Understanding Club Tax Season
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Attention Club Treasurers!
November 21, 2008
Dear Club Treasurer,
The investment club tax filing process can be a confusing time for all club members, especially club treasurers. ICLUBcentral's Club Tax Printers are created with treasurers like you in mind, trying to make tax filing as easy and painless as possible for both federal and state tax returns. With just a few clicks of your mouse, you can generate the forms that are required by the IRS and 14 states.
In order to make investment club tax season as straightforward as possible, ICLUBcentral has create lots of additional help and resources to educate both new and experienced club treasurers on the schedule and process of filing an investment club return. This guide is intended to help you and your club members to understand the process and timing of investment club-related tax issues.
First, please visit our "General Tax Principles" guide to better understand the basics of club tax preparation.
Next, register for one of our free online webinars with ICLUBcentral's Vice-President of Customer Care and Special Projects, Daniel Abraham. These free workshops are open to anyone who has a computer and internet access (and speakers). You don't need a microphone in order to participate, so drop by at one of these informative seminars. You can ask questions, as well.
Registration is required and space is limited, so sign up for your seat today.
Finally, here's a handy guide to the timing of the tax season. Save or print this email so you can refer to it later, and distribute to your club members if needed.
Every Treasurer's Calendar of Year-End and Club Tax Preparation Tasks
Each year, Treasurers go through the same song and dance -- the Tax Season Tango. Though the music may change, the steps of the dance never do. Here's what you can expect as a club treasurer during tax times.
The Prelude
Some time near July, the IRS usually releases drafts of Federal tax forms. This is enough for software companies and accountants to get a general feel for the new forms, most importantly for any changes that may have been made since the prior year. ICLUBcentral is already at work on the Tax Printer software for the new year, and will place these draft forms into the software as a placeholder until the final forms are released.
November: Clubs Begin to Pre-order Their Tax Printers.
ICLUBcentral starts pre-sales on the Tax Printer software in November. The software is generally in the testing phase at this point, so nothing is shipping yet. Pre-sales helps ICLUBcentral spread out the orders so they don't come in all at once. We ship CDs in the order in which they were received, and offer a discount to clubs who purchase by December 31st, so there's a definite advantage to being an early bird. And remember: professional tax preparers typically charge several hundred dollars to prepare the forms that the ICLUBcentral Club Tax software generates for you; add the hours you'll save by not attempting to complete the forms by hand, and the Club Tax Printers are a relative bargain!
What You Need To Do: Get approval from your club if needed, and purchase your Federal and (if applicable) State Tax Printers. Tell the club members to expect their completed K-1 tax forms in February.
December: Be Patient.
ICLUBcentral starts shipping Tax Printer software in mid- to late-December. At this time, the software is complete, but the tax forms are still in DRAFT mode. The IRS would love to publish the final forms, but there always seem to be delays, usually due to last-minute legislation. For example, in 2005, Congress added a check box for taxpayers to donate $3 for Hurricane Katrina relief -- after the IRS had sent the forms to the printers! In 2006, a similar delay occurred because Congress renewed a clause that had just run out. If there were no last-minute changes, there would be no delays, but this is seldom the case.
What You Need To Do: Install the software as soon as it is released. This way, you'll know that there are no problems running the software on your computer or troubles with installation. While you can't generate any forms, you will have plenty of time to contact ICLUBcentral Customer Support and work on a solution at your convenience. (There is nothing more frustrating for you -- and for us -- if you wait until the last minute, then sit down to prepare your tax forms on a weekend, only to find that there's some glitch in your program. Also, make sure that your club puts together an audit committee, and begin to collect the necessary documents for the audit. Being your review of the club's books for the year. Tell the club members to expect their completed K-1 tax forms in February.
January: Audit Your Books.
You're waiting for the draft forms to be finalized. You're waiting for your bank and brokerage firm's 1099 forms, which they don't have send to you until January 31. The tension builds as your club's members decide that now is the time they should start asking you for their K-1s -- in some cases, every single day. Hand them a copy of this message so they know why they don't have their tax forms yet.
You'll need to close your club's books. Check the "Closing your Investment Club Books at Year-End" presentation in the StockCentral Learning Library for more on this procedure. The Audit Committee should then complete their review of the books. Our Investment Club Annual Audit Checklist will help, also available in the Learning Library.
What to do: Check iclub.com for the status of the tax forms. We'll keep our main page updated with the final and draft status of both the federal and state tax forms -- so check there before sending a message to Customer Support. Tell the club members to expect their completed K-1 tax forms in February.
February: Generate Your Tax Forms (Congress and the IRS Willing).
You've got your 1099s. You've recorded every transaction and closed the books for the previous year. You check iclub.com for the status of the tax forms. When Congress and the IRS finalize the forms, ICLUBcentral makes any necessary changes, tests them, and releases the final forms to you. ICLUBcentral shouts from the rooftops that the final forms have arrived, updating the main web page, sending out emails, and automatically updating Club Accounting. Folks with Club Accounting Online see the finalized forms under the Taxes tab. Treasurers with Club Accounting 3 for the desktop get a message that there's an update.
What to do: Complete the tax forms for your club members. Remind the club members that they owe you dinner, and the person who called you the most asking for their K-1 should pick up the tab -- or be nominated to be next year's Treasurer!
We hope this helps you get started with your tax season. Don't forget to pre-order your federal and state tax printers today! Don't miss the special early bird price of $89.99 ($59.99 for StockCentral members, not a member, sign up today for your $30 in savings!) Order today -- prices will increase on January 1, 2009.
P.S. Don't forget to register for the online classes we have scheduled to help users learn about the new Tax Printers. These webinars are free of charge and will be conducted on Tuesday nights in the coming weeks. You may sign up in advance to reserve your place at any of these classes: