TaxCoach Briefs:    March 11, 2010

Volume 5, Number 10

• Marketing Minute: Lessons From Margaret's Teachers
• New Content: Selling Your Home at a Loss
• Member Success Story: Practice Makes Perfect
• Member Call-In: Introduce Tax Planning

****Attention All-Stars and Press Club members ****: The playback from Tuesday's monthly webinar is now available on the All-Stars page. And for April, as usual, we're delaying the webinar until after tax season — it will be Tuesday April 27 at 4pm Eastern. Mark your calendar now!

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MARKETING MINUTE (EAL)
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LESSONS FROM MARGARET'S TEACHERS

My daughter Margaret started fourth grade at a new school this year - Wilson Elementary, a highly-regarded school here in Cincinnati's Forest Hills district. Here at TaxCoach, we're familiar with those schools. (Keith's wife Barri, their kids Kees and Aidan, and our Manager of Client Services, Catherine Chiara, are all Forest Hills "lifers.") So Margaret and I both had high expectations. And we've both been pleased - she loves her new school and her new friends.

This is also Margaret's first year for letter grades. She's doing great - but last quarter she got her first "C," in science. So she was nervous as a Swiss banker in a room full of auditors when I met with her teachers for a conference last Friday.

Margaret's teachers - Jacqui Freeman, Jamie Fulmer, and Doug Davis - are all bright, dedicated and enthusiastic. The conference went well as we discussed her academic progress and adjustment to her new school.

So, why the "C" in science? It turns out that while Margaret understands the material just fine, she races through her her quizzes and tests and doesn't show her work.

I was always one of those kids who hated showing my work. If I could come up with an answer off the top of my head, why not just spit it out and move on? Why did I need to show my work? And was I really going to use algebra when I grew up anyway? (As it turns out, I really do use algebra. It's Phys Ed I never use - but that's another story.)

As it turns out, showing your work has great value in the real world. In our business, showing our work helps us demonstrate our value to our clients. And that, in turn, helps us attract clients, keep clients, generate referrals, charge premium fees, and make them stick! All good things in my book.

Some clients are happy to pick up their 1040 and walk out without looking at anything other than their refund. Others like to walk through it line-by-line, making sure they understand where every number comes from and how it affects their final bill. But we're not in business just to hand our clients tax returns, or even show them how the numbers come together. We're here to help them plan their finances to produce the lowest tax bill allowed. How can clients see us do that if we don't show our work?

Let's say my client owns a couple of rental properties. I show her how to hire her kids to maintain the properties so she can set up a medical expense reimbursement plan and write off their orthodontics as a rental expense. Here's how the conversation might go:

Me: Okay, now we've got Schedule E, where we report your rental income and expenses. We've got your rents on Line 3, plus all the usual expenses through Line 20. So far so good?

Client: You know these forms give me a headache, right?

Me: I know. Just stick with me for a second, OK? Here's a new entry on Line 18, $3,000 for "Employee Benefits." Remember when I told you to hire your son and daughter to help take care of the properties?

Client: I do, yes. Something about taking their braces off the personal return and onto the rental return?

Me: Exactly! If I put the braces with your regular medical expenses on Schedule A, they still aren't more than 7.5% of your adjusted gross income. So they don't give you any savings. But moving them here lets you "rescue" that lost deduction. You're in the 25% bracket, so it saves you $750 in tax. And does Sarah still treat you like the "First National Bank of Mom"?

Client: She'd still rather practice her cheerleading. But she does seem to appreciate her allowance a little more!

See how showing your work pays off? Now my client sees how I saved her $750. Now she appreciates how I saved her $750! Now she's more likely to pay my fee without grumbling. She's more likely to refer me to her friends, family, and colleagues.

Do you want an "A" in Client Appreciation? Show your work - and your clients will give you a report card you can be proud to take home to Mom and Dad!

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NEW CONTENT (EAL)
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SELLING HOME AT A LOSS

Americans spent most of the last decade buying houses and assuming their value could only go up. They thought of those homes as giant ATMs, refinancing to take withdrawals for renovations, cars, trips, and the rest of "the good life." The Tax Code encouraged this speculation, letting taxpayers exclude up to $500,000 in home sale gains from their taxes.

But, like most good things, the real estate bubble had to end, and millions of Americans are upside down on their mortgages. They're looking at capital losses, short sales, and even foreclosures instead of fat tax-free gains. Many of you have asked us to address these situations in TaxCoach. So we've taken the existing module on home sale gains and split it into two, with the second module focusing on easing the sting of selling a home at a loss.

This is a bit of a departure for us. TaxCoach focuses on proactive planning to save tax, not after-the-fact scrambling to fix mistakes. (One member wrote in yesterday asking if we had any thoughts for a client who failed to report a foreign bank account during last year's amnesty period, and I suggested calling Johnnie Cochran.) Nobody plans to lose money on their home. But this is one scenario where planning can still reinforce your value in your client's eyes.

You'll find the new module in the "Cashing Out" section of the TaxCoach plan.

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MEMBER SUCCESS STORY OF THE WEEK (KAV)
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"After listening to you for months, I finally used the 'I see the way you've organized your business is costing you thousands of dollars' approach with a client, instead of just telling him up front he should be an S Corp. He was totally on board, of course, and I didn't have to give away the farm for nothing. I think we have to practice saying that until we feel comfortable enough to say it every time."

Deborah J. Smith, CPA
Walnut Ridge, AR

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MEMBER RESOURCE (KAV)
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MEMBER CALL-IN WITH ED AND KEITH

This week: "The Goodness" again, as usual. At first it looked like we'd have lighter but still-respectable attendance, especially during tax season, but we ended up with just as many callers as ever.

Here's an excerpt of questions and comments raised by callers this week, straight from the call log.

• Any ideas on how to leverage the news folks are getting with their completed returns and move into tax planning?
  • What is a good item to get clients to do planning when they get their returns
  • How about enticing non-clients with the same type of approach, but without a summary report since those persons are not existing clients?
  • Any suggestions for direct mail piece (or whatever) to send to non clients immediately after April 15th along the lines of "If you were not happy with the amount of taxes you owed this year now is the time to do something about it"?
• Local Realtor Assoc ran full page ad in Sunday paper honoring sixty-nine top agents. The ad listed the agents & their basic contact info. I would like to appraoch most or all of those 69 agents. What's your suggested best approach? Also please discuss marketing plan that will get me in front of them. Thanks.
  • I have been asked to speak to a realtor group but they are only giveng me 5 minutes for a quick speak. Is there a short presentation.
    [A: Take a look at the Networking Mini-Presentation in the Playbook, #7 under the Seminar Kits heading. It's designed for exactly that. ]
• DO you have any section 105 plan providers you have had good/bad experiences with
  [A: We recommend ClaimLinx as a Third Party Administrator, www.claimlinx.com. ]
• For the "other guy" have you thought about placing the weekly call in in audio so we can listen to on our Ipods when we have time or if not in that format as another audio file?
  [A: Nope — we don't record these sessions on purpose, as we want to keep them informal, and don't want to end up "on the record" in providing advice when we really might just be thinking out loud. And since we occasionally discuss specific vendors and packages, we also don't want to be on the record as endorsing any product or organization with which we're not completely familiar. We like it as a casual conversation among peers. ]
  • Thank you for not recording and keeping it informal
• What software does everyone use/reccommend to do actual preparation/calculations
  • Which vendors? How do I find a good valued one? Sorry, I'm new to this industry.
  • I've tried to switch to a less expensive package but had to go back to the other I had used for 12 years. Very hard to learn a new one.
  • I looked into changing several years ago. The company that i was thnking of switching to was then puchased by Intuit. I would be back to where I started. I will never change.
• This is a followup to my question last week about relocating to a better climate and 5 point plan. In your opinion would it be better to buy a existing tax practice and enhance fees with tax coach or use the dollars to start and market a practice from scratch.
  • More fun to build - do not have to break others back habits
  • Regarding warm climates. I have found FL to be really difficult as every retired accountant from the country appears to have moved there and is working part time. The result is a lot of competition and lower rates.
  • What's that saying about 'Teaching old dogs new tricks..."?
    [A: At this point, we discussed how we helped Press Club member Pam Burns launch a new practice from scratch in Gainesville, Florida. We mentioned that we did an All-Stars/Press Club webinar with her as a Hot Seat participant, in December 2007 (available for playback to elite members on the All-Stars page). We've also featured her in several Briefs issues, which you can find via the Archives in the Playbook. Two of the best examples are 10/30/08, where we wrote up her experience as a Member Success Story, and 4/16/09, where we analyzed her TV commercials as part of our "TAMMY Award" series. ]
• Do your comments regarding branding extend to social media such as a Facebook Fan Page, Squidoo Lens, LinkedIn, etc?
  • Are Tax Coach advisors utilizing social media or the proverbial Web 2.0 tools, if so how and to what extent?
  • What would be your thoughts in utilizing a YouTube channel for content delivery? Since I have a face for radio, I would use YouTube to post slides or comments on different situational questions of problems of real estate agents or problems of a certain industry segment.
  • Recently read good article discussing backlash & drop in favor of of so-called "Just Like Me" referrals via social media due to growth of too much business content & not really consumer referrals.
  • A fat, bald middle aged accountant with an Indian accent, like me, is ideal for video promotion.

If you're looking for clarification on TaxCoach strategies or additional ways to profit from TaxCoach too, join us for the next call, on Wednesday March 17, at 1pm Eastern. Enter a question or just listen in on the repartee. Check the "Contact Us" button within TaxCoach for registration instructions.

While our elite members (All-Stars, Press Club, and Hall of Fame) can still schedule time directly with Ed as part of their coaching programs, we simply cannot answer marketing and tax-strategy questions via email or unscheduled calls.

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We can answer questions on using TaxCoach system features anytime. (Save marketing and tax strategy questions for Member Call-Ins.) For best response, email support@taxcoachsoftware.com.

Regards,