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I have more and more earlier. So, my stack is huge. And, clients are calling unhappy. "But, last year you had mine done by now!" Maybe I'll send the complainers to HRB.

No, your client can't take either son as a dependent. For being a qualifying child, they each fail the age test. For being a qualifying relative, they each fail the gross income test.

If we find a mistake on a prior year return, (and we have), we tell the client and let them decide if the return should be amended. If the error is significant, and not in the clients favor, and they choose not to amend, we are prepared to drop the client. Over the years, we have discovered our own errors on prior year returns. It is a bummer to admit to the client that we have messed up, but it is the right thing to do, no matter how painful or embarrassing. It's a lot more fun to find the mistakes of other tax preparers and be the hero for getting the client more money by amending!

My billings were down for February but that does not mean I have fewer returns or that I have reduced my fees. It simply means that I purposed to work 75 to 80 per week this year instead of my 100 to 105 in years past. The back log just keeps growing. I have about 120 done and approaching 150 in house to do with continued drop offs coming in at a pace of 10 to 12 per day between now and the 20th of the month and another 50 that will come in after that. We are right now committing to a 3 week turnaround. By the 15th we will be committing to a tax season completion. After the 15th - no commitment. On April 15th, I will be committed. They're coming to take us away, ha ha, ho, ho, hee, hee...............................

I don't do it for marketing. I do it to understand their tax situation, check for any carry forwards, know what to look for/what might be missing in their current year information, and to get an idea what type of person I would be dealing with if moving forward with a new client/were their returns prepared honestly, completely, etc. Do I want this client?

If there was no 'tax benefit' it is not taxable. Override the taxable refund worksheet. I do this all the time in AMT situations and zero prior year tax situations. Go back to the prior year return and reduce the state taxes claimed by the amount of the refund. If the tax liability does not change, the refund is not taxable.

Wouldn't it depend on what the scholarships were for?The scholarships that I have seen specify what they can used for. Also if you can get a detailed print out of the student's college account, it might help, if it shows shows what funds paid for what charges. Unfortunately some colleges use a balance forward approach, which won't be of any help.

I am going to be way up this year but that is attributable to the fact that I moved my office out of my home this year to a highly visible location downtown. Most of what I've done thus far are new returns. My regulars just started rolling in last week. It could get a little tricky in the next few weeks.

I probably could do more, but just don' t want to. Seems nice to go at it more relaxed, and spend more time on the ones I do, do.

I will be down. New competition in town (EG tax) and i am also waiting on corps! Very slow getting to me this year. Haven't decided if this is a good problem or a bad problem. Sometimes I'm happy to see clients go.

I don't know the answer about entering zero. Do you want to do that to document that you've considered the income and reported "something"? I pulled out an old Master Tax Guide and was then reading Reg 1.183-1 through 1.183-4. Maybe the answer is in there somewhere. Are there any costs that might be moved out of COGS as more indirect costs, or any that should be considered withdrawn for personal use, or is this person really not able to get the prices she dreamed of? Is she making jewelry and wearing it or giving some of it as gifts? I had one of those clients that was doing all of that and had big dreams with tiny profits. lol

Christian, I have heard of taxpayers doing it even to the point of BOTH parents claiming HOH if they have more than one child. That is ONLY ONE of the reasons the EIC holds the title of the area of the tax code where the majority of the fraud occurs each year (per IRS employees during seminars). For those taxpayers who have only one (1) child, Social Security numbers can be bought this time of year at Wal-Mart (Wal-Mart itself doesn't sell them, people go through the store on their on asking others if they need a SS #). I can remember where a number could be bought for $50...with inflation, the going rate now in Louisiana has increased to $600 (from what I'm told...I stay out of Wal-Mart this time of year because of those solicitations). Your question as to whether IRS will catch it....probably not. I have seen it happen too many times..over and over and over again. Cathy

Right! Is that something specific to the medical professions? I took my dog to the vet and was told she'd lost weight and was 7.12 lbs so I'm thinking the tech meant 7 1/8 lbs. Nope, the .12 was 12 oz or 3/4 lb. So I'm standing there asking the vet about the entries and she's looking at me like I'm the crazy one. It seems some techs do this and others don't so there was no consistency in the entries to tell what was really going on with the weight because some entries were 7.50 lbs. That was enough to aggravate this bean counter!

I would like for the nurses filling out their time sheets for this payroll I'm doing to learn that 4 hours 45 minutes is 4.75 hours, not 4.45 hours. Hope they administer proper dosages to their patients. Geez Louise. I dunno, KC, rounding may be too much to ask of people these days.

I have. Looked at three years for a new client and found the preparer didn't give her credit for property taxes paid in CT for two years. $1,000 back. She's my client now. Conversely, for DIYers, I tend to find they misunderstood the law or their software and computed too small a tax liability. I explain it to them. They seldom accept my offer to amend. They are not my clients now.

My preference would be that the law would mandate that everyone use forms with the same layout as the IRS forms, even if they are going to print them on plain paper. I don't care about the perforations, but I could sure be more efficient if I could look in the same place every time to enter the EIN for the employer, the wages or the taxable income, etc. Instead it sometimes seems as though every company has a different format for their W2s and 1099s.

I try to get things straight from the horse's mouth, but sometimes I discover (too late) that my information originated from the other end of the horse.

Remind the callers that, thanks to ACA and other significant changes, it's complicated many returns, slowing you as you work carefully to be sure you provide all your clients with the best in professional, proper returns. And that accuracy is more important than speed, because you don't want your clients to ever overpay.

I do know that it depends on how the scholarship reads. Some are only for tuition, books and fees, thus they can not be applied to room and board.

This is a known issue with the IRS. ESTIMATED time of fixing it is March 23. Paper file it and be done.

I am thinking that is some of my issue also sans the unhappy callers. I worked on 6 decent size business returns in February that I did not do until April of last year. And I have seen many more that are in earlier - thus adding to the backlog. We are being as honest as we can with our folks about the turn around time and the nearly universal response has been "whenever". The only caller that I am aware is the one that tried to do her own on TT and screwed it up requiring it now to be amended. And I am suppose to drop everything I am doing and work on that? I don't think so!

A lot of forms haven't been sent yet. I have a huge pile...all waiting for "one more thing...........".

Thanks very much for your answers. Appreciate it very much. Had neither son had wages/income, I assume they would be eligible then?

I would say 'no' since, in general, hobby losses cannot offset other types of income. If gross income from the hobby is less than zero, I don't think you can put a negative figure for hobby "income" on line 21 and have it reducing other income to arrive at total income or AGI on the 1040. I don't have a cite for this without looking though.

...or not entertainment, at least not in terms of how we describe it for tax purposes.

I respectfully disagree. Certain operating expenses may be deducted on Schedule A (subject to 2%), up to gross income (which is the amount shown on line 21). From IRS Pub 535: Gross income from a not­-for­-profit activity in­cludes the total of all gains from the sale, ex­change, or other disposition of property, and all other gross receipts derived from the activity.Gross income from the activity also includes capital gains and rents received for the use of property which is held in connection with the ac­tivity. You can determine gross income from any not­-for­-profit activity by subtracting the cost of goods sold from your gross receipts. However,if you determine gross income by subtracting cost of goods sold from gross receipts, you must do so consistently, and in a manner that follows generally accepted methods of account­ing

Be careful here. Even if there were no sales, there may still have been assets purchased or contributed to the partnership that need to be sorted out as to what each partner/member received at dissolution. There can be potentially a transfer of wealth from one individual to another, using the partnership entity to "launder" the transaction. I would prepare a final return and present a balance sheet with no assets and a reconciliation of who and what was contributed and to whom assets (if any) were distributed. I am not saying in any way that is the case in your situation, but it is a reason to dig deeper and prepare an accurate final return.

Thanks Jklcpa. Yes she received a 1099 G but that does not make it taxable.

Our local big box chain...won't name names, however, the local branch of the chain goes by initials...three of them........has a horrible error rate (negatively affecting their clients returns). In fact, the errors were so outlandish years ago, I refused to take any of their clients unless on extension, and I have continued that policy since. I tried sending a few clients back to them to get them to amend the returns, however, the chain tried to charge each taxpayer for correcting THEIR mistake(s). I had a discussion with the manager several years ago in regard to depletion allowance on royalty income. She didn't know what I was talking about and further told me that if her computer doesn't do it automatically, taking a depletion allowance is not something she can or would do on her own. For a couple of more examples: A MFJ couple's return included Social Security income as taxable income. "Not bad, you say?" Not only was the disabled mother's SS income reported (which was correct), but also the SS income received under the children's SS#! Another couple paid income tax on interest "earnings"......from a 1098 Mortgage Interest Statement. The payer was listed as XYZ Mortgage Company....seems like that should have thrown up a red flag! Never mind the amount of mortgage interest reported as income was over 10K! I don't use the "double checking" as a marketing tool, don't have to. I always have more of them than I care to do anyway. I was eating supper the night their new commercial aired. I almost choked on my food!

I generally include that form on my HOH clients. I feel like I can do it now, or I can wait until they (hopefully) call me in the summer to do it, or I can hear them cry next year when they are too late to get the problem fixed. It is a PITA to fill it out, but it is easier than having a client claim I did their tax return wrong. Tom Newark, CA

Clearly, medical measurements should be ___lbs ___oz, not rounded at all. But when it comes to money on tax returns, I really think the difference if $97.50 is rounded up [as it should be] or down, is not going to change the tax in more than one out of a thousand cases, Or maybe one in ten thousand!

With today's IRS, no telling.

I'd like to see uniform sizes that are readable, plus NO DECIMALS ALLOWED, ALL NUMBERS ROUNDED. That would avoid a lot of errors on both ends.

You can pro-actively get an IRS-issued 5-digit PIN to prevent someone from using your ssn to file a fraudulent return. Some folks on another tax board are doing this for their clients; I just did it for my family. If you know the ssn's it takes about 10 seconds including the time to print (or save as pdf). http://www.irs.gov/Individuals/Electronic-Filing-PIN-Request

Jack -- read Rita's sig line and I think you will know everything you need to know about this situation.

Why, what have you heard?

I do not use the scheme as a marketing tool but I will review prior year returns for every new client - not so much to look for more money back as to review for correctness. Some like what I find and some do not. But it is always understood that if they are going to continue to be my client, they will go with my suggestion of a fix whichever way that may go. I do not always recommend amending either. It has to be significant enough to make it worthwhile - even if it is a refund.

Every year. This guy comes in with his W-2 only. Me: Hey, remember you itemize? You have mortgage interest, real estate tax, church contributions? Guy: Oh. That helps? Yes, and it has helped every year for seven years now. Guy makes $95k. I don't get it...

Is there a personal story attached to this post?

I rather have your client than the ones that makes 17K and brings a bunch of receipts from CVS and Rite Aid. This reminded me about a new posting.

My girls came home from a trip to Alabama (a family reunion on their dad's side) and told me they saw a store advertising beer, guns, and bridal gowns and said it sounded like the perfect all-in-one wedding planning store (for that area).

If he takes clients and potential clients, or employees, to a full-service range (where they rent the equipment, give the safety lecture, sell the ammo, etc) for "team-building" exercises or to drum up business (like folks take potential clients to football games) then that cost is entertainment. His personal firearms, unless he uses them substantially for a business purpose, are not depreciable. Which question is actually stupid on the face of it, as good firearms tend NOT to decrease in value. My daughter competes with a pistol older than she is. (And kicks butt.) But if we went to sell it, we'd get what was originally paid for it.

File a 1065 with zeros, and marked final. Charge them $200 or whatever to do it. They can deduct the $200 on the Sch E page 2. Rich

See pub 525 concerning recoveries of amounts included in itemized deductions in a prior year. Maybe this part will help you: Negative taxable income. If your taxable income for the prior year ( Worksheet 2 , line 10) was a negative amount, the recovery you must include in income is reduced by that amount. You have a negative taxable income for 2013 if your: Form 1040, line 42 was more than line 41, Form 1040NR, line 40 was more than line 39, or Form 1040NR-EZ, line 13 was more than line 12. At the bottom of Worksheet 2 linked to above, in reference to entering taxable income for the prior year it states: 4 If taxable income is a negative amount, enter that amount in brackets. Do not enter zero unless your taxable income is exactly zero. See Negative taxable income . Taxable income will have to be adjusted for any net operating loss carryover. For more information, see Publication 536, Net Operating Losses for Individuals, Estates, and Trusts. The NOL was created in 2013 and wasn't from a carryforward from a previous year. Because you say that the tax didn't change with or without the Schedule A, there is no tax benefit to the state tax being included in the Sch A and therefore the state refund shouldn't be taxed. I'd just delete the entry from the return and move on. Is this question coming up because ATX included the state refund when you rolled the data forward, or did your client actually receive a 1099G for the refund?

I sometimes take sales tax instead of income tax if over two years it will benefit the client. But, the worksheet should work through whether or not last year's deduction benefited the client over and above the sales tax and over and above the standard deduction and how much is income this year.

If they don't jump thru the hoops to set up residence in another state i.e., Drivers License, Vehicle Title & Registration, Vehicle Insurance, Voters Registration, etc., then their tax home will remain in their current state.

And I agree with both of you: I just am not willing to tell them that it makes sense for them not to have insurance. I prefer to point out the facts on both sides of the argument IF ASKED and let them decide what if anything they should do. i am not going to tell them it makes economic sense to forgo insurance when I have not got a working crystal ball.