JohnH

You could have left it like it was - it made sense. But now that you made the change, you have two more edits to make (subject and verb), if you want agreement between them and the plural object.

A letter, memo, email, fax, or printout of a text is an equally good paper trail.

This is from the instructions for Form 1098: (Just an FYI) Who Must File File this form if you are engaged in a trade or business and, in the course of such trade or business, you receive from an individual $600 or more of mortgage interest on any one mortgage during the calendar year. You are not required to file this form if the interest is not received in the course of your trade or business. For example, you hold the mortgage on your former personal residence. The buyer makes mortgage payments to you. You are not required to file Form 1098.

I think a risk-based fee schedule takes into account the higher risks associated with the preparation of tax returns for high-income clients. The upcharge provides sufficient income to pay the additional premiums for higher E&O coverage. After all, E&O insurance is the ultimate protection against catastrophic claims by clients for the tax preparer's errors. If the client base involves higher risk, then the coverage should be stepped up accordingly, and those clients' fees need to reflect that fact. I don't think this conversation involves clients who fail to provide information, or clients who are dishonest with respect to the info they provide us. Those clients clearly are responsible for all their P&I. I wouldn't consider paying a penny in either of those situations. We are discussing situations in which the preparer makes an obvious error which costs the client penalties & interest and has to make a reasonable, consistent decision on how to make the client whole. Incidentally, if the interest related to a preparer error would put the preparer out of business, chances are the associated penalties have already accomplished that task. After all, 3-4% (APR) interest on an error already has a 6% (effective APR) FTP penalty attached to it. But in all this discussion, we haven't referenced what the E&O Insurers generally do. I assume the have already plowed this ground. If a payable claim is filed, do they only pay penalties, or do they also pay all or part of the interest?

With all due respect, to me that is a rationalization, not a reason. But I do get the point concerning the potential problems with higher-income clients. Perhaps that is a good reason to consider a risk-based fee schedule.

One issue which continually puzzles me is the position many take regarding interest. I don't agree with the view that "they had the use of the money", which implies that the preparer has no moral obligation to pay any of the interest. I believe that is short sighted and a bit of a cop-out in the face of reality. So let's look at reality. If the client had the money in a savings account, they would have only earned about 1% at most. However, the interst is being charged at about 3-4%. So if I am truly committed to making the client whole due to my error, I should be willing to accept responsibility for at least the interest differential.that is, at a minimum I should be willing to shoulder the responsibility for 75-80% of the total interest charged.

I couldn't make out from the original post whether the client has filed an extension for 2013. If so, then if he files by Oct 15 he will not owe any FTF penalty (5% per month), for the underpayment, no matter how much the underpayment might be. He will owe a FTP penalty of 1/2 of 1% per month plus interest at about 4% APR on the unpaid balance. So with the extension in place I'd estimate that he will owe about $100 in FTP penalty and interest combined.

Is the $2,664 penalty comprised of $2,000 early withdrawal penalty plus $664 of estimated tax penalty and Failure to Pay penalty combined? If that's the case, you should prepare a pro-forma of the original return to show her the total penalty she would have paid on the original return if the $20K withdrawal had been included. That figure would include the estmiated tax penalty up through the filing date. That sum is hers to pay, although I'd at least make an effort to get all or part of it waived or abated. The remainder of the penalty is on you. I understand the reasoning behind refusing to pay interest, but I personally don't agree with it, so I'd probably pay all the interest. I say that because the interest is added at about 3-4% per year, and the client could only have earned about 1% per year or less if the money were in a savings account. Given that I feel obligated to pay most of the interest, I'm not inclined to quibble over the 1%. Form what you said about her comments, she probably isn't going to return no matter what you do. So this becomes an issue of your integrity and how you feel about the way you handled it, rather than client retention. Decide what you're willing to do based on what is fair and reasonable for you and the client, give the client your numbers and reasoning, and move on. I might decide to discount their fee next year as an additional mea culpa, but I wouldn't commit to that at this point. It all depends upon the client's attitude (if they do return). Some clients come to regard any mistake on your part as something to hold over your head in perpetuity. For them, the discount is essentially offset by the PITA premium. For others, who are reasonable and appreciate the way you settled it, you might want to do anything from a discount to a "no charge" return next year. But no sense staking out your position on that issue until their position is known.

Just filed my corporate return on Friday. Now have to get around to the personal return in the next 3 weeks. Darn freebies...

There will be no late filing penalty assessed for a C corp showing no tax due, except for the $135 penalty if it's over 60 days late. . But it's a vastly different story for an S corp

Sounds to me as though Prof Duvall had a faulty email policy at the outset, so she had to revise it to deal with reality. Her failure to set an appropriate policy on the front side caused her to overreact on the back side. The problem isn't her students, and the problem isn't email - the problem is her failure to properly utilize a valuable resource for effective communication.

I think I like the clerk's response. I assume she meant, ''You don't look that old" rather than "I don't think anyone born in that year could still be alive."

Isn't Drake wonderful? It is just full of surprises, and it seems every one of them increases efficiency. Increased efficiency = increased speed = increased profits. I like that math :)

OCD Nightmare. I'm getting one of these for my office

I'm paper filing with the 8944 attached. I have a hardship waiver number. It is quite a hassle to go to the client info screen and click on that alternate preparer, but I struggle through the ordeal. . Or I could write a macro...

I'd select an option like that, but only IF the IRS provided an instruction to do it that way. Right now, that isn't the instruction they provide.

I used to be paranoid. Then I learned they really are out to get me.

That's what I do. I have a preparer set up in my software whose name is "..". That's sufficient to leave the Paid Preparer info blank. I prefer to do it that way when I'm not paid to prepare a return (personal, family, charity). I've heard people boast "I sign all my work". I agree with them in principle. My signature is the quality of the work on free returns being the same as on paid returns - not a name scribbled at the bottom of one page. Plus, I like to follow the rules as they are written.

My invoice lists "Schedule A (analysis)" as a boilerplate entry. It's on every invoice, because I don't bill by schedule or line entry. That entry means one of several things: 1) I analyzed everything you gave me, you didn't provide any Schedule A information, and I moved on. (no charge) 2) I looked at your Itemized Deduction figures, determined you didn't have enough to itemize, and moved on (no charge) 3) I added up all the medical receipts in your shoebox, plus your other deductions, determined you didn't have enough to itemize, and moved on (the time I spent is included in your bill) 4) I prepared a Schedule A and billed you accordingly. For some clients who don't have enough to itemize, but whom I suspect will inquire, I nevertheless force-print a Schedule A for the client copy set and put a big "X" on it with a felt pin.

Talk about running around in circles. So I got back to his return today, and just for grins I decided to run the numbers taking the deduction for the $4K of travel, along with his other employee business expenses. I assumed he's going to ask what it "would have looked like" if he could take the deduction. I'd certainly ask that question if it were me. Turns out I can tell him it makes NO DIFFERENCE. What the 2106 giveth, the 6251 taketh away. His taxes would be lower if we simply reduced the Line 21 entry, but I never seriously considered doing that from the outset. So maybe the buddy pass is still a possibility....

Nobody is being very sympathetic here. I'm not worried about getting paid to prepare the return, but I've got to tell you all that you're probably costing me a few "buddy passes" for future air travel. Are you feeling any guilt?

Well this is a bit unusual. New client - taxpayer is a commercial airline pilot based in Baltimore and his wife is a retired flight attendant. They live in Charlotte, he drives his car to the Charlotte airport and then flies as a passenger in the jump seat or cockpit on most any cooperating airline to Baltimore, where he then flies his regular route. He also does the same thing in reverse. He doesn't pay to fly to & from Baltimore - lots of airline employee are given this privilege and it isn't taxable. Now the plot thickens. Since she is a retired flight attendant, she and her family can fly on a space available basis anywhere they wish. So sometimes he flies on her family pass rather than as a "ride-along" pilot, only because it's sometimes easier to do it that way (less paperwork, I think). But beginning in 2013, her airline began sending out 1099-Misc with the value of free retiree trips listed in Box 3. I think this is in response to an IRS decision of some sort. So she got a 2013 Form 1099-Misc showing about $9K for all family travel, but his trips to & from work in Baltimore were about $4k of that. There's no question the personal trips for all family members are Line 21 income. But I'm trying to reason through whether he can deduct the $4K on Form 2106. He is already over the 2% haircut due to union dues and other normal work-related expenses. Anyone have an opinion on whether we can use the $4K as commuting expense in this odd situation? One day I think "yes", then the next day I think "no": If so, my two choices would be to reduce the Line 21 entry to $5K with an attached note, and the other would be to leave the $9K on line 21 and list the $4K on form 2106. I think the second alternative is best, IF the $4K can be deducted in the first place. (And just for the record, he doesn't use her family pass any more for his trips to Baltimore. Lesson learned)

Bring it on Eric. Every time you've made changes, it only got better. Thanks for all you do.

Firing the guy on the spot, in the field, is bad management no matter how one spins it. That sort of knee-jerk behavior is strictly ego-driven and counter-productive at all levels. It also breeds a culture of fear and tentativeness in the organization. It intimidates any other employees (or those to whom he bragged about it for years to come). Good people make mistakes - very good people make big mistakes. An effective manager uses these mistakes to mold them into top performers. A sloppy, lazy, insecure manager discards them, often because they are a threat to his self esteem. It's also a convenient cover-up for the manager's own lack of clear communication and follow-through. I'd more quickly buy into a philosophy of "No more mistakes and you're gone !"

Ive noticed that the discussion ABOUT the political forum is a lot more civil than the discussion ON the political forum. Guess that confirms the wisdom of KC, Judy, and Eric's decision. :)