The paperwork associated with real estate closings can be overwhelming if you don’t stay on top of it. You can’t get away with putting off the HUD closing statement since you need that to close the deal, but too many real estate firms procrastinate on 1099-S filling, leaving them in a scramble at the end of the year. Here are a few tips to keep the IRS at bay.
File As You Go – Just because you have until January 31 to file your 1099-S forms doesn’t mean you should wait until the last minute. 1099-S filing should be a part of your closing process. All the information is fresh in your mind so take a moment to fill out one more document, send it off and forget about it.
File Electronically – The IRS encourages electronic filling so why bother sticking with outdated paper forms? Easy HUD, Easy Soft’s HUD settlement statement software, includes an optional 1099-S electronic filing module. You can file with the click of a button. Information is pulled from the HUD form so you don’t have to worry about mistakes on the IRS document. Enrollment in the program is free and your only cost is a very affordable $10 per filing. You get an immediate confirmation number so you know the IRS received your form.
Pay Attention To Addresses – A client selling a house is probably changing addresses. Since a copy of the 1099-S goes to the client, be sure you are using the new address and not sending it to the house that just got sold. This is especially true if you have ignored our first piece of advice and are filing at the end of the year, months after the sale.
Audit Yourself – Even if you file as you go, be sure you haven’t missed any closings. It’s easy to overlook one especially in a large, busy real estate firm but you can be the IRS won’t miss it. Generate a 1099-S Submission Report from the Easy HUD RESPA software as you near the end of the calendar year. This is a record of all your closings and electronic submissions. Look it over to be sure none of your 1099-S filings have fallen through the cracks.
Protect yourself from oversights by automating your practice with Easy Soft’s attorney practice management software products. Download a demo of Easy HUD or any of our titles to take a test drive and see how much faster your real estate closings can be.
People become attorneys to practice law not to crunch numbers, and yet family law attorneys spend most of their time calculating property division, alimony and child support. The lack of accounting experience means that some of these well-meaning attorneys are not negotiating ideal settlements. You can use Divorce Financials family law software to examine the tax implications of a settlement.
The Best Settlement Is Sometimes the Worst Settlement
Many state use formulas for alimony and child support. The idea is that formulas remove bias and make negotiation simpler. This is especially easy when using settlement statement software. You plug in a few numbers about each spouse’s income and lifestyle expenses, the number of kids, the custody arrangement and *bam* the program spits out numbers. Easy.
However it’s important to realize that the formulas are only a starting point. As long as both parties agree, attorneys can come to a deal for different alimony and child support amounts. Why would you want to? Because sometimes tweaking the numbers can actually reduce the payer’s obligation while still giving the recipient more money each month. How is that possible? Through the magic of taxes.
Divorce and Taxes
Here’s the issue in a nutshell: alimony is income, child support is not, at least according to the IRS. This means the payer can deduct alimony in certain cases, thus paying lower taxes, and the recipient must pay taxes on alimony received. Child support is neither deductible by the payer nor taxable by the recipient. What does that all mean?
By exchanging alimony and child support on a dollar for dollar basis, you change each party’s tax situation. The same money is changing hands but the amount of taxes each party owes is different. There is often a sweet spot where each party is paying the least amount of taxes and divorce software for attorneys makes it easy to examine different payment scenarios to find this optimal balance.
In addition, there are tax advantages to an alimony buyout. Attorneys use divorce planning software to calculate a lump sum that has a value equivalent to the alimony payments. The payer or recipient might prefer that lump sum over monthly payments, in part because it could be advantageous to pay all the taxes in one year rather than over time.
Family law practices employ outside accounting firms to do this kind of analysis, but that isn’t necessary with modern legal practice management software. Attorneys can do their own tax analysis, provide better solutions to their clients, and save money for themselves. Download a demo of Divorce Financials and explore tax optimization for yourself.
Child support and custody is an important aspect of divorce negotiation, arguably the most important aspect since the children can’t fight for their own rights. However it’s not the only aspect. By using both of our products, Divorce Financials and CIS, NJ family law attorneys have a comprehensive set of tools for their clients.
General divorce software provides family law attorneys with tools necessary to calculate equitable property division, alimony and child support. These tools allow divorce lawyers to create comprehensive settlements as well as dealing with complex issues like alimony buyout, pension valuation and tax optimization. General divorce software does a good job of working with the numbers, but leave attorneys to fill out the CIS form manually.
Specialized CIS software focuses on New Jersey custody and child support laws. It allows attorneys to explore in depth various custody and support scenarios, generating multiple scenarios in a matter of minutes and comparing them side by side to find the optimal solution. While this is a great solution for completing CIS forms, it doesn’t provide tools for the other aspects of divorce.
Great Products Working Together
Easy Soft has designed Divorce Financials and CIS to work together. You can exchange data easily between the two programs to give you a software suite with the benefits of both products. They complement each other to provide a comprehensive family law software suite.
Use Case Information Statement software for meticulous analysis of custody and child support options. Then import that data into Divorce Financials to create a tax-optimized alimony/child support solution, simplify asset and liability division, and offer alternatives such as alimony buyouts. Generate the CIS form as well as a host of other documentation from a central repository of information so you can be sure all forms contain the same information.
This kind of software collaboration is a hallmark of Easy Soft’s attorney practice management software. We don’t offer solutions for single issues. We offer the legal profession an array of technologies that work together to provide an easy yet comprehensive suite of applications designed to simplify and automate the modern legal practice. Explore our many legal software products and discover how they can improve your service and your bottom line.
Retainers are the cornerstone of many legal billing arrangements. However collecting, distributing and managing those retainers is not as easy as it might appear. Attorneys use legal billing and accounting software to automate the process and improve the practice’s financial position.
Manual retainer management is a lot of work. Attorneys must constantly check records to see that Client A’s expenses should be billed directly while Client B’s charges should be deducted from the retainer. Many practices are not as diligent as they should be on retainer balance monitoring, letting the funds run out and leaving themselves with the task of continuing to work the case without the security of prepayment.
Here are just a few ways Easy TimeBill attorney time and billing software improves retainer management in a typical practice:
- Set Retainer Per Matter – Not all matters require a retainer. When setting up a new matter for a client you can choose whether or not to set a minimum retainer.
- Automatic Retainer Deduction – You no longer have to keep track of whether to bill the client or deduct from a retainer. All charges entered on the matter will automatically be taken from the retainer funds. You won’t have the embarrassment of sending an invoice to a client who already has provided funds.
- Notify Clients Automatically – The practice isn’t the only one who needs to know the retainer balance. Every invoice generated includes retainer balances. Clients can see the dwindling amounts so are less likely to be surprised by requests to replenish funds.
- Batch Retainer Reminders – Notify clients with low retainer balances all at once. Bulk generate retainer requests that can be printed for mailing, or emailed directly to clients from within the software.
- Trust Management – Eliminate the confusion and cost of opening each retainer as a separate bank account. Add the optional trust accounting system module, Easy Trust, and put all retainers in one account and yet keep all funds completely separate.
Without the right tools retainer management is awkward and time consuming, which is why many firms don’t give it the priority it deserves. Stay on top of your retainers with attorney practice management software to improve your profits and run a more stable law practice. If you aren’t using Easy TimeBill already, then download a free demo and explore the easy-to-use retainer features for yourself.
Accurate financial information is critical to an equitable divorce settlement. New York family law attorneys know that clients are sometimes “creative” in their financial reporting, hoping to reduce New York State spousal support and child support. Attorneys also know that this fraud is not only unlikely to succeed but it could also open the client to criminal penalties. To protect the client, attorneys might want to ask specifically about these kinds of easily overlooked sources of income.
Bonuses/Tips – Bonuses and tips can fluctuate wildly, leaving clients unsure what to report. In particular a client doesn’t want to over-predict future income and get stuck with unreasonably high support obligations. Assure your clients that judges understand these kinds of incomes are variable and support calculations will likely take this into account. Use New York child support software to prepare multiple scenarios for different levels of variable income in order to find a fair support amount.
Perks – Many clients don’t realize that benefits such as company cars, club memberships and other job perks are considered income. These employment extras directly affect the client’s spending — e.g. a person with a company car won’t be spending money on gas and maintenance for a family car — so should be reported on the net worth statement.
Unreported Income – A person who gets a $100 cash payment for a job he does for a friend might not report it on a tax return and, let’s be honest, the IRS isn’t likely to catch the omission. However clients need to remember that the spouse is going to be reporting family income as well. If your client doesn’t report the income and the spouse does, it undermines the client’s credibility. The judge is going to wonder how many other omissions are on the form. Remind your clients that full disclosure is always better.
Gambling & Gifts – Many people don’t realize gambling winnings, even small ones, and gifts should be reported as income. They are easy to overlook and forget about when trying to remember what last year’s income was. Again remind clients that the spouse is going to be reporting income as well, and even accidental omissions will undermine the client’s credibility.
Nontaxable Income – Income that might not need to be listed on an income tax form still should be reported on a Statement of Net Worth. New York divorce law takes into account all sorts of income when determining fair child and spousal support.
Easy Soft’s law practice management software saves you time so you can give clients more personal service. Take time to go over financial information with a client and ask questions that might bring to light unreported income.
Everyone agrees the economy is recovering, so why talk about recession proofing now? Because you don’t patch your leaky roof when it’s raining. You wait for the weather to clear. Now is the perfect time for companies to leverage technology such as Easy TimeBill attorney time and billing software to analyze their costs, improve their profits and be ready for the next economic downturn.
Track Hours Even For Flat Fee Cases
The industry seems to be moving away from the billable hour, but that doesn’t mean you should ignore your time. Easy TimeBill allows you to enter hours and expenses associated with a matter without having those charges show up on the invoice. Someone using the time billing software reviews the costs on a case relative to how much you are charging so you can adjust your billing accordingly. You can also root out unprofitable clients. You know the type: the client who keeps calling for consultation, asking for extra services, and generally taking advantage of your good nature. Know when to “fire” these unprofitable clients and replace them with better ones.
Cut Costs But Don’t Cut Service
Some law firms try to improve profits by reducing their expenses but end up simply eroding their capabilities. Look for ways to work smarter, doing the same work and offering the same quality for a lower cost. If you are still using generic billing software or manual methods, switching to legal billing and accounting software allows you to manage your practice’s finances more quickly and easily. Less time spent on billing is more time spent generating revenue.
Collect What’s Owed
No business likes doing collections. Maybe you don’t want to risk offending a long standing client, perhaps you hesitate to make that awkward phone call, or possibly you just don’t notice how delinquent some accounts have become. Easy TimeBill automates this process, generating late notices for accounts that are 30 or more days overdue. These polite reminders generate a surprising increase in collection rates. You don’t have to be aggressive or confrontational, but you can’t be complacent either.
Prepare your practice now for the next economic downturn because there will be another one. Implement policies and law practice management software technology designed to keep your law firm competitive even as competing firms are struggling to stay afloat.