Best Practices

[BrewOne]

I have 8821's on about 70% of my clients.  I don't require it, but have toyed with the idea of requiring it of all clients.  I push it every year in my annual letter.

Anyway, I just finished my review of their 2022 IRS accounts.  Two biggies and one take away.

1) Client's name and SSN being used in California for DoorDash payments.  Impersonation has to be the worst form of identity theft, what a nightmare.  Client had no idea and would not have found out until getting a nastygram from the IRS (1099-NEC, so self-employment taxes as well).

2) Client's professional association was reporting all their income under her social (large $$$--can't believe she hadn't heard from IRS).  Square is cooperating with reissuing 1099-K's, so kudos to them.  Once again, client had no idea this was happening.

3) Client's 5498's--seeing how much client's have in their IRA's may seem intrusive, but I was able to match up the accounts with 1099R's, make notes for those approaching RMD age, and verify that everyone was receiving distributions who were supposed to.

The slow response of the IRS to discrepancies means that you can get out ahead of problems--I highly recommend collecting the authority.

[Catherine]

Good to know about Square. 

I do like to have authority for docs with clients. A few are now out of date - thanks for the reminder to get updated signatures from those clients.