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Rita: Please do not put two different issues together. Really three different ones. 1. Sloppy, corrupt preparers. There is only one thing you can do about them. That is to report them. You can also point out their failures or incompetence to other who will listen, and do the best job you can. 2. Paying the salaries of those who waste our money. If you believe that the system is designed to catch the sloppy corrupt ones, it *IS*, but it takes a long time, and doesn't catch the randomly awful preparer. In my perfect world, the IRS would get more dollars to fight and nab the real bad preparers and taxpayers who cheat outlandishly. However, they will let $21B and rising, in fraud out the door and not put $500M in to fight it... So, no perfect world for me. 3. Your rates. Your rates are your rates. I can advocate for you to raise your rates, make more money and have more time to keep us all laughing here. If you are happy, I leave you to your rates. My rates are different, and I am happy. I raise my rates every year. Maybe not your choice, but that ok. I have lots of friends as clients, and they pay me what I bill. If they make another choice to go in a different direction, I can still be their friend. Rich

I posted many times on this and you can do a search but I would always do a 1065 and infact if one spouse wanted to own it outright I would suggest the other get .0001 percent just to use a 1065. Gets large amounts and schedules off of the 1040; easier to transfer shares to kids etc down the road; eliminates the appearance of co-mingling deductions; in any sort of lawsuit, protects the necessity of showing you whole personal return, etc etc etc

http://www.bizjournals.com/baltimore/news/2016/02/09/maryland-comptrollerfranchot-cuts-off-returns-from.html

New forms = new fees. You get to blame it on Obamacare and not your own desire to eat.

Why don't you want to raise your rates? Everything goes up, and your rates should, too. These extra forms need to be included. If you go up conservatively every year, you never have sticker shock.

Yes, deduct the eligible expenses in the year the payments were made (even if by a loan), regardless of any forms and worksheets. Sometimes you gotta wrestle with it. Keep good records; IRS might check up on it.

We surely do think alike! It's not all about money for me either, and I have said that many times. Also, I know that I spend too much time with my clients, but they relish that personal touch. It they are happy, I am happy. Yes, ma'am this IRS audit has not made me a happy person. Two full days in my office with a sixty mile round trip and no end in sight. There is an IRS building about a mile down the road and she told me that one of the other auditors who lives in my neighborhood is upset because she got this audit instead of him. You think?

Well, thank you for that vote of confidence. Nah, I know I'm worth more. But I would far rather undercharge than be perceived as someone who overcharges. It's not all about money to me. I did 385 returns last year. I'm that person who has to make everybody happy. I do get irritated when sloppy, corrupt, preparers get away with murder. Also get irritated that we pay the salaries of people in government who waste our money like there's no tomorrow. If all IRS is doing is writing checks, it's not ok. But, apparently they are doing at least two audits this year and that one year when the phrase "tea par..." never mind.

Oh, and I she is married now. Same preparer charged him 100 to miss his non-taxable retirement. All he had was a 1099-R. So they paid 250 for wrong returns and 275 for a correct return. They'll be fine. I do believe.

I charged her 275. Previous "preparer" 150. The returns are not remotely similar. The other preparer made at least twice as much per hour as I did. No, clients don't usually understand that. She may when I show her. She already has the lender's opinion after all.

I have one that has been here on and off for one client going on two years now. It is one of those comprehensive audits where he is required to look at every line and justify the number. Started off as a 2012 audit and the scope was broadened to include 2011 and 2013. I will gladly send the auditor to Tennessee, Wisconsin, Timbuktu...........no wait, I live in Timbuktu, I don't want him there. I will gladly send him anywhere and I will even pay the transportation costs. Any takers?

Want me to send her to Tennessee?

Determining whether or not a husband-wife LLC is a disregarded entity is a matter of state law. If the LLC is formed in a state that is NOT a community property state, the LLC defaults to a partnership unless an election is made to be treated as a corporation. The exception is where the LLC is set up in a community property state and meets the exceptions in Rev Proc 2002-69. If it meets the criteria, it is considered a "qualified entity" and may be treated as a disregarded entity for federal tax purposes. The IRS will accept this position for federal tax purposes. Likewise, LLC may file as a partnership for federal tax purposes and the IRS will accept that position also. Consistency in filing from year to year is key, otherwise a change in filing is considered a conversion of the entity. The requirements under 2002-69 for the LLC to be a "qualified entity" are: The business entity is wholly owned by a husband and wife as community property under the laws of a state, a foreign country, or a possession of the United States; No person other than one or both spouses would be considered an owner for federal tax purposes; and The business entity is not treated as a corporation under the applicable Treasury Regulations. None of the above addresses state reporting. Please check your state's law to verify that filing as a disregarded entity is acceptable.

If the IRS doesn't question charitable contributions on page 2 of a Sch C, I don't think they will be looking for SE tax on that little ol' 1099, right Rita? I'd blow it in there and not be concerned.

Yep, sounds like work to me, too.

One and only drug trial? I'd use Line 21 and warn her that she may get an IRS letter, to contact you for a response. But explain what the IRS will be trying to match, self-employment, and the tax difference. Let her decide.

Your client should keep books for his business. 1099-MISC means nothing (unless it reports more than your client reports as income, then you have questions to ask your client). Report your client's income per his books on Schedule C and use Schedule SE.

Definitely belongs in box 7. IMO they are trying to not pay SE tax and asked it be put in box 3. I would inform the client that their income is subject to SE tax and that box 3 was incorrectly used. If they still want to go with box 3, I'm not sure what I would do,

Yeah, and it sounds like NY is not likely to change their mind any time soon. By the way, I said NY is one. NY is not number one. You're not one, though, Michael.

Hey, Gail. I tried again today. Same messages. But, I closed everything and was going to try downloading via IE when I noticed I have a Chrome Setup on my desktop. Clicked and it installed. I'm in the 64-bit now! I think it's faster.

I also prefer doing the 1065. It is FAR easier if they sell / gift a portion of their ownership to another person or bring in another partner. Makes it look cleaner. I've had condo associations require a copy of the tax return be filed when you submit a copy of your leases to show you are meeting the requirements. FAR FAR easier with the 1065. Also, what if they decide to move somewhere down the road to another state that has a different requirement?

I have also been using Adobe Pro. This year, however, I am using 256 bit encryption with a more complex password sent in a separate email from the attached returns. My reading is that banks use 256 bit and it has to be better than 128 and my password is now 3 times more complex but sensible to the client. I am doing my best.

I live close enough to Catherine's state that I do have resident tax returns, NR tax returns, and people with no business at all there but might be picking up there emails while vacationing on the Cape (I gave it away!) so I really push for clients to use FileShare so I don't have to worry about as much.

I would say yes as long as she has the receipts and they are specific for the educational expenses for the 2015 tax year.

Barnum was an optimist... so the answer to @Jack from Ohio's question is "not until the millenial kingdom at earliest."

They do not. Net employment income is zero.

I tried downloading the versions that had 64 bit after the name; and my current version does NOT. But, it tells me it cannot download the same version I already have!

How long will it take for the scammers to get all the gullible people?

Rita, You greatly underestimate your value and worth as a tax professional! I had the same fears as you express before I made major increases in my price schedule starting with 2013 tax year. My prices are now 33% higher than 2012. Lost 3% of my clients, make 30% more income and retained 225 clients. I have already gained 5 new clients for tax year 2015. None of them batted an eye at my pricing structure. You are worth FAR MORE than you charge.

Rita, I hope you charged at least as much as the bad preparer. If it were me, knowing the client had been alerted by her banker of the bad preparation, I would assure her that we will do things right going forward and charge her a bit more than the last guy. And, quote her a bit more than the last guy charged for prep for me to amend his erroneous returns -- if she chooses. And, I know some preparers that would charge her a "set-up" type fee for 2015 only to get her Schedule E and depreciation schedules set up right.

Yeah, about two miles from my office, I can hook her right up with a doozy. Give her something worthwhile to do. 15,000 miles on 500 tax returns would make a dent in the national debt. And there's no telling how much EIC is involved. She gets a lot of likes on Facebook...

I used Carbonite for over 10 years. I know how it works. Yes, you can add some folders but you cannot add all. And, unfortunately for ATX users, you cannot add the Program Data folder. I called them two years ago and that sealed my decision to find a new backup company. The other main reason I left them is that frequently changed files, like ATX data files, only get backed up once a day. So you start on a return and the first time you save it, Carbonite backs it up. The second time you save it, Carbonite says, whoa this is a frequently changed file, and it marks it to be backed up next 24 hours after your first save. That's not good enough of for me. I don't like to go home at night until I'm sure all my work has been or will be backed up shortly. That never happened with Carbonite. CrashPlan defaults to backing up every 15 minutes, but I found that to be too much, so I set it to 1 hour. We're basically always backed up. I haven't felt the need to back up internally to a network drive, but I haven't ruled it out. You can't have too many or too frequent backups. In ATX, I like to backup a return I'm working on every 30 minutes at the most.

Every 2 hours. The frequency of your backup equals the amount of time (beyond the restore) you are willing to spend retyping data. I am willing to retype 2 hours of data. I am not willing to retype an entire day's work, let alone a week's work.

What Jack said. Again, Carbonite and others DEFAULT to only backup certain common folders. You CAN add additional files and folders to what Carbonite backs up. If the folder's permissions, or your user permissions do not allow the file to be backed up, you have bigger issues with using that folder.

But you might need to look at FBAR requirements to see if this triggers a filing requirement for her.

Go back and re-answer the SRP questions especially #3 I have missed this several times, but if anyone had coverage for even one month the answer to this question should be yes, then it should calculate correctly.

LEAVE THE DEFAULT ORIGINAL PROGRAM INSALLATION FILE LOCATIONS ALONE! This is from a knowledgeable (I wish I had his name) experienced tech support person as well as my personal investigation. LEAVE THE LOCATIONS ALONE!!

I do all my H/W LLC rentals on Sch E. Any IRS agent with half a brain knows there is nothing for the IRS to gain by forcing them to do a 1065. And the penalty removal is automatic. I'm not worried.

If it is a Husband and Wife, Wife/Wife or Husband/Husband situation, filing a joint return, you just go with the disregarded Single member LLC. Then no extra tax return. If they change to MFS, or get divorced then you make the election to file 1065. If they elected 1065 when getting the EIN, then elect back to SMLLC. Keep it simple. Rich

The cPaperless will work but again, more than I want to spend right now. The Virtru is overkill for me as I do not send many files other than just some signature forms which can be mailed back once signed. For that I send as an encrypted PDF attachment using PDFill to encrypt the form file, (PDFill.com) and it works well (does a lot more too), plus meets my price point ($19.99 one time). You buy the "editor" and all the extra's are free. Create, Fill, Edit, Delete and Submit PDF Form Fields Type, Draw, Comment, Sign and Scan PDF Documents PDF Ink or PDF Annotator on Table PC Open, View, Edit and Save PDF files without Adobe Acrobat

I don't mail returns; that's the client's job if they choose not to e-file. I have dropbox for an volunteer organization that was sharing pictures from an event for a slide show (Appalachia Service Project where one of the college students was organizing the slide show and chose to use Dropbox). Never use it for business purposes. Yesterday a pop-up showed up saying I had a new file in Dropbox! Obviously wanting me to open a link. I haven't touched DropBox since last July when the slide show was being put together.and won't. I was going to remove it, but my church does send out the Sunday bulletins to participants, and I'm a lay reader this Sunday, and it's snowing so I don't want to drive to church today to get a bulletin to prepare my readings, etc. I still might remove Dropbox today -- either with or without downloading the bulletin. My husband, the church organist, uses Dropbox to proofread the bulletins from home. He recently received a similar pop-up on his personal computer. Get Dropbox off your business computers!

I don't EVER volunteer to send the paper returns to the IRS. I give them the envelope with the returns and ask them to take it to the postal office. If the postal office or the IRS looses that return, the client would not claim that I never sent it. I don't recommend drop box for our type of business.

cPaperless's "Signature Flow" is excellent. Encrypts, confirms identity, e-signatures, then automatically returns to you all validated. Fee is only per-signature so it's worth signing up for even for 2-3 clients (unlike some services that charge a hefty monthly fee plus a per-signature fee). I have out-of-state clients, travelling clients, or folks who don't have convenient access to scanners or faxes so while they can *get* a file share document with no trouble, they can't send it back to me easily. I'd rather pay to have their sign's than have them go to a self-service fax place where the chip SAVES their confidential information (name & ssn) for heaven only knows how long and with heaven only knows who gets access.