TaxCoach Briefs:    February 26, 2009

Volume 4, Number 11

***** Attention TaxCoach Members ***** The March Lineup hits the mail next week, with a special discussion revealing a simple two-line graph that holds the key to recession-proofing your practice. If you're not already a member, click here for your 30-day no-risk trial.

TaxCoach Briefs archives.

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MARKETING MINUTE (EAL)
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MORE POLITICAL NEWS YOU CAN USE

Back in October, as it became clear that Barack Obama would win the election, Keith and I started planning how to exploit the marketing opportunity that fear of tax increases would present. You'll recall we launched our Obama tax seminar kit the day after the election, along with several other Obama-flavored marketing materials.

Since then, the economy has fallen completely off the cliff. Taxpayers across America stopped worrying about potential Obama tax hikes and started worrying they wouldn't have any income to be taxed. Shortly after the election, Obama discussed deferring tax increases to avoid squeezing the economy.

Last week, President Obama signed an economic stimulus bill offering nearly $300 billion in tax breaks (see below). For a while there, it looked like raising taxes on "the rich" was just a political practical joke. (Unless, of course, you think jokes should be funny.)

Now Obama has begun releasing more detailed budget proposals. And now we're starting to see plans for future tax hikes -- tax hikes that will create opportunities for you to market to your most valuable clients.

Specifically, Obama proposes to let the Bush tax cuts expire for households making over $250,000. Marginal rates would climb back up to 39.6%. Capital gains taxes would climb back to 20%. And Obama would cap the value of itemized deductions at 28%, so that even taxpayers in higher brackets save no more than 28 cents tax for each dollar of deduction. According to Bloomberg News, this would mean an extra trillion in tax over the next 10 years.

These proposed increases won't take effect until 2011. But they will start making news. And as they do, your high-income clients will start worrying about the bullseye on their back. Make sure they think of you when they wonder how they should plan for that trillion-dollar bill!

And what about clients not threatened by the proposed hikes? Well, flat-tax fans can argue until they're blue in the face that flat or consumption-based taxes would be easier and fairer. But the new administration has signaled a love affair with the sort of targeted tax credits that prompted former president Jimmy Carter to condemn the Tax Code as a "disgrace to the human race."

This naturally presents opportunities for you to deliver value by navigating clients through the rules. Make sure you get the credit you deserve for being your clients' Sherpa! Send them the TaxCoach Client Alerts. Schedule times to present the TaxCoach seminars. Make sure they know you're watching their bottom line, and they'll reward you by supporting your bottom line too.

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TAXCOACH RECOMMENDS (EAL)
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ENTRYTRACKER SOFTWARE

Here at TaxCoach, our job is to give you tools to set yourself apart from your competition. And we're always keeping an eye out for complementary tools to make your practice even more valuable. This month, we've got a great one for you. Let me introduce you to "EntryTracker," a new tool that saves your time and your clients' tax dollars, all in one convenient package.

EntryTracker is an online version of Sandy Botkin's classic tax organizer that helps clients track their business expenses and organize their documents to legitimize their deductions. And it's far more powerful than just an expense ledger. Does QuickBooks let them take a cell-phone picture of a receipt -- then send it directly to the software? EntryTracker does. And EntryTracker even trains your clients how to use it!

The real opportunity isn't just the practice management benefits. The real opportunity is in practice development. You can license EntryTracker for a low monthly fee, then offer it to your entire practice. Give it to them free as a value-added service (They would have to pay $49/month to subscribe on their own, making it a nearly $600 value.) Or charge them for it and bundle access into your regular fees.

I realize you're heading into the busiest part of your year. But now is actually the best time to add EntryTracker to your practice. That's because now is when you're seeing clients and confronting the cost of poor recordkeeping. And that makes now the time to score points for giving them the solution.

Click here for more information and an eye-opening demo!

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UPDATED CONTENT (EAL)
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ECONOMIC STIMULUS ACT

We've updated the system to reflect recent tax enactments, particularly those within the the American Recovery and Reinvestment Act that President Obama signed on February 17. These include:

You'll find these changes integrated into the plan modules, Summary Report, and Outlook Letter where appropriate.

We're also working on an economic stimulus seminar kit, which will resemble the "Obama Tax Proposal" seminar kit we released immediately after the election. Keep an eye out for it in next week's Briefs.

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MEMBER EVENT (EAL)
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2009 TAMMY AWARDS

Excitement is building as we move closer to April 16, when Keith, Catherine, and I will present the very first annual TAMMYs -- TaxCoach's eagerly-anticipated and highly coveted Tax and Accounting Marketing Awards. We're looking for your web pages, newspaper ads, direct mail pieces, TV or radio ads, and other marketing materials. (Don't worry about categories -- we're making this up as we go, and if we like it, we'll figure out where to put it.)

Send your materials to Catherine by April 1. Don't miss your chance to make tax marketing history!

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MEMBER Q & A (KAV)
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Q: I’m trying to get comfortable talking to my clients about the MERP. From what I’m reading, it looks like they should really be set up as a “C” corporation. I personally just filed as an “S” corp. and I would like to use the MERP for my business. Did I make a mistake?

A: The short answer is that while S-corp owners can’t draw MERP benefits from their S-corps, there’s no need for a C-corp either. By far the greatest number of plans we see involve sole proprietors filing Schedule C who hire their spouses to qualify as “employees” and pay those spouses in the form of benefits only (and not salary) to avoid payroll hassles.

In many cases, an S-corp owner can segregate a separate line of business outside the S-corp to report on a Schedule C to get the best of both worlds. Do you have 1099 income from a certain line of business (such as securities, financial-planning fees, or a specific type of insurance commissions) that you could “peel off” and report on Schedule C? In that case, you can hire your spouse to help administer that business, establish a MERP, and compensate her in the form of MERP benefits -- thus getting both the S-corp and MERP benefits.

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We're happy to answer your questions on TaxCoach content, features, or marketing. While we give first priority to our All-Star and Hall of Fame members, we work to answer all questions. For best response, email support@taxcoachsoftware.com. If we think the answer will be useful to all of our members, we'll publish it (anonymously) here in the 'Member Q & A' section of TaxCoach Briefs.

Regards,

Ed Lyon
Keith VandeStadt
www.taxcoachsoftware.com
(513) 321-2820

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