Leaderboard

Why would any of us want to retire now when things are just getting fun. But today I received in the mail a letter from the blockheads that they have flexible options and will even hire my staff. (my dog?) They will help reduce my fears and make goals of retirement a reality. I'm telling you, HRB has given me a significant amount of amending work over the years. Perhaps I will ask them to just keep me on as their fixer-upper preparer......

Tom , the OP said paid to take care of mother and did not mention paying for her living expenses. There is not enough info given to discuss support, caregiver's husband could be earning $xxx,xxx. If the payments are strictly for her efforts in taking care mom, then it is not excluded under the code. As mentioned, a written agreement would be helpful.

The continent is not as wide as you think, Tom! LOL; that was a good one. I appreciate the laugh. And I just can't help it if the rest of you are all over-sized!

I don't see how you can call it a gift regardless of how favorable it would be to the client. A gift is given without the expectation of anything given back in return. In this case siblings are paying client with expectation that she will take care of mother in return. It sounds like she has informally or formally entered into a caregiver agreement with siblings. "You take care of mom and we will pay your $$$$ per month". I would not report it on Schedule C since she is not in the trade or business of being a caregiver. If she does not have a written agreement, it might be in her best interest to get one.

They may already know, but look into some sort of state funded caregiver payment as well. Can be substantial, and in certain cases, tax free.

I have noticed recently that HRB has been advertising their consulting services for PPP Loan Forgiveness. Now that's a scary idea.

I get daily offers of funds, buy in's, etc. For those that watch the AK gold dredging show, Shawn P. found out what it is like to take on selfish "investors". (Investor somehow put the new corp through bankruptcy as a means to cash out the investor shares.) As part of the whole pandemic situation, a couple of my customers was thinking of just closing. But they had a couple of long term reliable employees, and have seemed to have found a way to pass on / sell their businesses. (Neither was all that aware of the ability to hire specialist representation to make such transfers easy, and fair to both parties.) One has a child who wants to keep working in the business, but not run/own it, so they were able to come up with a method to sell to other employee(s), while guaranteeing their child's employment as a non owner. I think both were able to get some amount of ongoing income for their retirement, without cutting the cash flow too much.

I received this letter and laughed my butt off. God knows that I want to retire from tax preparation within the next several years, but I love my clients too much to turn them over to HRB. 2020 has been enought to make me shut down right now, but I have to stick it out.

I had a customer who is "vacationing" via a federal institution. He was preparing tax returns for non-native English speakers/writers, and was altering their returns and pocketing fake refunds. He had the gall to make a death threat against me and my family if I cooperated with a subpoena, even though I had no knowledge of his actions, nor any access to or copy of his records (he was using my payroll software). His threat was via email, which the investigating agency was happy to receive. I think he represented himself in court, proving the old adage about being foolish.

Copied from Accounting Today: "The Internal Revenue Service should make more of a priority of going after tax preparers who haven’t filed their own tax returns or paid their tax liabilities and penalties, according to a new report. The report, released Monday by the Treasury Inspector General for Tax Administration, noted that as of November 2018, the IRS’s Return Preparer Database indicated that more than 30,000 preparers self-identified as being tax noncompliant on their Preparer Taxpayer Identification Number applications in tax years 2011 through 2018. TIGTA’s analysis of that database found 10,495 preparers who prepared more than 2 million tax returns for clients in 2016, but who didn’t file their own personal tax return to report the income they received. On top of that, TIGTA identified the top 100 nonfiler preparers out of those 10,495 preparers based on the number of returns they prepared for clients in 2016 using their PTIN information. Those top 100 preparers prepared between 1,000 to 6,000 tax returns for clients in 2016, and TIGTA estimates that each of those 100 preparers potentially received somewhere from $189,000 to upwards of $1 million. In addition, TIGTA estimates $45.6 million in potential taxes could be assessed if the IRS worked on 6,903 of the preparer nonfiler cases. After reviewing a draft of the report, IRS management told TIGTA it has included 449 of the nonfiler preparers in its examination plan for this fiscal year. TIGTA also did an analysis of delinquent preparer penalty and tax “modules” as of May 27, 2019, and it indicated the majority were in active collection status. However, a significant part of them weren’t in active status because they were in “currently not collectible,” or CNC, status or were in a queue awaiting assignment to the IRS’s Collection function. There seemed to be discrepancies when TIGTA analyzed those modules showing there were high-priority preparer penalty modules in CNC shelved status, preparers in CNC hardship status who were probably earning significant income nonetheless, and high-dollar modules that were sitting around aging in the queue. The IRS’s new nonfiler strategy doesn’t include specific items to address preparers who have failed to file their own tax returns that are due, and the IRS’s current preparer misconduct strategy doesn’t offer specific direction on how the agency might deal with preparers who are nonfilers or have balances due on their own tax accounts. “Paid tax return preparers (preparers) serve an important role in the U.S. tax system as they prepare approximately 60 percent of all tax returns filed, and their actions have an enormous impact on the IRS’s ability to administer the tax laws effectively,” said the report. “When preparers cannot manage their own tax affairs, or worse, if they intentionally claim credits and deductions to which they are not entitled, they could undermine the tax administration system."

All interesting discussion here. I wonder if OP will respond with more facts or any additional information. We are quite good at offering possible solutions to a sparsely described situation. I will be very interested in the whole story and correct tax treatment, if any. Always ready to learn more!

I too have been considering retiring. The business is slowly downsizing due to clients passing on and the fact I rarely take morning calls anymore. Basically I have shifted all appointments to the afternoon and this is well accepted. I likely will try to go on for five more years unless bad health intervenes. To that end I am getting back into exercising more. Around here taxpreparers just quit. I don't recall anyone selling out although I probably could.

https://www.irs.gov/businesses/small-businesses-self-employed/family-caregivers-and-self-employment-tax The IRS takes the position that there is not a trade or business if the taxpayer only cares for a single family member, therefore report as other income. In Q-3 there is SE tax since taxpayer "operates a sole proprietorship adult day-care business for multiple clients, including her grandmother".

I'm ready to retire. But not to work for HRB. Or anyone else. Ha. My general plan was 5 more years but I don't know if I can last that long.

It sounds like she is now. This is her sole means of support, and she quit her job to do this. If she quit her job as a doctor because she became a lawyer, she would still be self-employed. Either it is a gift, or it sounds like employment to me - she is exchanging her labor for their money. Just my opinion though. I don't have a cite offhand for it.

How many siblings? If there are three, they can each gift $16000/yr to the mother and the daughter can administer it. If there are only 2 siblings, they can gift a total of $32K and the daughter can apply for IIHS through medicaid/medical. She would get about $12000/yr in non-taxable income. That would only leave $4000 taxable and surely there would be enough expenses to offset this.

It may stop some, but it is not foolproof. If the clients are from Mexico and a few other places, students are not taught cursive writing and use block letters for "signatures". It would be fairly easy to forge these "signatures" and make the return self-prepared. The refunds would go to whatever address is on the return, which is what they already do.

Don't renew PTIN's for non filers. That would stop it IF they are signing returns.

Is she doing it in the mother's home? Her home. It is taxable, should be on W-2 but I have one that does it on schedule C because her mothers lives with her. What expenses does your client pay?

Big Charts won't help if the company merged, or went out of business. Once a stock is delisted, BC drops it. Info may still be available on the company website until that disappears for non-payment of web/domain fees. However, the information might be on the company website with which it was merged. The details can sometimes be found on business news websites. Sometimes it takes a lot of searching.

BEWARE!!! Working for HRB requires you to sign a non-compete agreement and to surrender use of your EIN. So, if you wanted to keep some of your choice clients you would be violating their contract. You would have to surrender all of your clients to them. Liberty at least allows current clients to be grandfathered, so you don't lose them. If your employees are tax preparers, they would be paid a minimum hourly draw against a commission. It has been along time I worked there and management was a disaster then. From what I have heard from former colleagues, it hasn't changed much. The district managers had no tax experience and didn't know an AGI from FMV. At least the office managers were required to pass Block's exam. They were constantly urging preparers to push HRB's programs, Peace of Mind (to cover errors in the return), Retirement Savings, etc. HRB has lost law suits over usurious refund loans and also the Retirement Savings as people were losing money because of the high fees charged. The really bright spot at HRB is their excellent educational materials and courses with the plus that they were free to employees. Most of the instructors, usually EA's, were very knowledgeable, but occasionally one was a dud. They also had a higher standards to pass the exams - 80% correct, whereas most others were 70%.

There was a guy who did taxes out of his home very near my previous home. Newspaper said he owed over $180k in back taxes so I looked him up. Multiple restraining orders against him and charges of beating people up, people claimed he never actually filed their taxes and he had a ton of lawsuits against him. He plead guilty and settled on his tax bill, still owns the home and somebody is still doing tax prep and accounting out of the home office.

If you can get an idea from them when they bought it, you can often figure out what the average cost was on the Big Charts website. Sometimes it takes a little more time. But it's billable time and they can pay you or they can pay uncle sam. However, if they are a low-dollar taxpayer and they fall into a zero cap gain, then just put zero basis and move on.

When I started working as a FA in 1992, I generated a spreadsheet which gave the cost basis information on the AT&T split up. It took me several Saturdays to complete it even though I had a book that had all the percentages. I went around to estate planning attorney's and CPAs pitching to them that we'd generate their cost basis for $200 - free if they became a client. By about 1997 it was so freakin complicated I had to give up on it. When they started buying back / merging with their own spinoffs I became lost in how to do it. The spinoffs from the spinoffs were coming so quickly I couldn't keep up.

To say that, without mentioning fear of getting sick or dying, or causing a family member to get sick or die, is leaving out the larger picture.

Margaret and Lion provided excellent additional detail on the subject. I'll just add that your nephew's then CPA you referenced was handling it incorrectly. He likely achieved the same result, so there was no negative tax consequence. But he must have been doing some sort of override of the software (unless the return was prepared by hand...).

Church & Clergy Tax Guide is by Richard R. Hammar, J.D., LL.M., CPA with Church Law & Tax.

If your client is a clergyperson in a main stream religion, the local, state, &/or national church probably has great resources, including booklets and webinars. Worth and Hammer and Geisler are excellent authors. The IRS has information: https://www.irs.gov/taxtopics/tc417 https://www.irs.gov/forms-pubs/about-publication-517

Thanks to all for the discussion. I finally chose one this morning and paid for it. It was one of those suggested by the collective members of this forum. Regards, Edsel.

Yes they do...didn't you see the Oompa Loompas in Willie Wanka? They had jumpsuits and they were the same height as Catherine. I am so glad there is a continent between us right now. Tom Modesto, CA

I try to send clients to their financial advisors to help with basis. If they changed brokers, some won't want to take on the task, but we all see how much those broker fees can be so let the FA earn it. Plus, FAs have access to all kinds of historical price data that we just don't, especially when companies merged and the original no longer exists. (Now basis info goes with transfers, but that's a recent development.) If the client has no FA or just owns the stock individually, as a last resort I look up the lowest price the stock ever sold for. This may be available on BigCharts or the company website. Even if it was in 1904, I'll go with that because the taxpayer could not have purchased it for less than its lowest price ever. Follow the advice of other posters, however. Put in the full amount with zero basis and see if that 0% tax applies--it's surprising how often it does even for clients with reasonable incomes. Now that basis tracking is mandated, just think--in 50 years tax pros won't have this problem (except with original AT&T stock--I tell my clients to hang on to it and let their heirs get stepped up.)

I do not think they make jumpsuits that small

On a surface 6, I use BL, and facial rec/pass phrase, and the other feature (can't think of the name at present) which restricts certain access to help stop ransomware if I were to do something dumb. I use remote access software, splashtop, when I am not at that computer, this the reason I allow a passphrase in addition to facial rec. The machine has other security features which help prevent any sort of side booting. Security has to start with the hardware and boot process. My hardware does not auto decrypt without proper login, and I can manage remotely, including login and reboot.

Also, BigCharts.

if the taxpayer has any clue of the date of purchase you can use Yahoo historical price data and have a reasonable idea of the original cost which is supposed to be adjusted for stock splits etc.

I do what Abby says. I use zero basis and tell the client the results. If that motivates them to search their purchase documents or work with their broker(s) or ask grandma when grandpa died or..., then the client will give me dates and basis. If they need help, I tell them my hourly fee -- IF I have the time.

One thing really bad about bitlocker in Win10 is that there's no prompt for a password, so the encryption is useless if someone steals your computer, because it auto-decrypts when you turn it on. We found a way to add a PIN for bitlocker in Win10, but I can't believe MS made it so difficult and techie to do. https://www.howtogeek.com/262720/how-to-enable-a-pre-boot-bitlocker-pin-on-windows/ Otherwise, what's the point? The downside to having a bitlocker PIN or password is you can't remotely reboot unless someone is there to enter the PIN/password for you.

Go with zero basis. Tell the client what the tax is on the total gain, and let them decide if it's worth it. They might even be in the 0% federal bracket for LTCG.