Tax Season is almost upon us and Club Tax Printers are now for sale on a pre-order basis.
Why do we offer pre-orders for the Club Tax Printers? Here's a little primer on investment club tax preparation and what you can expect if you're an investment club treasurer.
Each year, ICLUBcentral produces investment club tax preparation software for our Club Accounting 3 program, or for our myiclub.com web site. For Club Accounting 3 users (our Windows-based desktop accounting software), you can choose to purchase the program by download or by receiving a CD in the mail. There is no shipping and handling charge for orders of the downloadable program, so you can save money by choosing this option. For myiclub.com users, there is no download or CD required -- your tax printer simply appears in the Taxes tab of your club's web site after you purchase it.
There are two separate Club Tax Printers that you may need to purchase.
Every investment club needs the Federal Club Tax Printer, which generates the club's tax documents for the IRS (Form 1065 Partnership Return, Schedule K-1, and other associated forms).
The State Club Tax Printer generates the required returns for 13 states: Arizona, California, Colorado, Georgia, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, New York, and Pennsylvania, and, new for 2007, Iowa and Wisconsin (the official announcement should be coming soon). Note: other states may require filings as well, even though we do not provide software for those states.
While IRS regulations stipulate that general partnerships have until April 15th to provide Schedule K-1s to partners, very few investment clubs ever want to wait that long. ICLUBcentral strives to release the Club Tax Printers as quickly as we can after the start of each year, but we are tied to the release schedule of final forms from the IRS and the states, as well as to the replacement forms approval process that states mandate that we follow. Since these items are out of our control, it's important that club treasurers understand the timeline for release of the software.
In November: ICLUBcentral launches pre-orders for the Club Tax Printer software. We do this to help spread the orders throughout the season so that we don't get overwhelmed during our crunch time. From January through March, we hire additional Customer Support representatives to staff the phones and answer e-mail, but the sheer volume of inquiries we receive during this time can lengthen hold times and delay responses. By pre-ordering and thinking ahead, we can help customers with any installation problems well in advance of the time when they'll be faced with time constraints.
In addition, by starting pre-orders in November, we can encourage club treasurers to focus on year-end tasks and prepare to close the club's books, as well as get any necessary approvals from the club to purchase the club tax software. (It's a good idea for clubs to give standing permission for the treasurer to make the tax purchase each year, instead of having to get approval each time.) Finally, a good reason for clubs to pre-order (if they want the program on CDs) is that we ship the product to those who order it first. If you delay ordering until next year in the thick of tax season, it could be 2-3 weeks until you receive the program in the mail.
In December: ICLUBcentral typically release the actual programs for Club Accounting 3 and myiclub.com, generally in the last half of the month. The forms contained in these releases will most likely be DRAFT forms as released by the various state tax agencies and the IRS. Final approval (of the forms or by the states of our replacement forms) may not come until January or February, but we don't want to wait until then to release the software. As such, we release forms in DRAFT format, with a watermark on each that notes that the forms may not be used for official filing. When final forms become available, we release updates via the auto-updater function built into the programs. As long as your computer is connected to the Internet, the software will check for updates from our web site and then download and install those updates into your program. If you use myiclub.com, your forms will be updated automatically.
Now is the time to remind your club members of the schedule for the tax season. They will need to wait for the treasurer to generate Schedule K-1 forms. (Here's a handy tip for a nymember who wants to file their personal taxes in early January and complains most loudly about not receiving the final documents from the club until February: suggest that those members volunteer to become club treasurer at your club's next officer elections!)
In January: All of the financial institutions with which your club has accounts (bank, brokerage, dividend reinvestment, etc.) will be sending you Form 1099s in the month of January. These forms are required to be sent by 1/31 of each year, so you may not receive them until the very end of the month. A Form 1099 details the amounts you received in dividends, interest, and other income throughout the year, and you should not plan on filing your club tax forms or provide Schedule K-1s to your partners until you have reconciled the amounts on the Form 1099s to your club books. Over the past two or three years, an increasing number of institutions have released erroneous Form 1099s to customers, requiring corrected forms to be sent, so if you find a discrepancy, don't assume that your data entry or the software is at fault. Since institutions send the Form 1099 information to the IRS, it's important that what you send to the IRS matches.
You can generate DRAFT versions of your club filings as you wish. These are useful in identifying any problems before you sit down to print the final documents.
Now is also a good time to convene your club's Audit Committee to review the club's books for the year. Once all the year-end reports and 1099s have been received from your financial institutions, the Audit Committee should meet and verify that everything is in order.
In February: Now that your books are closed, with all amounts reconciled to your financial institution's year-end reports, you're ready to prepare your club's tax filings as soon as the forms are finalized. While we endeavor to release these forms before the end of February, some states may keep us on hold until March.
Check ICLUB.com for updates on when the final Club Tax Printers are scheduled to become available. We keep updates on the main page of our web site with the expected release dates. You can sign up for our free ICLUB Insider newsletter, as well, to ensure that you receive a notice when final forms are released.
When the final Club Tax Printers have been released, the next time you start Club Accounting 3 you should receive a notice that an update is available. (Sometimes, firewall software interferes with this communication with the update server, so keep this in mind if you don't see the update message.) If you use myiclub.com, the final forms are automatically released.
Now you can prepare your club's final tax documents. Be sure to review the instructions so that you print enough copies for your club's files, for the IRS, for the states, and for the members. And graciously accept your club member's gratitude for a job well done!
We offer discounts on the Club Tax Printers -- and even the software itself for free! -- for StockCentral.com members, as well as discounts for those who order before 12/31/07. We strive to keep the costs of the Tax Printers as low as we can, and they do compare quite favorably to the dozens of hours that it would take for a treasurer to complete all the forms by hand, or to the hundreds of dollars that you would pay a professional tax preparer to do the job for you. Considering that a treasurer can generate the IRS forms in as little as seven clicks of their mouse, the Club Tax Printers are a bargain.
Finally, even though we call this product the "Club Tax Printer," don't expect to receive an inkjet or laserjet printer in the mail after you order. The software merely "prints" the tax forms from your club accounting software to Adobe Acrobat (PDF) files that you can email to fellow club members, save for future reference, and print to your own printer for sending off to the IRS and state tax agencies.