YEAH1 Down to my last 16 returns

[Guest Taxed]

Don't understand why she witheld @ 47% on a CG of $80,000?

[jklcpa]

Taxed, because late in the year of 2011, Lion's client raised her withholding to 47% that was supposed to be only on her remaining paychecks until the end of that year that was to cover the tax on all the investment income for the year of 2011. She forgot to go back to her normal withholding in 2012 and now has the big refund.

[Guest Taxed]

If someone had roughly half their pay witheld, they surely would have noticed the difference in their take home pay the following year?

I had people complain they noticed the reduction in take home pay when the ss tax increased by 2%.

[Lion EA]

She was always very underwithheld, so with an extra $80,000 coming in on top of her usual investment income on top of her six figure salary on top of her husband's six figure salary, I told her how much extra to withhold late in 2011 and what to change January 2012. She did not notice at all, but her husband finally noticed mid-year that their savings was not increasing as in the past (her direct deposits went to three different accounts plus retirement accounts), so she went back to her old withholding and not what I had suggested. Now, they will be at least $20,000 short for 2013 so are increasing husband's withholding this time and he's more likely to listen to me in January 2014 also. It was just so odd seeing a huge refund.

They're in the 35% bracket, so to cover for their investments and her husband's underwithholding of only 20%, 47% was needed for a short-term fix. Now it's 39.6% plus 9% plus enough to cover for tax rate plus 3.8% on investments and one or both of them making up for withholding only 20% since mid-year. Both get bonuses, so income fluctuates. A 1% swing in their income or tax law changes makes a big dollar difference. We work hard to keep them out of penalties -- and usually not let Uncle Sam have anything extra as he doesn't pay interest -- but since they wait on K-1s, I didn't see them earlier in the year to know they hadn't followed my instructions.

[Jack from Ohio]

The aspect of the government not paying interest has become a non-issue since the amount paid on short term savings and CD's is so very small. Avoiding penalties will save them more than any interest they could earn.

It is an outdated statement.

[Lion EA]

But they could've done something more productive with $71,000 than Uncle Sam's lack of interest !! She's getting a great return on one of her K-1s, for instance, and their dividends go up every year. My point was we work hard to keep them out of penalties. We do aim to keep them close on one side or the other of zero (I have other clients that never want to write checks in April, so for their personal reasons and not necessarily pure financial reasons -- I make sure my time is reflected in their fees! -- we keep them on the refund side all the time). A $71,000 refund would be a gross miscalculation on my part (and a $71,000 balance due much worse), but luckily they realized even before I told them that they'd failed to follow my instructions. For this couple, I don't spend too much time getting them closer than about a $9,999 swing on one side or the other of zero, because as I mentioned their income and bonuses fluctuate and I don't get their full picture until after 15 September K-1s come out. She makes more money, but he's the better record keeper. Our current $20,000 adjustment for 2013 will keep penalties away but still leave them a refund or balance due depending on their December bonuses which get underwithheld at 28%.

[Guest Taxed]

I can see if both husband and wife are making 6 figure salary, it may have slipped their attention. The clients that I was talking about noticing even a 2% change in their take home pay are basically living paycheck to paycheck as most of America does.

[Lion EA]

She had the same amount going to their joint checking account each pay. It was a savings or investment account that was getting a lot less during those six months and was finally noticed by her husband when he caught up reading the statements.

[Guest Taxed]

2 more to go. I should be done by this evening and the other by Monday. That's it, not accepting any new MIA returns.

[joanmcq]

I just saw one of my clients that dropped off the rest of her receipts for her Sch c. She was diagnosed with Stage 3 breast cancer in early September, and the person she hired to compile the stuff didn't do a good job, then stopped showing up. I've been suggesting she just have my assistant do it and finally (her chemo brain is kicking in) agreed last night. So next year she'll be in good shape records wise since we'll be doing her books all along.

This is (except for the procrastination) the perfect client. The one that when you say she has to make a $5k extension payment says 'wow, I made a lot more money this year. Yay!' and writes the check. The one that says 'how much more can I put into my SEP? I've already put in $12k this year'. She asks about tax consequences before she makes financial decisions. And she's not wealthy, just a nice middle class type earnings, but is one hell of a saver.

Tough when after admiring her new short haircut, she handed me a chunk that fell out as she touched it.

[Guest Taxed]

Same here. I do offer the services of my assistant to arrange my "good paying" clients shoe box filled with receipts @ $10 -$15 per hour. I do not allow them to lounge out in my office and arrange their receipts wasting my time while I am doing the return.

[joanmcq]

Damn, I just got faxed over a CP2000 for a horror of a return I thought I had finished; the CP is for 2011 of course, but it changes a bunch of passive credit carryforwards for 2012. And I can't frikkin think straight today. Assistant sorted all of her girlfriend's Sch C stuff, but didn't get to the horrorshow return's Sch C stuff yet.

And another last minute client's stuff started showing up in my portal last night. RE broker's Sch C. Registered Domestic Partner (not married). With a note that said, 'hey the taxes will be much easier next year because I formed a corp!' I knew this October was going too easy...

[Jack from Ohio]

Damn, I just got faxed over a CP2000 for a horror of a return I thought I had finished; the CP is for 2011 of course, but it changes a bunch of passive credit carryforwards for 2012. And I can't frikkin think straight today. Assistant sorted all of her girlfriend's Sch C stuff, but didn't get to the horrorshow return's Sch C stuff yet.

And another last minute client's stuff started showing up in my portal last night. RE broker's Sch C. Registered Domestic Partner (not married). With a note that said, 'hey the taxes will be much easier next year because I formed a corp!' I knew this October was going too easy...

You are charging accordingly for all this last minute expertise???

[Kea]

I thought I had my "horrorshow" return (Fed + 4 states) done and ready to e-file. It passed diagnostics and when creating the efile got a series of 'AttachmentInformation' element is invalid - The value '[various text bits from various lines]' is invalid according to its datatype 'MediumExplanationType' = The Pattern constraint failed. The lines they reference are from the Preparer Notes and the IRC staetments.

Arggh. Can't find much in the TaxWise Knowledgebase, but similar terms come up for MeF disallowing special charicaters. So I took out all periods, hyphens, commas but still no go. I'll do a bit more digging but it looks like I'm calling tech support tomorrow.

Edit - It just wasn't saving my edits. Removed all puctuation and saved multiple times. It has been transmitted!!!! At least if it rejects now, I have my postmark.

[Guest Taxed]

Do not panic! If 2011 needs to be changed and that will impact 2012, I would still submit 2012 by 10/15 without making any changes right now and later on amend 2012 after 2011 is resolved.

I can tell you from experience that amending a later year because of an issue from the immediate prior year before that prior year issues are completely settled is a horror show later on. I have been through a nasty one like that where 3 years were involved because IRS then went back one more year, though that was no change.

[joanmcq]

My horrorshow is a client that got a million dollars from the sale of ex-hubby's stake in S-corp (she's a passive owner since she got her stake in the divorce). She has little income so most of the flow through items, like the R&D credit, gen biz credits, DPAD, etc were carried forward. Now they all change. And CA has completely different credit carryforwards. At least the CP2000 added on the DPAD that was not available due to income, but not the biz credits which now wipe out most of the tax due but aren't available for 2012, which makes her extension payment short.

And I deleted the wrong autosaved spreadsheet; didn't keep the one with the gain calc.

[taxxcpa]

I filed my last return--and it was rejected because someone had fraudulently already filed using my client's SSN.

She only made a little over $ 26,000 of which $ 20,000 was social security, so I told her to either mail in the return or just do nothing since she was not required to file. I said she might want to file to establish that she would not need to file in the future and attach a note about the fraudulent use of her SSN.

I told her she didn't need to file in the future unless her non-SS income increased considerably

[Guest Taxed]

File form 14039 asap. There is no such note that they will read and act on it. She should continue filing until this mess is resolved.

[kcjenkins]

And I deleted the wrong autosaved spreadsheet; didn't keep the one with the gain calc.

I feel your pain! Have you gone to your Trashcan and tried to recover that file?