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I had to ask myself: Do I want to be feared or loved? I decided I want people to be afraid of how much they love me.

I say we all just show up at Joan's house, raid her refrig, drink all her booze, wreck her house, and then go home If that doesn't work, Stockton works for me. Tom Hollister, CA

there is a not so subtle campaign going on by congress/irs. I saw in the press today that 32 mill federal returns were filed by individuals from their home computers. their requirement...buy an individual tax prep program or use "FREE flipping FILE", follow the menu, and press send...and good luck with your state return that you have to pay for. on the other hand, congress/irs wants to impose regulations/standards (not that there is anything wrong with that) on the tax prep industry...from mom/pop stores to eas, cpas, and attorneys who know way more than individual filers who are doing their own returns to save $75-$150+. WHY? individuals who prepare their own returns and make it through, pay more (way more?) taxes because they don't know what they are doing on their fed and state returns. many individual returns that incorrectly over claim tax law benefits are flagged and corrected. the irs and state tax bodies do not flag and correct tax law benefits that are not taken.

Good records are always the best protection. Just hard to convince some clients it's worth the effort. Until AFTER the audit.

Me too! You have made this tax season the best with your knowledge and sense of humor. I am not afraid of you. Keep up the good work! Love your posts!

What's not to love, and who could be afraid of such an intelligent lady?? (is there something about Rita I missed? Black belt, etc.?) Plus, my family heritage is from TN, so she feels like family!!

Well, yeah, there's that. I have one who swears every year that she changed her name with SSA. I just nod and continue to use her old name.

According to the Tax Foundation, today, April 21, 2014, is Tax Freedom Day. It's the day we have worked as a nation collectively to pay our total tax bill for the year. This includes federal and state income taxes for a combined total of $4.5 trillion. Tax Freedom Day is three days later than last year at 111 days into the year. We will spend more on taxes in 2014 than we will on food, clothing and housing combined. EITC was SUPPOSED to help mitigate the ta burden on 'the poor'.

Remember way back yonder when you could qualify for EIC with negative AGI? I swear it's true - I had a couple who received EIC with negative AGI. One had 4,872 SE income, other had (8,439). I didn't give them EIC, never occurred to me. IRS sent them the letter saying you might qualify. Year was 2001. I'm looking at the file right now. I have in my notes where I called IRS in disbelief, a Ms. Casper didn't know either, spent 30 minutes on it, finally told me to have clients fill out the form and hope for the best. They got $346. EIC is a nightmare, in my opinion, and I wish it had never been instituted. I fear we are stuck with it forever.

Just to add a little humor to the thread, I had a client call me last week to say that he had gotten a letter from the IRS suggesting that he might qualify for EIC. He trusted me to know what they were talking about. Well, by golly, I overlooked that one. He is on disability for a bad heart and his wife works two part time jobs. No qualifying child. I ran the numbers and told him that he was qualified for $8 in EIC. He laughted. I told him that it wasn't worth amending for, but if they had given him a form to fill out, he should send it in. If they want to send him a check for $8, let them. He said he would think about it. (This is due diligence in reverse).

I don't scare Tom? Pout. Guess I will settle for being loved!

Eric, you're not nuts for not taking the home office deduction. But you may be costing yourself some money. Your greatest risk is filing a schedule C in the first place, but you don't have any choice in that matter if you have self-employment income. Using made-up examples, if a Schedule C adds 50 points to your DIF score, claiming the home office might add another 5 points. So if all the factors on your return added up to 302 points, and the cutoff happened to be 300, then technically the home office put you over the magic number. But the relative risk isn't that great. (Those are total fabrications - the scoring system might be in the thousands, for all I know. But I think the principle is valid.) On the positive side, keep in mind that the home office deduction is more valuable on a dollar-for-dollar basis than an itemized personal deduction. This is because the home office deduction reduces your self-employment tax in addition to your income tax. And now that the IRS offers a simplified method, I suspect the relative risk has gone down for those who opt to use it.

We were just recognized by our regional chamber of commerce with a Headliner Award for continued growth in current economy. We have seen double digit growth each of the last four years (2010-2013) and I bet when I get caught up with the books for tax season 2014, we will have hit that mark again. The economy is hitting people hard and they are looking for someone they can trust for help. My wife obtaining her EA, me Intuit QuickBooks ProAdvisor has drawn more people in who need and want help. Our approach of establishing relationships with our clients is resonating and attracting new clients. Gina is on the left, I am two over, or 2nd one from right.

Anybody can put "TN" in their profile. Tom.

Be self-employed and have 30,000 business miles. Be self-employed, have three kids, and net income of $13,500 - 17,450. Be self-employed and lose money every year. Every. Year. Have a day job and a farm that loses money every year. Every. Year. Give away your yard sale crap that is worth thousands. Wink. Wink.

I think people are nuts and anything they don't want to do increases their chances of being audited. I have heard many people ask, when I tell them they will have to get an extension, "But won't that increase my chances of being audited?" That's when I say, "Pssshhh, I get an extension every year and prepare my own return in June. Or September. Whenever I feel like it. And you're not doing anything wrong, are you? If you get audited, they probably owe you, right? Bring it on!" Then they go home and think about all the money they didn't report and miles they made up and worry. But they got an extension anyway.

Married over 70 years; held hands EVERY morning at breakfast. Died 15 hours apart. http://www.theblaze.com/stories/2014/04/19/they-held-hands-at-breakfast-every-morning-over-70-years-of-marriage-is-it-any-surprise-it-took-him-so-little-time-to-follow-her-in-death/

Also worth considering: Would you want to e-file this return even if you could? The e-file perfection period for a 1040 is 5-days. E-file a 1040 today and the return would be considered late. Paper-file a rejected tax return today and assuming it was rejected 4/11 or later it is on time.

And I had a client whose return we had electronically filed for several years using her current married name. All of a sudden one year, it would not file and the name that actually worked was her married name from a previous marriage. Sometimes the system has indigestion.

We have three clients that we mail the returns to them with her married name on them, then change her name to her maiden name and efile. We stopped asking....

Well, I love you, Rita.

I believe you should take the deduction. I have a closet in the old part of my OIH, but have never counted the SF of the closet. I also have a lot of SF in the basement that never gets counted and should. I found this year that for a certain few clients; switching to the safe harbor method was the best thing to do. You can take your pick, but in my opinion, you safely qualify for OIH. One important fact to remember is that the deduction is not really for a Home Office, but rather for "Business Use of the Home". I have clients who use parts of their home to store supplies and tools for their Sch C businesses. This also qualifies. If push comes to shove, I have clothes in the closet, but I also have lots of extra toner cartridges, paper, envelopes and computer parts and backup drives in there. If you are entitled to a deduction, take it.

If your business is profitable, the OIH will save a between 25%-40% tax on every OIH dollar deduction. When selling the home, the very small amount of depreciation recapture will be treated as capital gains currently taxed at a maximum of 15%. A good trade, no matter how you look at it. All the fears about OIH are unfounded if done accurately and properly. At the firm, in 30 years of doing tax returns for small businesses, which is our main emphasis, only one audit questioned the OIH and it was an afterthought, not the original cause of the audit. For the record, we prepared 2,200+ returns at the firm for small businesses. 70% of those have OIH. The numbers have been that high for over 20 years.

lol , well keep it in mind for next year. There have been some posters here that would argue that the contents of the closet would cause you to fail the exclusive use test, but the tax court also has a de minimus factor that has been applied in cases too. Iirc, we had a topic on this very issue within the last year where personal photos were mentioned to be a no-no. I'm sure others here can attest that with the things people get away with on their returns and are never audited, that you wouldn't have any worries. I picked up a new client that had oih on the return in prior years, and the things the former preparer included in those expenses would make your head spin; items deducted that are clearly spelled out in the pub as NOT being allowed, and this was from a mid-sized CPA firm in my area. I think you should take the deduction, Eric.

I totally agree with SCL on that one. Over all my many years in the business, over 90% of the self-prepared returns I reviewed showed the t/p had over-paid due to missing deductions and/or choosing the wrong option for treating a transaction, due to not understanding all their choices.

Eric, it's not the contents of the room that's the issue, it's the activities in the room that make it an 'office'. The books and dog bed do NOT disqualify it. The IRS rule is that you must use your home substantially and regularly to conduct business, to qualify for a home office deduction. 20 hours a week in there, and 100% of that time spent on freelance web development, would absolutely qualify.

....taking a rest after cleaning all day.

I'm nagging some clients all the time about their records.

Thanks for the ideas. My husband might want to do pick-ups/deliveries....and other errands .....just to get out of the apt. We really don't need the $$$ (another reason for my low rate)...and my business was just supposed to be a hobby. But, it became a very successful hobby. I'd like to maintain it as an income generating hobby. Or...we just may go to a warm climate....and I'll do everything remotely.

Maybe because she does not scare me?..... Catherine even carries guns and is a dead shot, but I am not afraid of her. Rita, you I love from afar....very far. Tom Hollister, CA

Don't know why you keep picking her over me.

Rita can vacation on the east coast and scare my clients anytime!

Try looking up an outfit called Frontsite. I think they are outside of Vegas. I don't know there fees but I get tons of e-mail from them.

If I were in charge of selecting returns for audit, I'd weigh the selection heaviest on returns which were filed on Apr 15. I believe that is where the greatest number of errors are made, as last-minute filers are rushing to "get something filed" at the 11th hour. Wouldn't surprise me to find 75% of errors by taxpayer AND preparers occur in those golden hours around Apr 12-15.

We will not be making it to Boston this year. With MIT killing my son's dreams, there is no reason to go. But we will be in Washington DC on vacation after he graduates from High School. I will wave to you when I get there. Do you think the IRS would pull my PTIN and EA license if I took a selfie flipping off the IRS headquarters in DC? Tom Hollister, CA

I WILL obtain my E.A. certification by the end of the year. This will be my leverage into the "DIY" tax prep group when they get those notices. 2014 will be a huge disaster for the "DIY" tax prep group due to the intricacies of the "ACA." I use quotes because by no standard based in reality is it "Affordable." With my E.A. designation, come 2015 I will be in demand big time in my town.