One would think that the tax situation for the younger generation, mostly millennials as we call it, is not that complicated. So traditionally, this demographic is not the target market for most tax firms. Taxpayers under the age of 35 usually do not seek the services of a tax professional or tax expert.
However, it is possible that in the current scenario, millennials (those born between the early 1980s and the late 1990s), may face extraordinary tax-related complexities that previous generations did not. Thus, contrary to popular belief, making them ideal clients for tax makers could prove to be a gold mine for the tax industry to serve.
Guide Millennials
As per studies and reports, millennials now comprise the largest portion of the workforce in the United States. This ultimately makes them the largest part of active taxpayers. There has been extensive talk of millennials spearheading and how they are changing the American economy and society.
Millennials’ fascination with technology, voting, recreation and their spending habits has given a new face to how money is used. Embracing these changes, tax professionals can prepare their companies for millennials as they face the unique and new tax issues of today, and develop those relationships for future wealth growth.
To prepare tax firms for the sporadic influx of millennial clients, it helps to take steps in this regard now and to fully understand their concerns, problems, obstacles and achievements. If a company makes the mistake of not paying much attention to millennials and their needs, it could hurt the client base. One could have the opportunity to lose some excellent clients and spoil the pan-age appeal.
Let’s take a look at some of the potential tax and financial problems millennials will face:
1. Millennials are transitioning from dependency to independence
The metamorphosis from dependent youth to independent adult is always a complicated one. It can be very challenging for young individuals to come out of relying on their parents to strike out on their own. As per current tax laws, parents can claim their children as dependents until they are 19 years old, or up to 24 years old, if they are full-time students.
When starting out on their own, young adults have a vague idea of how their parents handle taxes on their behalf. This can cause them to make simple mistakes during this transition.
This is where professional tax experts come into play. If something goes wrong on a millennial’s tax return, they will need the help of a tax specialist.
Of course, the IRS doesn’t differentiate between millennials and older taxpayers. For the IRS, all citizens stand equal, and the authorities will ultimately impose penalties if there are discrepancies or errors in the filing. It is common for these children to end up with tax bills that they may not be able to afford.
Helping millennials overcome such mistakes, by offering tax resolution services, is proving to be beneficial for tax companies. This can help sow the seeds for the start of a long-term professional relationship.
2. Millennials Embrace the Gig Economy
Freelancing and the gig economy as a whole are a huge hit with millennials. Whether it’s freelance design jobs or offering driving services for taxi or carpool companies, many millennials are hooked on the freedom that contract or gig jobs like we call them offer. A recent study conducted, stated that millennials will make up about 42% of the gig economy by 2020. This number represents a larger share than any other generation, and this percentage is expected to only grow in the next few years.
While taking on additional contract work it may seem attractive to those who may struggle beyond the bare minimum. This can be said about paying rent or paying off student debt. Millennial taxpayers are not always aware of what they are dealing with from a tax perspective.
When hiring employees on a contract basis, the company does not withhold taxes or pay for social security or health insurance. Now, at first contract work may seem promising to millennials, because it means extra cash. But what they may not understand is the result that they may be required to pay quarterly taxes as well as self-employment taxes.
Millennials who are not very familiar with tax laws are expected to be surprised as April approaches. They may end up spending money that now needs to be donated to taxes because they were previously unaware of all these nuances.
To avoid such situations, they should take guidance from professional tax resolution services. A tax expert can take advantage of this moment and help millennials by estimating their tax burden and managing their money better. They can give their aide to millennials to be well prepared in advance for what they owe as taxes.
3. Millennials are less likely to receive IRS Notifications
As we already know that the IRS sends notices and penalty messages if there is a tax discrepancy. Now, millennials are less likely to receive these notifications sent by the IRS due to several factors. Given the fact that the younger generation is more affiliated with electronic mail and less dependent on physical mail. The IRS sends most of its notifications by US mail.
Now, with the majority of transactions switching online, millennials don’t have the habit of checking their physical mailboxes. As such, we see that it’s easy for people to completely miss any notification or issue the IRS is trying to notice.
Another factor that attracts millennials is renting a place without a fixed mailing address. They tend to move and change addresses frequently, making physical mail communication even more difficult.
When they are finally on track with their physical mail, the IRS may be a little too late to follow up on them and tax issues will grow over time. This is where a tax resolution expert can help. Tax professionals can assist millennial clients with IRS communications and help them get back on track with their taxes.
By focusing on developing millennials as clients, tax firms can not only generate more profits but also do good deeds by reaching out to those who are striving for a better life.
They can help them through their tax struggles and financial burdens. With this generation’s confusion, doubts and goals in mind, tax firms can be very well positioned to develop millennial clients, with whom they can have lasting professional relationships.
