Leaderboard

I have a candy dish on my desk, and I ask every one of my clients to take a piece. I tell them if I am audited, I am going to call every single one of them as a witness at tax court to get my $24 deduction every year. Tom Newark, CA

Eric, THANK YOU for taking such good care of us!

Jack, You need to see the settlement docs. My first blush is it is all taxable, but the costs of the litigation may be handled differently depending on what the settlement docs say. 1. Lost wages should be paid on a w2 to the recipient. These are fully taxable and subject to employment taxes. The defendant is also subject to their portion of the payroll taxes. 2. Punitive damages are fully taxable on line 21 unless they related to injury or illness. 3. If the award is for discrimination, the taxpayer can take the legal fees as an above the line deduction on line 34 of the 1040. You need to see the settlement docs. Did I say that already? Tom Newark, CA

Nothing will be lost.  There's an extensive migration process (it takes hours to run) that should get 100% of the data into the new format.  I'll be making full file and database backups before I start, so if anything does turn up missing I'll be able to roll it all back.

I'm going to shoot for next weekend.   I'm going to get the ball rolling on Saturday May 2, and hope to have it finished by the end of the day on Sunday.   That is, unless I forget, which has been known to happen.

I was "way underpricing" about 30% of my clients several years ago and realized that I was literally working myself to death and not making any money. I sent a letter to those 30% after the filing season telling them that their fee the next year would at least double. They could pay the fee and continue our relationship or they could find another preparer that could satisfy their need at the lower rate - either way they would not hurt my feelings. About a third stayed and remain good clients and the others chose to leave. So I worked less hard for nearly the same amount of money. From that point, I purposed to get my complete fee structure to a respectable point. So I systematically increased my minimum fee over a period of about 8 years to where it is today. And every year, I raise every tax client (well, not every every client), a minimum of the cost of living increase but more likely 2 to 5% more than that. And I never apologize for my fees. As some of the others have said, stay with the software you have comfort with and bump up your fees to pay for it.

Haha, Jack. At first I thought it was because I was agreeing with you, and then I saw your bolded item. Yeah, some attorneys are pretty bad with the taxation issues, especially those that are the litigators. Worse one was an attorney handling a divorce that had never heard of a QDRO, I kid you not, and was about to cause a huge tax bill until I stopped her. She was so bad that I had to tell her that if she didn't know how to structure that portion of the settlement properly, then she needed to let the opposing side's attorney draw up that portion of the settlement because the amount had already been agreed on. Most of the attorneys I work with now are for the business clients that specialize in estate and financial planning and business taxation, a couple of them also CPAs that worked in the industry, so they're very good.

In my conversation with the grand mother I established the grand kids had not lived with them in years. I noted it in their file for 2014. The daughter works but it's all off the books. If there is another boyfriend I hope he is infertile.

Not saying you can't charge for the preparation of the EIC forms. And you can charge however much you want for that service. But the charge cannot be based on how much of a refund the client gets. It is a fine distinction, but charging based on the amount of the refund on and originally filed return is a circular 230 violation. You can charge by the hour, you can charge by the form, but you can't charge based on the amount of credit that comes from that form. Tom Newark, CA

No. If she was "audited" for 89 cents? Me? I give candy bars to my clients. And I might have one as a snack. And I am deducting ALL of them. No M&E deduction, or anything like that. She was in tax court for other reasons. Rich

I view this more as "work expanding to fill the time allotted". I don't see it as any sort of measure of efficiency, and it certainly isn't having any positive effect on your bottom line. But I also understand that there are non-financial aspects to any business practice, and we each need to be comfortable with how we operate.

I would never charge Less than the big box stores, I have confidence in my ability and I believe my clients do too, they are paying for year round access, etc etc. I probably should raise my fees every year but I have the habit of raising 10% or so every 3 years. On the rare occasion a client questions it, I can honestly say, hey its been the same for over 3 years, have your utilities and grocery bills gone up, So have mine. In JJ case, if he raised 300 returns $10 that's $3000 if he loses one or two, he is still way ahead and working less. I also don't have any rules written in stone, the little old lady that I have been doing for 20 years may not see an increase for 10 years, etc. I bill on value, not fee charts or form based nor income based. A w-2 for $600,000 is the same fee as a w-2 return for $40,000. There is no added value because they made more until the richer client starts adding investments etc. Oh and the PTP's that Merrill Lynch pushes so much, I add 50-100 for each one.

As long as it is after April 15, and we know that you will eventually get the forum back up for us, we will be fine. As someone mentioned, we might have withdrawal symptoms, but all will be well once we get our next "fix."

It's good to see that most of you survived tax season with your sanity (mostly) intact. The forum is going to receive a pretty significant makeover soon, but it will require some downtime, perhaps an entire day, to complete all of the changes.     My question you you folks is when the best time for that is?  When will things be sufficiently slow that taking down the site for a day won't be a huge disruption?

Judy, I don't see any shouting. I think he was pointing out (just like you did with the bold in your earlier post). We all post to confirm our thought process, and Jack just pointed out that he was getting his thought process confirmed. I think you read too much into his post. Just my 2 cents. Tom Newark, CA

The age old question, how to prove a negative. Tom Newark, CA

LOL It's not real. It's posted by SnickersBrand© and labeled as comedy on Youtube, the same Snickers© that has the current commercial starring the Brady Bunch.

No ambiguity about the reason for the settlement. I am hearing that my instincts are correct. Lawsuit was for sexual harassment and illegal termination. No physical injury involved. I will contact the attorney for documentation about the settlement.

Court awards and damages. To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. Include the following as ordinary income. Interest on any award. Compensation for lost wages or lost profits in most cases. Punitive damages, in most cases. It does not matter if they relate to a physical injury or physical sickness. Amounts received in settlement of pension rights (if you did not contribute to the plan). Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. Back pay and damages for emotional distress received to satisfy a claim under Title VII of the Civil Rights Act of 1964. Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments).

Jerry: I think you know what you have to do. Its always difficult to do it. Very few of my returns went thru the office without some sort of increase, from $5 to $50. Just do it. Rich

Have you ever considered penalty risk in your pricing? A penalty on a return with a $600,000 W-2 would likely be much greater than a penalty on a return with a $40,000 W-2. None of us expect penalties to happen, and we certainly don't expect them to be our fault if they do, but we still need to allow for the possibility. Now if your fee schedule already has this risk built into it based on the $600K W-2, then you're doing just fine on the $40K return.

Thanks Eric and whatever works in your schedule works for me.

I agree, John. It is defiantly the withholding that drives the desire of the IRS to insist on classifying as many as possible as 'employees'. With an added bonus for them that 2106 deductions are treated much worse than Sch C expenses, if they are even able to itemize at all.

I agree, and I think that has always been IRS's reason for going after I/C designations. After all, roughly the same amount off money is paid into SocSec/Medicare regardless of whether it comes via S/E tax or employee withholding + employer match. IRS wants withholding at the source so they don't find themselves chasing people who haven't set aside the proper amounts or didn't pay estimated tax. The only other issue at stake with I/C classification is Federal Unemployment Tax. But since it is tied to benefits, there would likely be no net gain or loss of revenue to the government if more people were I/C's and thus not eligible to receive Unemployment benefits.

She should have had a business meeting with someone, documented it, and shared a piece of that candy. /s

Eric, is there anything that will be lost that should be printed out or copied to a file such as our private messages?

Clearly, her mistake was the standard "too much information" error. Had it been listed simply as 'office supplies' it would never be questioned. LOL

Just please warn us a day in advance, and we will try to survive it!

Eric...thank you. What works best for your schedule is how you should proceed. We'll survive without the Community for a few days while you do your thing!

a number of years ago, a local long distance trucking company had the bright idea of going to a 1099misc after always doing a w2. i'm guessing they had 25+ drivers. within 2 tax return cycles, the irs hammered them for unreported back employer and i believe employee fica...plus substantial penalty with interest. there may have been a claim for unreported fed withholding...although that may have been settled. why? my deduction... when the drivers filed their returns, even assuming they (or their tax preparers) did it correctly on a sch c, many/most of them had no money (since they had no prior fed or fica withholding on a w2) to pay the lump sum fed and se tax liability from a sch c. that got irs attention. it's not nice to fool with mother nature.

Sure there's an extension of time time to pay. I didn't say it was without cost, but the cost is actually fairly modest, especially for a taxpayer who has to borrow the money. Anyhow, a taxpayer who files the return without full payment is in exactly the same situation as a taxpayer who applies for an extension and then files without fulll payment. The only difference is, the collections clock begins ticking six months sooner. Costs (penalties & interest) are basically the same. But IRS charges that FTP penalty, which when combined with the interest charge adds up to about 8-1/2 % effective APR. They bluff taxpayerrs and tax preparers with the dreaded "Penalty" word, and common sense goes out the window.

IRS either gets confused by their own rules, or perhaps they know the difference but they often bluff. Preparing a return is also not the same thing as filing a return, although the IRS has fooled a multitude of tax preparers into thinking it is. Also, they say "an extension of time to file a return is not an extension of time to pay", but as a practical matter that's exactly what it is.

'Leasing' solar panels is a crock. It's more like the company is leasing your roof to put the panels up; I was flabbergasted when Solar City started promoting this, but Elon Musk is laughing his way to the bank. I've had several clients buy panels, and most have no electric bills now, even in summer. I'd like to put panels on a pole barn or carport. My roof isn't really suitable, but I've plenty of land to put em up anywhere I want to.

Any time works for me. I say schedule it when it is convenient for you.

Also, thank you to everyone for all their help!! For the life insurance - whatever the atty did took care of it - so it came thru Fri closed - my 2 hours of phone calls and work nada.. but we can file them with a little raised rate rest of the questions resolved! one way or the other Extensions - staff left at 10:30!! gotta be a better way to rollover and open and lock and date and create!!! about 400 filed and 100 of those should have been done but just ran out of days. Gained a ton of new clients so had a lot of 2011's that came in last week, lost clients to do it them selves and didn't want to wait (so they paid more to go elsewhere) to much atx retry! and locked up program... Brandon needs to talk really hard.. But other than that a pretty darn good season! Need a post for best ideas and practices...

On the speed issue--I've had my current machine (decent dual core processor with 8gb of RAM) for 2 1/2 years. It seems to run ATX just fine. However, I have noticed that it now takes about 50% longer per return than five years ago. I know the code has gotten more complex and the IRS increasingly uses tax preparers as enforcement agents but some of it is just increased complexity in the ATX process (things that used to be direct entries now required opening a separate screen to make several entries) and in the ATX code--rollovers take longer, opening a return takes longer, saving takes longer--all things that point to bloat. I'm grateful things are better than '12 but Oh for the good old days when I was cranking 'em out with Parson's tax package. $79 and flawless execution! By the way, in case you're curious, after selling off the pieces of Parson's Technology Bob Parsons started another little computer outfit. It's called GoDaddy.

I use a simple ... NOL Explanation 2014 NOL CARRYOVER FROM 2013 - ORIGINALLY FROM 2010