JohnH

4/13/14 through 4/19/14

Same here - everything Yardley said so well...

My thinking was that they accepted a slightly higher interest rate in exchange for not having to pay any (or as many) closing costs. As such, they are deducting the "negative points" via their normal interest deduction. Net result is exactly the same as if they had paid points at closing and then amortized them over the life of the loan. I'm sure the lenders are doing this to in some manner benefit the borrower. They are always looking out for the best interests of their customers. :)

Last-minute illness. Another good reason to have a proactive (or pre-emptive) extension policy, beginning in mid-March. The unexpected does happen - that's why they call it "unexpected".

NC follows pretty much the same rules as IRS - no penalty on refund returns filed late, and the extension is still valid even if someone owes and doesn't pay it all. But they do like to hear from the taxpayer, just to stay in touch.... And NC sticks the filer with a flat 10% FTP penalty if they owe money after the 15th, plus a 1/2 of 1% monthly interest charge.

Between the Drake input screens and broker compliance in 1099-B reports this year, I've even stopped foaming at the mouth when clients bring in reports with multiple sales. Drake still need to make one or two tweaks to the spreadsheet layout to streamline the process even more, but what they have is very easy and well thought out. I'm beginning to be happy IRS made the changes for broker reporting.

You can file NC extesnion online through their web site.

I've been ignoring the negative entry. The deduction is taken via the normal home mortgage interest deduction as the loan is paid off, so there's nothing to adjust on the tax return either way in conjunction with the refi. I came to that conclusion after sitting and staring at a HUD-1 for a half hour or so when I first ran across this entry. I would like to hear if anyone has another view of how to should be handled. (Hopefully that won't entail amended returns for 3 or 4 of my clients.)

You might try explaining to him that the asset "Land" is no different than the asset "Cash". He can hold cash in more than one account at the bank, or he can hold some of his cash in the bank and some more of his cash in the form of land. So when he writes the check to pay for the land, the portion that goes to pay principal is simply being moved from one location to another. It is no different than moving cash from one account at the bank to another account at the bank. The only difference is that he can't write a check from his "land" account, and he can't easily divide, spend, or add to his "land" account in the same way he can divide, spend, or add to his "cash" account. If he can grasp that, you're well on your way to getting him to understand the other half of the transaction, in that he really doesn't own the portion of the "land" that is offset by a liability. By paying the principal down, he reduces the liability and the offsetting transaction is that his net worth increases by exactly that same amount. If you can ever get a client to understand his business and personal life as a set of flows between balance sheet accounts rather than focusing only on the P&L side and the associated taxes, you can help him become pretty good at really grasping financial concepts.

Many thanks to Eric & KC for setting up this forum, and thank you to all of you who contribute your valuable time to participate. Like others, I have learned much on this forum, saved myself much research time in a few situations, and definitely saved some money in other situations. And the laughs & chuckles are priceless. And a special Happy Birthday to KC. Hope you have a great one.

Yes, extensions should be filed for any returns not expected to be filed by the 15th, or any case where there is uncertainty about whether it will be filed on time. This should be done irrespective of whether there is a balance due or a refund showing in the return. You never know when a client forgot to give you some income info , or one or more of their deductions turns out to be incorrect. So even though the original return showed a refund, if the examination shows a balance due on the original return, a FTF penalty will be assessed. You don't want to be in the middle of that. A "protective" extension solves all those problems.

He will probably do just fine if he calls IRS. If he doesn't get a sympathetic person on the first call, just call back with new or additional information he forgot to tell the first person he spoke with. The telephone collections people have lots of leeway.

Happy I got the standing desk in place DURING tax season. It's a great work area when I want to do research, sort paperwork, assemble client files, etc. In a few weeks I'm going to install a computer on it and then really put it to good use.

if they are suddenly trying to get it done by the 15t, I'm betting they are either applying for a loan or IRS is breathing down their neck. Both would be deal breakers for me.

Smoothest tax season ever for me. Looks like I'll be done by Friday (with about 30 extensions waiting for me after a short vacation)

Don't forget, you can stuff a LOT of paperwork into a $5.60 Priority Mail envelope. And that includes the cost of a tracking number.

Yep, he's an engineer. Probably a very good one. Has all the qualifications & character quirks.

I like that idea. Maybe it should be used with all new clients and with any existing clients (if any) who have a tendency to let things slide. Any time info is accepted, just assume it's incomplete and get written permission to file the extension at your discretion. I think I'll do that next year, and I think it will be a separate statement altogether. Maybe it should have their phone numbers and email address as well.

You could also mail a paper extension request to the client, with instructions that that they must send it in by Apr 15 in order to avoid FTF penalties of 5% per month. The "Amount You Are Paying" box #7 should be blank (not zero, but blank, so they can fill in any amount they are sending with the extension) I would include instructions mentioning the fact that they are supposed to pay the estimated balance due, but a partial payment or no payment is permissible, and they will pay interest and FTP penalty of about 1-1/4 % per month on any unpaid balance. I would also include a short disclaimer that this extension request is based on partial information they have provided, and that I will not be responsible for any subsequent penalties or interest when the return is completed. Then I'd forget about it until they contact me.

Can't speak for Judy, but here's my take on it. If they were providing a service regarding sensitive financial information, I'd conclude they were trying to comply with some sort of government requirement designed to protect them or me. I'd assume they have sense enough to know who I am or else I wouldn't be doing business with them in the first place, so there must be a logical explanation.

Jack's right - too paranoid for their own good. Interesting thought process on the part of the client. Here are my W-2 forms (WITH MY SS#, BTW), my home mortgage information,. a rundown of every penny I have invested drawing dividends, interest, capital gains, etc. Not to mention my medical bills and whether I'm a cheerful giver or a skinflint. So I'm giving you more information about my finances than anyone in the world (aside from possibly my spouse), but I just don't feel right knowing you have a copy of my Social Security Card and my Driver's License.

On a few occasions, I've been able to point out to a new client that their last preparer's fees were a huge bargain and so they benefitted from that while it was available, but now it's time to step up and pay the going rate. Some people don't accept that simple truth, but if they don't then it's my contention they simply aren't fair minded (or else they're financially ignorant), and either way I don't need them taking up my time. The only alternative is to cave in and let them ride roughshod over me, which I would resent as long as I did their work. It is important to let them know in advance, so they aren't shocked by the bill.

You could "migrate" over the course of a Couple of tax seasons. Buy both programs for a couple of years - maybe one full access and the other on a pay per return basis. Then pick and choose which returns you run on Drake based on their complexity. A return that takes 20-30 minutes to prepare is probably not worth taking another 10-15 minutes manually entering the client data before beginning, but for a return that takes ab hour and a half or longer , the extra 10-15 minutes is a wise investment. I'd probably keep the simple returns in ATX and focus in getting the more complex returns into Drake since you get the highest efficiency from preparing the most complex returns on the fastest program. And there is absolutely no doubt that Drake runs circles around ATX when it comes to speed. Anyone who says differently just doesn't know what they are talking about. That discussion is beyond settled. When year 2 rolls around, you're definitely realizing tremendous gains in efficiency and it will make the time spent converting the simpler returns seem more productive. I've been blown away by how fast my tax preparation has become in year 2. In addition to the efficiencies and speed of the program itself, I'm now reaping the rewards of having taken the time to manually enter my client data last year. I can think of other creative ways you could handle the changeover, but if you get it done you are not likely to regret it. If you simply can't commit the time to convert everything all at once electronically, then doing it a step at a time is the next best thing. You would still yield tremendous productivity gains in the areas where you realize the best return on your time invested - the most complex returns. Personally, if I were preparing 1200 returns I'd be running two separate tax programs on an ongoing basis anyhow, but I've beaten that horse to death in other discussions and so there's no reason going over it all again.

I forgot that the question is even on the form until this thread reminded me.

I know someone who entered of his three grandson's social security number incorrectly on a family members' tax return last year. Their refund was delayed until a phone call straightened it out. He had to offer to advance them the money until the refund arrived, but they assured him that wasn't necessary. He had an excuse - he had changed from ATX to Drake and re-entered all his clients' info rather than do a conversion. It was one of 3 mistakes he made last season during the re-entry process. Said tax preparer will remain nameless - nobody knows other than my daughter and son-in-law.