Patrick Michael

I spent an hour of my life that I will never get back debating rounding with an engineer. He wanted to know why his calculation of interest income differed by $2 from what was on his return. After I told him it was due to rounding, he asked if I rounded first, then added, or added first and then rounded. He proceeded to lecture me on why I should add all the interest first and then round. I explained how the software required that each 1099 had to be entered separately and would not allow me to enter the cents, so I had to round first. And how $2 did not change the amount of tax owed. He insisted I add $2 to his interest amount. Luckily he did not come back the next year.

Thanks everyone. I think he's out of luck at this point. He's in the 15% capital gains bracket, so he won't have a huge tax bill. He informed me this morning that he is out of the stock market as of last week, with a net loss this year, and isn't planning on getting back in. At $3,000 a year, it will take him about ten years to write off his current loss.

I can believe this particular preparer would miss it. Many of his former clients came to me after he retired, and I had to correct more than one of his mistakes. I am pushing back on using it unless he can produce evidence showing that the loss was claimed on a previous return. I was hoping that the IRS might have a record of it being reported, but I don't know how far back they keep returns.

I'm getting too old to put up with some of these clients! A client came to me in 2015, and I have been preparing his taxes ever since. He never had any capital gains in those years; this year, he has about $20K in gains. He included a note that, in 2000, he had a million-dollar capital loss carryforward. The previous preparer did not include the carryforward on his 2014 return, so I did not know about it, and the client never mentioned it until now. He can't find his 2000 return, and the previous preparer passed away many years ago. Does the IRS keep track of carryforwards and be able to provide him with the information? If he can find it, would that amount have to be reduced by the $3,000 he should have taken (I would amend the last three years)?

I can already hear it from some of my elderly clients: "I don't want to give my bank information to the government." Then they mail the check, which has the bank information. Another reason this is looking more and more like my last year.

I asked a client to text me a picture of the front and back of her license because the ones I had were expired. She texted back "I don't know how you know they're expired, but here are the pictures". They were pictures of the license plates on the front and back of her car!

I have one former client who decided I charged too much for a "simple return" and he could do it on his own. The first year, he called and asked a very simple question that I answered. The next year he called again with another question. I told him my consultation fee would be more than the cost for me to do the return. Never heard from him again.

Thanks for the suggestion.

Seems like I get one of these oddball situations every year. A client purchased a timeshare and signed a mortgage to pay for it. A short time later they discovered there was fraud involved with the transaction. After some back and forth with the timeshare company, the timeshare agreement and mortgage were canceled. All was good until the client received a 1099 C for the amount of the mortgage debt that was canceled. The timeshare said they were required to send out the 1099 C. I looked at form 982 and it appears Line 10A would be the best option to exclude the canceled debt. Is this the best way to deal with this or is there a better option?

All nursing home costs, including the cost of lodging and meals, are medical expenses on Schedule A if the principal reason they are in the nursing home is to receive medical care.

Client bought a car that is used exclusively for Turo rental. Using the standard mileage rate, they are looking at about $12,000 for auto expenses. Their actual expenses amount to less than $4,000. My research shows that there is no reason they can't use the standard rate, even though they didn't spend anywhere near the standard rate deduction. Only one car, so the fleet exception does not apply. Is there something I'm missing or have not thought of?

My tax season "ends" on March 25th. That's the deadline for clients to send me all their information so I can guarantee they will be done by April 15th. That gives me about three weeks to catch up. The stress of getting the procrastinators' returns done is gone. I don't do many entity returns and they are usually happy to go on extension to give them more time to get the books in order.

Thanks for all the advice. She has not told me anything else about this other than what happened today. I did tell her to make sure he gets an attorney ASAP. When CI gets involved I know it's serious. Her main worry is if they are going to take the house and she is going to be left homeless. I have never met him or talked to him so I'm not worried about any involvement on my end.

A long time client called me this morning, crying, because two agents from the IRS criminal investigation visited her house with a subpoena for her boyfriend ordering him to turn over all his bank and tax records from 2018 to 2023. He is a successful contractor and, apparently, has not filed taxes in many years. He had been using a check cashing service to cash customers' checks and that led the IRS to him. I advised her to tell her boyfriend to get an attorney immediately. I have never dealt with anything like this, and my client asked me what is going to happen next. Has anybody else had dealings with the criminal investigation division and knows what they may expect?

All income is taxable unless specifically exempted by law. I would put it on Sch 1, no SE tax.

I'm in NY, and you have to add back into NY income any exempt income that came from issues outside of NY. Some 1099s provide the information, but most do not. You have to hunt for the information, and it is very time-consuming.

I am already tired of trying to find the state information for exempt interest/dividends. The investment companies don't make it easy to find this information. I spent almost an hour trying to track down 5 company's information. I'm thinking of putting it back on the client to get the information or charging them an hourly rate, but it would probably cost them more than they would save on state tax. I am wondering how others handle this.

Stolen from another forum. Here are some band names comprised of tax professionals. Feel free to add our own. The Rite-Offs Double Entry Goodwill 'n Boot Qualifying Children LIFO of the Party Due Diligence

Be careful preparing CA tax returns. It may make you subject to apportionment rules, creating the obligation to file a CA tax return and pay CA tax. Here is an excerpt from a Forbes article (https://www.forbes.com/sites/robertwood/2022/07/07/california-is-taxing-nonresidents-who-never-once-visited-really/). I doubt they would come after you for a single return, but if you prepare many CA returns you may be fair game. "In the Matter of Blair S. Bindley, OTA Case No. 18032402 (May 30, 2019), a sole proprietor performed all of his services outside of California, but some of his customers were in California. Is that enough for the poor guy to attract California tax liability? The California taxing authorities said he was operating a "unitary" business. Therefore, his tiny business was subject to California's apportionment rules. The FTB would not budge, so Mr. Bindley went over their head to the state’s Office of Tax Appeals (OTA), but it agreed with the FTB. This case has precedential effect, so it is clear that the Golden State can go after other non-Californians too, and it’s happening."

Me too. It is easy, information is saved year to year so you don't have to re-enter, and for $4.69 per 1099 to efile, print and mail it's a bargain.

No, that's not what I meant. I'm sure people have not filed for a number of reasons. What I am saying is I don't see what the downside is to filing now is since the information is already available and it's looking more and more like it's going to be required.

Most of my clients have already filed. I filed mine a long time ago and don't remember giving any information that isn't readily available from other public sources. The only people I see this affecting are the ones trying to hide ownership through a series of holding and/or shell companies.

I had a client who didn't want to pay an attorney to represent them in a divorce since it was "cut and dry", so he just signed the paperwork from the spouse's attorney. The client had a nice pension from the state and they had to give half to the ex. The ex filed the paperwork with the state and started to receive half the pension. Tax time came and the 1099R was for the entire amount, including the wife's share. No QDRO was filed with the divorce decree, so he was stuck paying the tax on the ex's share. Ex refused to reimburse for the tax owed on their amount and it cost the client twice as much in attorney fees to straighten it out than they would have paid to do it right the first time.

After the last tax season wrapped up, I received calls from 3 local preparers asking if I was interested in purchasing their book of business. Others have raised their minimum fee to over $500 for a personal return. I have been getting many people in panic mode looking for a new preparer. It looks like it's time to raise my minimum fees too!

The people who need the money the most end up paying outrageous fees to get their money back a couple of weeks early. Never offered them.