Top tax myths you have heard

[Jack from Ohio]

Mstabbykats does have a point. While we may feel some of these are stupid questions, the client does not. If they are paying us to prepare their return, they deserve our professionalism to advise them what the law is.

Unlike Jack from Ohio, I will not take offense and fire them, if a client challenges me on a tax point. If I am right it gives me the opportunity to show them that I know my stuff, and if I am wrong that is a learning moment for me.

You left out the words "...the second time..." Please be accurate when you refer to what I say.

[SaraEA]

I don't think any one of us is belittling our clients. These are just the kind of comments we hear frequently that put a chuckle in our day. As MAS says, "Only us get a kick out of this." Of course we explain the rules and the law, over and over again, and most of the clients are glad they asked because they really don't want to get in trouble with the IRS (which is why they asked). I for one would feel that I was missing something if I didn't have at least one client each season whose car taxes or mileage or charitable contributions were not printed on the ceiling over my desk.

[Jack from Ohio]

One tax preparer I met in Atlanta has a sign on the ceiling above his desk...

"The answer is not up here."

[Guest Taxed]

You left out the words "...the second time..." Please be accurate when you refer to what I say.

>>>Like I posted before... The second time that a client challenges me on an issue...

Pardon me, so generous of you to give them at least one chance before they are fired!

[jainen]

>>so generous of you<<

Poor Mas! All he or she wanted was to "talk about tax myths" Although all of us are cyber-fantasies, I don't think we qualify as mythical.

[ILLMAS]

I am still a he by the name of Pat lol

http://youtu.be/VwT1kp0C3Ss

[jainen]

>>I am still a he by the name of Pat <<

I thought you said Marco.

I like Pat, though. It's consistent with your forum profile.

[Terry O]

My MOTHER - -(of all people! )- -wanted to deduct the total cost of the new roof on her double - - because the apartment upstairs was rented - -and of course - -the roof was over THEIR head!!! The things she would ask me - -because she heard it while she was at the slots in the casino!!!

OY!

[ILLMAS]

>>I am still a he by the name of Pat <<

I thought you said Marco.

I like Pat, though. It's consistent with your forum profile.

The picture on my profile is of my daughter, I'm too ugly. And my name is Marco, I thought I would joke about Pat, it was a SNL sketch, people couldn't figure out if IT was a she or a he. In that picture my daughter was only 4-5 months old, now she almost 5.

[Catherine]

The picture on my profile is of my daughter, I'm too ugly. And my name is Marco, I thought I would joke about Pat, it was a SNL sketch, people couldn't figure out if IT was a she or a he. In that picture my daughter was only 4-5 months old, now she almost 5.

My toddler is out on her own and my newborn is a junior in college. Blink three times and that five year old will be in high school!

[MsTabbyKats]

When they come from 5 year+ clients, I have the right to laugh that they thought other people knew tax law better than me.

Like I posted before... The second time that a client challenges me on an issue of ethics or following the regs, I fire them. I have not spent all the years and expense to become a professional to take lightly people insulting and impugning my integrity. (I am sure jainen will jump in here...)

I don't mind if a client challenges me because I don't know everything.

Just this past season I had a client with NJ/PA...and I was unaware that the treaty between those states gave credit for local taxes in addition to the state tax (or something like that). Client told me "her friend said......"....and since I never did a return with this scenario, I checked it out, and the friend was correct.

I'd rather be corrected and lose the client than have the client submit an incorrect return....just to save me some embarrassment.

[Jack from Ohio]

Like I posted before... The second time that a client challenges me on an issue of ethics or following the regs, I fire them. I have not spent all the years and expense to become a professional to take lightly people insulting and impugning my integrity. (I am sure jainen will jump in here...)

Seems that my naysayers missed these key words....

[MsTabbyKats]

Seems that my naysayers missed these key words....

No...I didn't miss the key words.

I was just explaining that the client may know something that the preparer doesn't....so a challenge doesn't bother me.

If it's to take a stupid deduction, such as: "I bought a ring...can I deduct it?"....if the client insists, I may fire him. However, sometimes "the ring in question" wouldn't affect anything anyway...so I might put it in and show it to him..but the standard deduction is still greater. Everyone's happy...........

[JohnH]

"Oh, thanks for showing me that.

Next year I'll buy a ring AND a boat.

That'll be more than $12K and I can deduct 'em both. Right?"

[jklcpa]

Jack makes a good point about being challenged on ethics where a client wants, or implies that, he should help them cheat, allow questionable deductions, or omit taxable income because it wasn't reported to the IRS by the third party payers. There is a difference between all of that and clients asking questions because they are simply unfamiliar with an aspect of the law, the complexity of the forms, limitations and phase-outs, etc.

To MsTabbyKats, I would never show a client a Sch A with a non-valid expense included even if the standard deduction is higher. It gives the impression that the item would be deductible if itemizing is higher than the standard.

[MsTabbyKats]

"Oh, thanks for showing me that.

Next year I'll buy a ring AND a boat.

That'll be more than $12K and I can deduct 'em both. Right?"

Only if you're an entertainer on a cruise line, and need to supply your own ship.

Seriously....I explain that things need to be related to their jobs. I would never put down a non-deductible expense such as a ring....it would have to be something that in some universe could possibly be a deduction. For example...if someone bought an IPAD....there is a universe where it can be a deduction.

Or...how does one handle this?....and I'm sure everyone gets it:

Someone donates an old car...and they have the proof...and they were told it's a deduction. The value of the car is $2000....and they want that deduction! But, the client is a cashier who is HH and makes $25,000. Generally the client doesn't know what a deduction is .....but thinks it's a credit to directly lower the tax.

My biggest challenge...who I did have to fire....was physician making about $250,000...but, she was an HH putting her 2 siblings thru MIT....and she wanted that education credit. After 2 years of explaining that her income was too high...I "outsourced" her.

[Guest Taxed]

Loss of student loan interest deduction for a single person is another sore subject once their income exceeds 65K.

[jainen]

>>a client challenges me on an issue of ethics or following the regs I fire them (I am sure jainen will jump in here)<<

No, jainen did not jump in there.

>>Seems that my naysayers missed these key words<<

Well, jainen is your principal naysayer, so to prove he didn't miss these key words he will now jump in after all.

A week or two ago Janitor Bob asked a perfectly good question about how to report a loss on the sale of a rental house ["4797 Loss"]

You replied, "Don't forget recapture of depreciation... This is often a spoiler when a rental owner sells for what he/she thinks will be a loss."

Nobody bothered--but suppose Janitor Bob as your client had challenged you on following the regs Section 1250 for rental real estate, under which there isn't any recapture of depreciation. Would you have fired him? Not, if he fired you first!

[MsTabbyKats]

Loss of student loan interest deduction for a single person is another sore subject once their income exceeds 65K.

Yes...and in NYC (where I live) 65K is not considered a high income. Then, we also have to explain "phasing out" when they accuse us of not entering the correct amount.

It's not so much "the myths" that are problems....but the rules that apply to some....but not to everyone.

[JohnH]

Well now, surely most of us make the useless entry of the "Tax Preparation Fee" on line 22 of Schedule A, already knowing all the while that the haircut is going to phase it out. But at least it keeps the client from asking...

[Guest Taxed]

Right you are. When I first started doing returns the accountant who was supervising me told me all about it!

[Jack from Ohio]

>>a client challenges me on an issue of ethics or following the regs I fire them (I am sure jainen will jump in here)<<

No, jainen did not jump in there.

>>Seems that my naysayers missed these key words<<

Well, jainen is your principal naysayer, so to prove he didn't miss these key words he will now jump in after all.

A week or two ago Janitor Bob asked a perfectly good question about how to report a loss on the sale of a rental house ["4797 Loss"]

You replied, "Don't forget recapture of depreciation... This is often a spoiler when a rental owner sells for what he/she thinks will be a loss."

Nobody bothered--but suppose Janitor Bob as your client had challenged you on following the regs Section 1250 for rental real estate, under which there isn't any recapture of depreciation. Would you have fired him? Not, if he fired you first!

Methinks I have pushed the "big" button here!! You must really have it in for me to follow my every post so closely!! I think I am complimented by your intense attention??? A general answer to a general question. Have you tried Xanax?

[Jack from Ohio]

Well now, surely most of us make the useless entry of the "Tax Preparation Fee" on line 22 of Schedule A, already knowing all the while that the haircut is going to phase it out. But at least it keeps the client from asking...

Also work boots, union dues and uniforms.

[jainen]

>>I think I am complimented by your intense attention???<<

Certainly!! I consider your posts in this forum to be among the most important, Jack from Ohio. We can always rely on you to highlight potential weaknesses in our client service, whether tax theory, customer relations, or technical problems of filing. I also enjoy the different persona you project in the very entertaining Political Forum.

[jklcpa]

Methinks I have pushed the "big" button here!! You must really have it in for me to follow my every post so closely!! I think I am complimented by your intense attention??? A general answer to a general question. Have you tried Xanax?

Jack, you were baiting Jainen to respond, and when he did, you then made accusations that he is giving you too much attention. This is inappropriate as is your comment about the Xanax. Please refrain!