Case Study using TaxPlanIQ Labs

TaxPlanIQ is a tax planning platform designed to elevate your value and put you back in control of your firm. 

To alleviate frustration, save you time, and better demonstrate your value to your clients, TaxPlanIQ lets you populate a client’s portfolio with all of their information and your tax-saving strategies to create a report that outlines a comprehensive tax plan and the ROI for the client working with your firm. 

In the following case study, we’ll review two cases and demonstrate how using TaxPlanIQ will allow you to bring clarity and proof of value to your tax plan when you present it to your client. 

Case 1

Heather met with Sharla to go over a client’s current tax plan. Her goal for the meeting was to determine if there was anything else Heather could be doing to optimize savings for her client’s taxes.

Background Info

To get a better understanding of the case, they reviewed the client’s background information and went over what Heather was already doing to save her client’s money. 

Heather explained that her clients own a business and are married, filing a joint return. They have no kids and due to a previous marriage, the wife would like to remain a part-owner of the business, instead of dropping her salary to ensure a larger tax break. The S-corp is projected to make $265,000, $65,000 of that is income. The husband is currently taking $41,000 and the wife is taking $24,000. They are relying on self-employed health insurance. 

In addition, they have a rental property that wasn’t drawing in much income on this year’s taxes but will be taking in about $200,000 of net income the year ahead. 

Ways to Save

Sharla found that Heather had already thought of a lot of the strategies that would optimize their savings. This includes:

• A strong retirement plan
• Converting the business into an S-Corporation
• The social security wage cap to save on medicare

Since Heather set these up over the last few years, she can take credit and add them into TaxPlanIQ. 

After reviewing what Heather has already done to ensure her clients are saving money, Sharla added the information into TaxPlanIQ and covered other options for saving.

She suggested doing cost segregation to have one of them collect a passive income. Due to their current situation, this may reflect negatively for the first year but will turn around down the road. 

After further review, Sharla and Heather determined she was already doing as much as she could to save her clients the max amount.

Findings

Once everything, including ideas for additional ways to save where added to TaxPlanIQ, Sharla ran the report. The report outlined savings Heather was already providing her clients and explained how the other changes, if they are implemented, would improve her tax plan. 

Currently, Heather charges $625 a month but Sharla suggests charging $750 monthly plus a one-time implementation fee of $7,000. 

The report showed a 300% ROI for the clients, which Sharla says should be the goal for most accountants. With this number, presenting and explaining the value of services to their clients will be much easier. 

Case 2

Kristin met with Sharla to discuss a current client’s tax plan and work through possible saving opportunities. The end goal is to use the findings to present a new and improved tax plan to her clients. 

Background Info

For Sharla to better understand Kristin’s clients, she provided a bit of background information. 

Kristin’s clients are married and filing jointly. The wife had a very successful year in real estate, boosting her income from roughly $30,000 to $300,000, while the husband worked as a firefighter. Their health insurance comes through the husband’s job. The wife also pays the husband for the handiwork jobs he does on the houses she sells. The wife has a seventeen-year-old daughter who is considered an independent living with her father. 

Ways to Save 

As Sharla and Kristin talked through the current plan in place, Sharla made suggestions and added each potential strategy into TaxPlanIQ.

As Sharla input the information into TaxPlanIQ she suggested changing the name of her plan to “Minimize Self-Employment Tax.” This will reflect the work that Kristin is doing to save on taxes by not taking credit for the work that was previously done. 

The first strategy she mentioned was having the wife pay her husband a small salary. To do this he would have to set up a Schedule-C contractor, that way the contracting fees will cover the MERP expense and enough for retirement if there is a reason he doesn’t already have it.

The most significant suggestion Sharla made was a college student strategy. For this strategy,  the wife would pay her daughter a salary equal to the cost of tuition when she goes to college. This would allow her daughter to pay for the costs out of her own pocket. The daughter could then apply for additional college education tax credits considering she is paying her way on her own. Once the daughter turns 21, she can then claim the Education Assistance Program, which would allow the mother to pay her for student loan costs and/or tuition. 

Findings 

Once Sharla placed the suggested strategies into TaxPlanIQ, she went through and added any additional fees. From there, Kristen was able to quickly see how much she’d be saving her clients over the next few years if they implemented the strategies above. By charging a one-time implementation fee of $10,000 and a monthly fee of $750, Kristin would be getting above 330% in the first year and roughly 533% ROI YoY after that. 

By working through the potential saving opportunities in both cases, Heather and Kristin were able to see just how much their work was saving their clients. TaxPlanIQ created both of them a comprehensive report that outlines: 

• A clear understanding of each tax strategy they could implement
• A savings amount for each strategy 
• A total ROI of implementing these strategies

With these clear descriptions of worth, Heather and Kristin both agreed they could convey their value to their clients. 

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