enrolled agents can represent any client before the IRS in any situation. Annual Filing Season Program participants may represent taxpayers in limited situations if they prepared and signed the tax return.

• Never sign a blank or incomplete return. Taxpayers are responsible for filing a complete and correct tax return.

• Review the tax return before signing it. Be sure to ask questions if something is not clear or appears inaccurate. Any refund should go directly to the taxpayer — not into the preparer’s bank account. Review the routing and bank-account numbers on the completed return and make sure they are accurate.

• Taxpayers can report preparer misconduct to the IRS using Form 14157, Complaint: Tax Return Preparer (www.irs.gov/pub/irs-pdf/f14157.pdf). If a taxpayer suspects a tax-return preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit (www.irs.gov/pub/irs-pdf/f14157a.pdf).


Extended Hours

In addition to this advice, the IRS also announced nearly 250 IRS Taxpayer Assistance Centers around the country will extend their weekly office hours to give taxpayers additional time to get the help they need during the filing season. The extended office hours will continue through Tuesday, April 16.

The Springfield office, located at 1550 Main St., offers extended hours on Tuesdays and Thursdays. For questions about available services or hours of operation, call (413) 788-0284.

The expanded hours at the assistance centers reflect funding and staffing made possible under the Inflation Reduction Act, which is being used across the IRS to improve taxpayer service, add new technology and tools, as well as help tax-compliance efforts.

“This is another example of how additional IRS resources are helping taxpayers across the country,” IRS Commissioner Danny Werfel said. “Adding extra hours provide more options for hardworking taxpayers to get help with their tax issues. The IRS is continuing to work hard both during the upcoming tax season and throughout the year to find ways to make it easier for people to interact with us.”

Senior Planning

Being in Charge of an Estate Can Be Unsettling

By Janice Ward, Esq., CFP


It is a fact: estate administration is complicated and time-consuming. Money can, and often does, complicate relationships. Money can make people do things they wouldn’t ordinarily do. Money can breed distrust — and worse.

These are just some of many reasons why those with estates, especially large estates or those with complex assets, should think carefully about who they choose to be their personal representative (formerly known as an executor or executrix) to administer their estate after they pass. Because settling an estate can be an unsettling experience and can potentially damage and destroy personal family relationships, you might consider an alternative to a family member.

Janice Ward

Janice Ward

“Overall, the person you choose as your personal representative will be responsible for a daunting list of tasks.”

Overall, the person you choose as your personal representative will be responsible for a daunting list of tasks. For a grieving family member, this could represent an unintended burden that requires a wide range of expertise and significant time commitment during this very difficult life transition. And if this isn’t enough, they may have to contend with pressure from — and disputes with — beneficiaries who are usually other family members. The resulting tug of war can lead to lengthy delays, sometimes lasting years, and often resulting in strained relationships and sometimes irreconcilable, heartbreaking splits among surviving family members.

An increasingly popular alternative is to choose a third-party professional, such as the Estate Settlement team within Greenfield Savings Bank Wealth Management and Trust Services. Such professionals can take away the burden and worries of estate settlement and ensure that one’s estate is managed efficiently and according to their wishes, without overburdening one specific family member. Alternatively, a professional personal representative can serve jointly alongside a family member. Such professionals can handle a wide array of responsibilities, including:

• Entering the will into probate and handling other legal requirements;

• Gathering all personal property and arranging for support of the family;

• Clearing out the decedent’s home and preparing for distribution or sale;

• Obtaining appraisals of required property for tax purposes;

• Reviewing real-estate records to assure timely payment of taxes and collection of rents;

• Evaluating contracts and leases, giving necessary notices, and complying with all requirements;

• Investigating all claims against the estate and handling them accordingly;

• Collecting all life insurance, rents, and other amounts due;

• Preparing and filing your final personal income-tax return, as well as any estate/inheritance tax returns that may be required either on a state or federal level;

• Paying related estate and inheritance taxes;

• Preparing a final accounting of the estate for the remainder beneficiaries; and

• Distributing the estate as directed by the will.

This partial list of responsibilities reveals just how complicated and time-consuming the settling of an estate can be. Individuals should keep this in mind when they are choosing a personal representative.

While choosing a family member may seem like a logical step, and some family members may actually volunteer for the assignment, most individuals are not fully qualified to handle such duties, and even if they are, they would often be placed in a difficult situation where relationships can become strained and matters can be delayed. There is often a perception of unfairness if one family member is making all the decisions that affect the personal finances and tax consequences of each beneficiary. For example, is this individual liquidating all the assets — which might cause significant capital gains to family members who pay high tax rates — and are those decisions equally fair and appropriate for all affected parties?

A professional personal representative will not only know the requirements of estate administration from a tax perspective, but will also understand the consequences of every decision they make as they assemble and then distribute each important piece of the puzzle. Choosing such a professional shouldn’t be considered disrespectful to family members. It should be looked upon as a common-sense alternative, one that can alleviate potential problems and eliminate the stress on familial relationships that often arises when money is at stake and an estate needs to be settled.


Janice Ward is an attorney, certified financial planner, and first vice president and trust officer at Greenfield Savings Bank.

Wealth Management

Stay the Course

Jean Deliso, CFP said she started calling her investment clients several days ago to gauge how they’re feeling amid some growing turbulence for the economy — and on Wall Street.

As she talked with BusinessWest about this initiative, she paraphrased the message she would leave if she encountered voicemail. “We just want to check in to see how you’re doing. The market has done very well, but we’ve seen some volatility in the market, and want to know how comfortable you are. On a scale of 1 to 5 (with ‘5’ representing the highest level of anxiety), how are you feeling about volatility, because there’s a political environment going on, we have China going on. Are you comfortable that your assets are positioned well?”

Again, that was the gist of the call. Deliso, owner of Agawam-based Deliso Financial and Insurance Services, said the firm has contacted about half the investment clients, and so far, there have a lot of 1’s and 2’s and generally nothing higher than a 3. And she’s not exactly surprised.

She believes those numbers tell her she’s doing a good job of helping her clients not just invest, but create and execute a plan. It also means she’s done well explaining to people that volatility — and yes, the markets have seen some this year amid trade turmoil, interest-rate movement, the dreaded inverted yield curve, and recession talk — is part of investing and nothing to really be feared.

“It’s important to keep their timeline in mind and not panic,” said Deliso, adding quickly that matters change the closer one is to retirement. “If you have 20 years … take a long-term perspective, don’t panic, don’t sell, and learn to live with volatility, because you can benefit from it because there are opportunities.”

That last comment is a perfect segue to the three words investment managers and financial planners always summon at times like these, especially for people with a long time window — ‘stay the course’ — as well as the seven words they also put to frequent use — ‘you shouldn’t try to time the market.’

“My job is to make sure, when these clients go into retirement, or are in retirement, that they have peace of mind. I want to make sure they’re not going to be emotional when the market drops. I want them to be secure that they know that, if it drops, they’re OK.”

Karen Dolan Curran, MBA, CFP, a principal with the Northampton-based firm Curran & Keegan Financial, used both phrases, and turned the clock back to 2008, the start of the Great Recession, to get her points across.

“In 2008, most portfolios lost an average of 30% to 40% of their value,” she recalled. “But if you stayed in those portfolios, they fully recovered after close to 18 months; you had to play the cycle out. And if you tried to go or if you tried to time the market as to when to go and when to jump back in, most people failed — because the most challenging part is trying to figure out when to jump back in. Those who stayed did fine.”

Neither Curran nor anyone else we spoke with is predicting anything close to 2008 again. In fact, some are hedging their bets on whether there will be a recession, not only this year but next year.

“In 2008, most portfolios lost an average of 30% to 40% of their value. But if you stayed in those portfolios, they fully recovered after close to 18 months; you had to play the cycle out. And if you tried to go or if you tried to time the market as to when to go and when to jump back in, most people failed.”

“We don’t believe that recession is coming necessarily in the next 12 months,” said Curran, noting that, while there a number of matters contributing to tension nationally and globally, overall, the economy is quite solid and unemployment and interest rates remain quite low, and investors should keep this in mind moving forward.

Still, the dreaded ‘R’ word is being heard and read more frequently these days, and that’s one of the reasons why Deliso launched her survey, noting that it’s a good conversation to have and she has it at least annually with clients.

The results of her polling, as noted, show there is not a high level of fear, a reaction that seems to mirror what’s happening on Wall Street, where, despite some turbulence and uncertainty, the S&P is up nearly 20% (or was at press time; things can change quickly), and when most of those ‘fear/greed’ gauges are tilting more toward the latter.

Beyond that, the comments seem to indicate that she’s doing well with what she considers her primary assignment. And that is to take fear out of the equation for her clients, even at times, like this one, in some respects, when one might be tempted to show some fear.

“That’s how this practice works; we provide a tremendous amount of education,” she explained. “And we make sure clients are positioned well with fixed assets and investment assets, because when we set people up for success, there’s a balance between the two.

“My job is to make sure, when these clients go into retirement, or are in retirement, that they have peace of mind,” she went on. “I want to make sure they’re not going to be emotional when the market drops. I want them to be secure that they know that, if it drops, they’re OK.”

Curran said her firm works in much the same way, with an emphasis on financial planning, not simply investing. As a result, she said she rarely gets a ‘panic’ call from an investor when the market takes a tumble, as it’s done a few times this year, or even when it takes a hard fall, as it did in the fourth quarter of last year.

She told BusinessWest that her firm helps clients plan against the backdrop of what she called the ‘worst-case scenario,’ meaning what happened in 2008.

“We do a lot of stress-case analysis,” she explained. “Saying, ‘well, what is the basic assumed market return? What if the market fluctuates downward during a particular time? What if it is nothing but positive for a particular time?’ And in certain cases, we replay 2008 right at a point of retirement, because that is the worst-case scenario — the moment you retire and you draw on your investment, the market comes down.

“We do all those simulations with clients so, when there are swings, like that 800-point drop recently, we get few, if any, calls, because we’ve already considered the worst-case scenario,” she went on, adding that, when people retire, they have more free time and spend some of it watching — and worrying about — the markets and their investments. “We don’t want them to have those reaction swings.”

Thus, the firm, like Deliso’s, recommends that those entering retirement do so with six months or perhaps a year’s worth of cash reserves to draw on, rather than their retirement savings.

Curran said effective planning, not to mention a willingness to stay the course, or “play the cycle out,” as she called it, is critical in this environment where interest rates on CDs and other very conservative forms of investing are far too low to generate real returns.

“The new norm is that people can’t go to a conservative portfolio of bonds and cash in retirement and live comfortably,” she said. “They have to be in the market, and they have to feel the weight of the ebb and flow of the market and understand that, if they stay long enough, the market will give them a positive return.”

Deliso agreed and reiterated that a big part of her job is to remove fear from the equation through proper planning and an effective mix of investments and fixed assets.

That’s why she hasn’t had anything over a 3 yet from her phone poll, and why she isn’t expecting any, either.

— George O’Brien