Keeping up with tax laws can feel like a full-time job in and of itself. Localities, states, and the federal government all come up with different rates and withholding tables. So, what should you do when you’re keeping track of your clients and juggling tax laws? Here are five tips to make it easier to keep up with changing tax laws and rates and keep your clients up-to-date.
Changing tax laws and rates
Some tax laws and rates change more frequently than others (i.e., state unemployment). Each year, quarter, etc. can bring additions, removals, or complete alterations to tax laws.
To stay on top of ever-changing tax laws and rates, you can:
- Set a schedule to review sources
- Use online payroll software
- Subscribe to government newsletters
- Take annual training courses regarding tax laws
- Check in with your clients to receive any updated rates
1. Set a schedule to review sources
While Congress passes federal tax laws, the IRS publishes the information on its website. Because Congress can make changes anytime throughout the year, set a schedule to review resources, including:
Depending on your clients, you may need to review additional information. The IRS typically provides a comprehensive summary of the tax laws and related topics.
How often should you review? Well, that depends on your preference. At minimum, review the pages annually (e.g., at the beginning of the year) to determine any new information before tax season rolls around. But, you may choose to review tax laws more frequently (e.g., monthly or quarterly) to ensure you and your clients are up-to-date. One easy way to stay in the know is to subscribe to IRS alerts (which we’ll go over more in a little bit).
2. Update your payroll software
If you use desktop payroll software, you may need to perform manual updates each year. Manual updates may include entering new rates from your clients (e.g., SUTA tax) or downloading the latest update in your software (e.g., new tax tables).
Depending on your software, the software may do automatic updates for you. Check with your payroll software provider to be sure. Do not delay updating your software because it may result in incorrect tax calculations or filings.
You may need to update your software more frequently, depending on when laws are passed. For example, COVID-19 resulted in changes to Form 941 in 2020 and 2021, and multiple versions of the form with new instructions were released.
As you review IRS and state information, check for software updates. If there are any changes to state or federal forms (like with COVID), ask your provider if they will handle the updates or if you need to do something on your end.
3. Subscribe to government newsletters
One of the easiest ways to stay in the loop on tax laws is to subscribe to newsletters that go right into your inbox. You don’t have to hunt down the information or pore over websites when you subscribe. But, there’s a catch. Not every state offers a subscription newsletter.
If a state does not offer a newsletter, consider bookmarking the state’s webpage for easy navigation. Set a reminder to check the state’s page regularly (e.g., monthly or quarterly).
Another easy way to stay informed about changing tax laws for the states is to see if the state runs any official social media accounts. Subscribe to their social media pages if the state shares regular updates or information.
The IRS also makes it easy to stay well-informed on tax laws with multiple options to receive updates regarding any federal changes, including:
- Newsletters specifically for tax professionals
- Social media accounts
- News releases
- A QuickAlerts program for e-File information
4. Take annual training courses
As a tax professional, you generally must complete continuing education courses each year. To ensure you get the most out of it, schedule your continuing education and complete the courses as soon as possible. And, consider taking more courses if your newsletters indicate any major changes.
To make sure that your firm is up-to-date, schedule training courses or company meetings throughout the year. Encourage your team to ask questions before and after the meetings to ensure their questions are answered.
After you meet with your team and go through training, review the information to see what you need to communicate with your clients.
5. Check in with your clients
Communicating with your clients is an important part of handling their taxes. But, beyond the standard check-ins, you should also be requesting information from them. And, you also need to inform your clients about any tax laws that may affect them.
Information you may need from your clients include:
- State unemployment tax rate notices
- Tax deposit frequency notices
- Any communications from the state or federal government
States typically change the tax rates for businesses at the end of each year. Your clients may receive the tax rate change notice in the mail or on their state account. Request that your clients inform you of any changes to their state unemployment rate as soon as they receive it to avoid penalties or fees.
The state or IRS may also notify your clients of changes to their tax deposit frequency. Failure to change the tax deposit frequency and deposit on time may result in late fees or penalties. Inform your clients of the importance of providing this information to you as soon as possible.
Throughout the year, the state or IRS may send your clients notices regarding amounts due or refunds. When you check in with your clients, ask if they have received any notices from the IRS or the state. If they have, review the notice with them to determine the next steps.
If your clients have not received any notices when you speak with them, let them know to contact you if they do. Or, set a reminder to contact them later. Consistent communication keeps you and your clients on the same page to help minimize the risk of late fees or penalties.