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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.

Tabby, the problem with doing as you suggest is not that the client goes away happy, it's that the client goes away believing that the item WAS deductible, when you should have educated him/her on why it was not. Not only for future, but also so they don't go around telling their friends "my tax preparer said it was deductible". Which, by putting it on that Sch A, you in fact did do. I'm not talking about something that IS deductible, like our fees, work boots, or union dues. Sure, we all do that, if we are smart, just so the client sees we did take them into consideration. I'm only talking about the temptation to put on something that IS NOT deductble.

Yes, he's spotted one of the times, [i am sure there are others we just don't know about] when some bureaucrats have made an unlawful change in how they carry out their legal responsibility. I hope he's successful in the lawsuit.

>>Circular 230 prohibited her from doing both<< That is correct. Section 10.29 requires "informed consent" in writing. With the limited knowledge a tax preparer usually has about a client's circumstances, especially non-financial issues, it's pretty hard to adequately inform the client of potential risks. Missing something could have enormous consequences to the client, and to yourself because it's an ethical violation. Referring to a lawyer is good, but if you have already "run MFJ/MFS report" then you have already transmitted information that may have an adverse effect. Maybe one spouse doesn't want the other to know about that big investment account, or what the W-2 really shows, or details about those business trips. Maybe they don't even want the other to know that they don't want the other to know. Maybe that's the whole point of the divorce!

Quite often in a divorce situation what is good for one client is not good for the other. For example, if they separated more than six months prior to the end of the year and have a child, it might benefit the spouse who can to file as HoH, but leave the other spouse filing MFS which is usually not to his/her benefit. Even if they both file MFS, if one can itemize and the other cannot, then one benefits at the expense of the other. Even on a joint return, it might be that one spouse would be better off filing HoH (if eligible) and getting EITC, even though together they are better off MFJ. And these are just obvious conflicts of interest in the advice that you give - potentially there are lots more ways that one spouse benefits at the expense of the other. How do you determine which spouse to benefit if you are representing both? I suspect that is why the CPA preferred to refer one party to another preparer to avoid even the appearance of a conflict.

Also work boots, union dues and uniforms.

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?

Divorces are not all bitter and often the couples can both be retained, particularly if there are small children involved and it is a matter of who gets to deduct who. Nobody said anyone should get kicked to the curb, but I see no value in a conflict of interest waiver. It has no valid merit. At any given time they can agree to disagree and they could care less where that leaves you. However, it is seldom a good idea to retain both parties in a divorce as clients beyond the year of the divorce (unless you like having headaches and upset stomachs) This is my opinion based on experience.

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...

I like the lawsuit filed by Rep. Chris Van Hollen to force IRS to use the "Exclusive purpose" language instead of the "Primary", that is the real cause of this problem

"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?"

I believe that if people are divorcing, the accountant can only do one MFS...because of a conflict of interest. Since they won't file jointly...tell them you can only do one of their returns. As others have said, don't get in the middle....or you'll end up being a marriage counselor. If I had to choose, I'd pick the one that I communicate with the most. You can refer the second one to another preparer.

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!

>>they should waive any conflict of interest.<< I disagree. It would be impossible to pull this off, because in order to obtain an informed waiver you would have to advise the clients of possible adverse consequences. There is simply no way for you to know what could come up in this hostile divorce! The CPA apparently has reason to believe one party is lying about income--how can you be fair to the other party if that turns out to be true? It can have major non-tax consequences such as family support and property division. In my opinion, the advice given to the clients in the original post was improper. Pick one side; don't get in the middle.

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!

One my favorites..."are you sure I can't deduct that because my barber (or brother-in-law, friend, etc) said I could". Well then have your barber prepare your return and I will cut your hair! You won't be happy with either one.