Not required to file / what do you do?

[RitaB]

Alright, I realize yesterday my client is under the filing threshold.  (Barely, if that matters to you, but easy to see, pension and SS.)   I text him and explain, hoping to avoid the whole drawn out discussion, but noooooooo.  He calls back, yak, yak, yak, and FINALLY asks what I would do.  Well, of course, I would file (but I get free tax prep).  I really think that's what he wanted to hear.  He says go ahead and do the return.  $75, ok, yippee, I'm glad he said that, but I could have done another return in the time we spent talking about it.

It would be easier, not necessarily "right," to:

1) Do the return, charge, and not mention it (Yes, I've done this)

2) Do the return and not charge (Yes, I've done this, too)

And, honestly, I don't have a rule here, it's based on my mood, and maybe, ok definitely, the degree to which the client has been a PITA in the past.  Sort of interest on my misery costs.  

BUT, next time I'm inclined to do #1, and move on.  I'm not gonna lie.  Who's with me?

[RitaB]

^^^^^^  This is why everybody should have withholdings.  Just kidding.

[Roberts]

If I'm doing the work to determine they don't HAVE to file - I'm charging.

Just because they are under the income threshold doesn't mean they don't have some other reason that requires them to file. As an example years ago I did the taxes of an old lady who was in a debt forgiveness program and had to prove she didn't have income of a certain amount - providing a copy of her tax return was required.

so my answer: I'd charge and when they pick up - tell them that next year they may consider the fact that they do not meet the income threshold requiring them to file.

This year I did the taxes for a lady - new client. Her husband was in a nursing home and they were forced to withdraw all of their retirement funds to get on Medicaid. In passing she mentioned they hadn't filed in 10 years because they didn't reach the income threshold - which she thought was $40k. Woops.

[SFA]

Yes. We all have these borderline situations. In PA there is a very low threshold for needing to file, plus we have a property tax rebate program for seniors and disabled people, so we must still enter everything just to be able to prepare the PA & tax rebate forms. If we don't charge, then word of mouth will clog us up with more of these (same with dependent's returns). It's much ado about nothing. I tell the clients to stop federal withholding, and next year go to VITA and they can probably have it done for free.

[BHoffman]

AZ gives a $25 per person refund, no matter what.  I prepare one freebie for this elderly couple because I like them so much. 

[Catherine]

We have a senior credit that folks can only get if they file.  Filing starts the SOL.  Filing also provides paper trail should it be needed later for nursing home evaluation of income.  And these days, it can provide warning of identity theft, too.

If I do the work, I charge.  Full fee always shown on bill but for those who don't "need" to file the discount is frequently very large.

[RitaB]

43 minutes ago, Roberts said:

so my answer: I'd charge and when they pick up - tell them that next year they may consider the fact that they do not meet the income threshold requiring them to file.

Ok, I like this.  Fair enough. 

Of course, their situation could change, and they may be required to file in the future.  No, of course, they won't know, and we're still having to discuss, discuss, discuss.  This is why everybody should have withholdings.  Just kidding.

[Roberts]

The property tax credit in my state also works for rent. A renter can get back $750. That client who hadn't filed in many years didn't qualify for any of this - made too much which is sort of hilarious considering she didn't think she made enough to file.

[Terry D EA]

I follow the same rule as Catherine. If I prepare the work I charge. But... there is a serious discount.

[BulldogTom]

We let them decide.  "Do you want to file?  You will probably get a letter that I have to respond to and charge for writing the response."  They chose.  I charge if they file, I give them their documents back if they don't.  Sometimes, things change and they come back.  Like this year.  Client did not have a filing requirement for the last 3 years.  Got married and brought her spouse in.

Karma.

Tom
Newark, CA