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Two weeks ago I had a guy come in with their two Forms SSA-1099s and one 1099-R. He was not new, so he knows very well that I don't overcharge. Be that as it may, he said, "I tried this myself and I think I'm getting a small refund, but I don't know WTH I'm doing." His refund was actually about $2,500. Of course, I went up ten bucks for listening to the confession. People will do anything to save money here. Of course, they will blow it on the Golden Corral buffet in Cookeville, or the 72 inch TV, but I digress. I would like to think all the DIYers that screw up will get letters, but they won't, and they don't come back. I would like to think all of them figure out they don't know WTH they're doing, like my guy here. They won't. Did I win him over forever? Nope. What is my point here? I'm not sure, it's Sunday, and I've had too much coffee.

I absolutely charge more for a shoe box than a well sorted/prepared set of information. No question about that and I make the client aware of that beforehand. If they choose to bring me a shoe box, they will be charged more. Fortunately, I don't have many of those.

There is no letter o in the verification code.So if you see 0, it will always be a zero.

My stomach is churning over these stories of greedy crooks taking advantage of innocent people. Worst I saw was an elderly lady who came in with a stack of 1099Rs and had no idea what they were for. Turned out her advisor had sold her an annuity and every single month cashed it in and sold her another one. Big commissions on the sales, big penalties to the lady for early cashouts. We called the state insurance commissioner and the offense was so egregious everything got fixed. I have noticed that when I tell a client to contact their advisor to find out why their fees are so high, or ask about what the heck is this investment, or whatever seems to me to be questionable in their account, I will often get a call from that advisor. Client likely called and said "my tax person told me to ask ...." Sometimes they defend themselves, sometimes we get to talk about the person's financial situation and the advisor is grateful to get a better picture (e.g., hey, this person needs income, not tax-free investments that carry risk, they have minimal tax liability as it is). I believe some of these people then do a better job for the client because they know someone is looking over their shoulder. Sad that the fiduciary rule is about to be tabled before it goes into effect.

Maybe, but they do NOT do enough to strip bad "advisers" of their licenses - or even "just" penalize them with some type of preparer-penalty analog. I have myself seen several utterly egregious cases where the family lodged formal complaints against bad advisers, and NOT ONE of them was made whole and not even ONE adviser even got a blemish on their U-4 record. Disgusting; utterly disgusting. If any of us pulled the type of shenanigans I have seen over and over again, we would have our EA or CPA licenses rescinded and multi thousand dollar preparer penalties assessed.

Early in the season I was alert to the fact that we are now supposed to enter verification codes if they appear on the W2. Then I forgot about them and just woke up this week and started searching for them. Not easy to find! Some W-2s have them only on one copy. I make a habit of zeroing in on the bottom copy so likely missed a zillion of them. I have found them on some ADP forms but not others. The number itself is a bear to enter--a million digits, mixed alpha and numeric so you can't use the number pad. I wonder if this great experiment is going to fall flat because preparers and likely self-prepareds are ignoring the codes. They will blame us of course (another avenue to impose big fines?). Anyone else guilty of not religiously entering these codes?

I read an article that H&R is experimenting with using Watson, the computer that competed successfully on Jeopardy, to prepare tax returns. I am thinking that the end is in sight.

I don't allow shoe boxes. They can at least add their medical and everything else and write the total for me. No time for the extra work. Plus I hate trying to figure out if the medical is actually paid, an initial bill or what.

The use of the letter O and zero should be outlawed. I haven't seen any with the code in the name box, and at least Drake has the input separated into 4 character blocks that jump from one to the next so I didn't have to think about whether or not to enter the hyphen. As for Pacun's idea of requiring the input in the software, or having it generate an error or reject message, only a small number of my clients' W-2s have the code so the software would need an acceptable input such as "no code" down the road when this becomes a required input.

Figuring out if that teeny, tiny character is an 8 or a B is a pain. I wear my reading glasses to prepare tax returns, but those 16 digits are really tough to read. Do I include the hyphens? I've done it both ways. And, I know I missed one originally, but spotted it when noticing that one of their other W-2s had the code. And, have you seen the one where it's buried in the name/address box?! Big companies have employee numbers anyway, so it took some time for me to realize where they'd hidden the verification code. Box 9 or within the name/address, right? What a stupid system.

Thanks for the reminder, Sara. I missed one on one client's return that was already filed and missed the code on my own husband's W-2. Hope he doesn't fire me as his preparer. lol

I just had a client tell me about his "advisor" that told hi8m to issue quit claim deeds for his personal residence and a vacation home to his son to transfer the property now before he dies and it is forced into probate. Nothing was mentioned about step up in bassis upon death if put into T/P estate or a Grantor Trust that would be lost if deeded to son before T/P death. I told him to get a new advisor!!

o oh my - good reminder - I doubt mine are in either - including my husbands for prior years - will double check... but too late for those filed

WASHINGTON – The Internal Revenue Service, state tax agencies and the tax industry today warned tax professionals to be alert to a new phishing email scam impersonating software providers. The scam email comes with the subject line, “Access Locked.” It tells recipients that access to their tax prep software accounts has been “suspended due to errors in your security details.” The scam email asks the tax professional to address the issue by using an “unlock” link provided in the email. https://www.irs.gov/uac/newsroom/security-summit-alert-tax-professionals-warned-of-new-scam-to-unlock-their-tax-software-accounts

I know you just file another 1096 / 1099 for only the MISC forms that were missed in the original file, but not sure about the DIV correction and the penalties.

Oh yeah, putting a tax deferred "investment" in an IRA, what a novel idea. Advisor should be tarred and feathered. Unfortunately many older people fall for this with high introductory rates, only to be a victim to the surrender charges when they need the money. And the absolute worst is putting a variable annuity in an IRA, a guaranteed loser with charges up the Ying Yang. I believe many states do have laws to protect individuals from these practices..

Sounds like a good candidate for a hug.

Yesterday a client came in and didn't have enough funds to pay the bill, but would in 5 days. So I took a check with the current date and made a note to deposit it on the day the funds will be available. Not a post dated check, and if it takes me awhile to get to the bank....

Sad to say the free file revolution has begun impacting my client list. Here even my local community bank is pushing Turbo Tax. I'll be packing it in in a few more years and luckily don't need the income but it sorta saddens me after so many years of hard work.

Are you able to file both a Schedule F and Form 4835 in the same tax year? For example a farmer has turned his farm ground over to a tenant to farm. That would go on Form 4835. The same farmer has ground in the CRP program in which he materially participates. That would go on Schedule F. Am I correct in the above examples?

As a DIY plumber, electrician, and carpenter I understand the desire to do things yourself. But knowing when you're in over your head, can be quickly realized, so going to a professional is what most people will do. I tend to think this is true in preparing tax returns.

In case you get anymore NYC clients or become a contestant on Who Wants To Be A Millionaire, Kings County=Brooklyn, Richmond County=Staten Island and NY County= Manhattan. Queens is Queens and Bronx is "Da' Bronx". All local tax on W2 should be identified as NYC, someone was being cute (or unaware) by labeling it as Kings. You will need the school code for the county (or borough as we NYers call them) and it will be identified as Kings. Good luck on Who Wants to be a Millionaire.

Right now I have two corporate returns that needs the books done before attacking the tax return, one is a returning client and it takes me 4 to 6 hours to create the P&L and B&S, this year I realized charging $200 to $400 of extra work is not worth it for me.

From time to time, I will take a shoebox client, giving them detailed instructions of how to organize and what to add up. Then have them bring the organized box back. I don't do shoeboxes myself anymore. In my experience , the returns are usually pretty straightforward.

I charge my hourly fee during tax season. If off-season, I usually charge less per hour than for tax prep. And, I have a very, very part-time assistant who I pay to organize/run adding machine tapes/etc., and then I add that cost (including any of my time to direct her) to the client's bill. Some stuffed boxes/bags get sent home anyway, to total themselves or go on extension until I can get my assistant in. I put the Bookkeeping fee right on their invoice, so they can see how much it costs them.

I have a full time person that does all of that for me. But I make the client understand up front that I charge her out at $55 per hour and that fee will be added to the tax prep fee. I actually like shoe box clients. That is a profit center for me. If I did not have a person like that the client would understand that I would charge $90 per hour to do that kind of work. They could either pay me to do it or take it home and bring it back summarized.

Uber drivers don't receive cash fares from clients. MAYBE an extra tip here and there.

We will never forget to enter it once they implement and force software companies to require it when efiling. I think it is a good idea and I am entering them if available. I am also entering Driver's license information. I know this is not required now, but it is coming down the pipe. I think both are good ideas and I like to see them implemented. I have used the same PIN ever since I started my first efile and I have been asking for school records and medical records for dependents for several years.

Christian, Sometimes the "free filing" can be our best friend. Just take a look at some of the outlandish questions that Turbo Tax users ask at the Turbo Tax Answer exchange. They want to inlcude their child's W-2 on their own return to "save him the trouble of having to file himself." They want to know where to put the 1099-MISC income they received on the Free File 1040 EZ. They want to subtract their gambling losses directly from their winnings on line 21. They want to know if having cancer insurance constitutes "being insured for the whole year." Ane then, after they file, they want to know what to do with the other W-2 that just came in. The level of frustration among the "free filers" is rising and they are beginning to respect what people such as you and I can do for them in terms of filing a complete and legal return. Don't be too anxious to "pack it in." I think the Millenials will need us more than any other generation in history. IMHO.

Yes. The PATH Act permanently reduced the BIG holding period from 10 to 5 years.

----> The penalties for incorrect 1099s and late filing seem to be stricter this year. I couldn't tell from my research if not receiving the W-9s qualifies for reasonable cause and exempts the clients from late filing penalties. I want to make sure I give the clients correct information regarding any potential penalties.<----- You might want to study what these people have to say about 1099's and TIN verification. There's some pretty scary stuff in there regarding the Tier 3 penalty, and good advice on how to insulate your client from it. http://1099express.com/TinMatch.asp

You're my MA Go To person too! Don't forget, I'm a Red Sox fan now.

I received quite a bit of information on this topic during the week including observations by CHECKPOINT. At this point, it sounds like IRS will accept and process refunds if box is left blank. However, taxpayer might later receive a letter inquiring whether they had HCC. At that point IRS might attempt collection. It was noted that IRS will have limited tools to collect other than offset of refunds. IRS has also stated no knew regs will be issued until the new Treas. Sec. takes over. My position is to keep the client informed and involved in the decision to check the box or not. Written communication will be kept on file. I need to cover my tail, but at the same time client has the right to be informed of the situation and possible outcomes. My advice will be to hold off on filing for another 30 days and see what happens.

OK. Just to be sure: The SCorp acquired the land on 12/31/13 and in order to avoid the BIG tax, it should wait 5 years until after 12/31/18 to sell. Right?

I didn't research but I think there is a BIG also. The partner is considered to own the underlying assets of the partnership, and when the corp made that S election, it became the "owner" of that land that was later distributed to it. I think the sec that covers it might be 751, but don't hold me to that for sure. I'd have to look up to verify the reference.

The issue would be allocating expense (property taxes etc.) between the forms. Especially if CRP is subject to SE tax. If farmer is on SS then no SE tax.

I believe there is a BIG on the partnership interest that will be recognized when the land is sold. In the case of "The Ringgold Telephone Company v. Commissioner (T.C. Memo. 2010-103)" the question was not whether there was a BIG from the partnership interest held at the time of conversion. The argument was over the valuation of the partnership interest. Both parties agreed there was BIG.

Yes, it's possible. I have several people in the same position.

Dead scorpion in client's "box o' crap" paperwork. Ewwww! Emptied it outside in case there were any live ones lurking in there.

Longtime client has a disabled son, so she was advised to set up a trust for him. She asked me if the legal fee she paid to set up the trust in 2014 is deductible. She did not ask me in 2014. She paid another $3,500 in fees in 2016 because it was not done properly in 2014 when she had paid $6,000. I asked her, "What is in the trust?" She has no investments. The only asset she had was her house which she sold in 2016. Her income is a government pension and Social Security. She told me she has a life insurance policy for $400,000 that is for the disabled son. She gave the not disabled son $200,000 from the sale of her house for him to buy a house. So she has about $10,000 in cash remaining. For this she paid $9,500 in legal fees!

Those annuity sales reps must get big commissions on those damn things.

There's an insane tax preparer in my county who advised a retired lady turned 'artist' to start an S corp and rent a space so she'd look like a real business and be able to deduct huge losses. She sells about $500 of paintings each year. Fortunately she came to me before she did put any assets into the S corp, but she's still paying rent on that lease. I explained to her that buying deductions is a losing game and a hobby is still a hobby even if you put it in an S corp.

I had a client who was advised to take her money out of an IRA and buy an annuity. I told her "Don't do it.

Another good one is when a sole proprietor starts up her craft business and decides she just HAS to be an LLC because, you know, every person in business, especially the craft industry, gets sued and loses their home, and apparently liability insurance is just not good enough. Lawyer charges her $1500 to fill in the blanks on the two pager with Department of Revenue. A couple months later, I meet her when she brings all her letters saying complete your applications for city business license. county business license, business taxes, etc. That's all he did. The two page fill in the blank. He did tell her she had no liability protection as a sole proprietor and cashed her personal check promptly.

I feel the same way. The worst one I ever saw was about 20 years ago when a young lady brought me a cardboard box crammed full of papers & junk. Her husband, a young farmer, had died of cancer the year before and she was the sole heir to his enormous life insurance policy . She had already lost lots of it (in ridiculous investments) and had a lawyer do her taxes the previous year. She asked my price and while I felt sorry for her, the size of that box was daunting. So anyway, I said "Ma'am, I hate to tell you this, but I'd have to charge you at least $500" (which was a huge price around here at the time). And she replied "Whew! That's a relief. That lawyer charged me $3,800 last year." So I got a new customer and she got a good deal. (There was a funny sequel to this, but...some other time).

I think the only way to protect our clients from these people is if the client called us for an opinion on such an investment. Many clients do, but the older ones are just too trusting and fall for the slick sales pitch.

Sounds like the Garrison Kiellor story about the time Ole visited the big city for the first time. A panhandler walked up to him and asked "How about giving me a dollar for a sandwich?" Ole replied, "Well OK, but first I need to see the sandwich."

Catherine, You need one of these........

My hubby got all excited when a large Lord & Taylor box arrived for me, thinking a grateful client had sent a gift. I took one look at the return address and knew it was just a tardy client sending all her tax documents, plus every other piece of paper she had, for a couple of years. What a letdown.

I have a dashcam in my car, maybe one day I'll upload a video and make you watch it for 30-45 minutes of my commute