jainen

>>a generic letter<< Here's one that covers the basics. I wouldn't use the word "defalcations" because it relates more to accountancy and nobody knows what it means anyway. Also note that "more likely than not" has been rescinded as a professional standard. In my opinion the tone of this letter is too negative, focusing on proving things at audit, penalties, even non-payment of prep fees. http://www.accountantsworld.com/taxletters/1040.doc

>>this is California State<< Interesting question on the state return. California conforms to federal definition of dependent, but UIB is not "gross income" for state purposes.

>>Where in the IRS rules does it require that a preparer verify... < That would be the mild-sounding Circular 230, which identifies its true authority in the first paragraph. Section 10.34(d) says, "A practitioner advising a client to take a position on a tax return, document, affidavit, or other paper submitted to the Internal Revenue Service, or preparing or signing a tax return as a preparer, generally may rely in good faith without verification upon information furnished by the client. The practitioner may not, however, ignore the implications of information furnished to, or actually known, by the practitioner, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete." http://www.irs.gov/pub/irs-utl/pcir230.pdf Unless you define professionalism as great marketing skills, I don't recommend you take H&R Block as your business model.

>>Is this a bug or am I really going to have to do this now << Reg. 1.6695-2 has already required such documentation for many years. Look it up in any standard tax reference. As taxtrio says many preparers ask the client to sign it, but that seems to be a misunderstanding. The responsibility for completing and retaining this form (and substantial monetary penalty for non-compliance) is imposed only on the preparer.

>>it's not my job<< Why else would a client come to a professional, if not for assistance in correctly applying the complex laws? The laws impose responsibilities on the preparer too. The practitioner can not ignore the implications of information furnished to the practitioner, even if the information was obtained from a third party. In the original post, the IRS is already watching because the client is a non-filer. But the big new powers the IRS just acquired are not against non-filers, but against preparers. It would be foolish to understate a taxpayer's liability when one has conflicting information that hasn't been resolved.

>>most politicians... aren't sure which end of a pitchfork to use<< Both ends are important, especially when you are talking about politicians.

>>Sen. Dianne Fienstien<< Now we're getting close to my cottage by the sea. The California power broker got her plug pulled over that CIA appointment, a local boy from my own district. Looks like our president-elect is a take-no-prisoners sort of fellow. Remember, his power base is that self-same Illinois statehouse that Governor Blago controls. All this in-fighting is just what I said--theater.

>>I like your governor.<< I like him too, and he has drawn out some fine political theater. The opposition party came up with all these accusations of corruption, causing the Governor's own party to get even more whacked out than they already were. They started impeachment proceedings against their own guy and refused to recognize the authority of this elected representative to exercise his constitutional power of appointment. Meanwhile, the prosecutor went to the indictment hearing and basically told the judge, "We really got nuttin'."

>>the state can sell them to raise enough money to issue refunds<< Would pitchforks be deductible as a cost of determining one's correct tax, like tax preparation fees?

>>ProSeries still shows all 4 quarters equally << I'm so lazy, I haven't even loaded the new disk. Quickfinder arrived just yesterday, and that's where I get my organizer to send out someday. Business doesn't really pick up for me until February. As for Proseries, it's a forms-based program. CA 2008 Form 5805 still offers the short method without reflecting the requirement for accelerated estimates. And the new rule doesn't apply to the annualization method. So I don't know what it means.

>>I thought asking the question would be more appropriate than racking my brain for answers<< @virtual [love this format, like "comin' at ya!"] This was well-said. You had me fooled for a while. Heck, I thought you were serious. Of course this is my preferred approach too, and I'm sure it accounts for the vast majority of tech support calls. So I'm no longer offended, but I'm still uncomfortable. With business as usual, how are you going to gain my confidence that you really want to enhance my experience with a competitor's product? Okay, so you know the concerns but still want some positive hook. Think about this--Quickbooks. It's another Intuit financial product, but there is a Brobdingnagian network of third party Quickbooks support. Maybe you can find some inspiration in that sort of model.

>>What if ... We knew the ins and outs of the software<< This is an odd proposition; I'm kind of uncomfortable and even a little bit offended by it. I think it shows a fundamental misunderstanding of the relationship between professional software and its users. If you were offering TRAINING, I would consider it unlikely but at least possible that you could do a better job communicating than the original publishers. I might take a look at your materials. I only call tech support when something goes wrong, and I need to get as close to the source as quickly as possible. Most often it is an unexpected result of a recent update or change. Because everybody else calls the same place, they usually have a patch or workaround already figured out. I can't imagine how in the world a third party could help in such a situation.

>>she can get $300,000 for the next three years instead and turn it into a tax-free settlement<< It's as simple as slipping a clause in the settlement about supporting the children. >>I guess I have to call her<< Ask her to give you that old refrigerator.

>>high income taxpayers<< High Income taxpayers have also lost the safe harbor of paying 100/110% of prior year tax. There are also some new "incentives" for withholding. Note that these rules are all about payments; none of these are tax increases which is why I expect they will be easily adopted nation-wide.

Whatch y'all think about California changing requirements for ES payments to 30/30/20/20? Technically that means withholding will generate a penalty since it is allocated equally to each quarter! Does everybody have to annualize now 'cause that still goes at 25%? Are other states and the IRS going to seek accelerated payments too?

>>What will constitute due diligence on my part when she comes to me with her tax information<< Good service would require you to ask to review the settlement before she signs it. You must read it sooner or later anyway. Apply the alimony rules specifically to the payments she received. If you still can't agree with the lawyer, ask him to cite some ruling because you can bet you're going to need to defend that position when the ex claims his big deduction.

>>I'll tell her to talk to her therapist instead of her lawyer<< In my experience, doctors don't give very good tax advice. Although generally tax professionals have even more respect for lawyers than lawyers have for us tax guys, I wouldn't be too quick to dismiss someone who can pull you ten grand a month. Half of that seems to be related to the children's use of marital property, which leaves quite a bit of room to arrange things tax-free.

>>can her lawyer actually change the character of the support to property by changing the timing?< Yes. He has at least three years to pull off this switch, longer if they used temporary support orders while all the money was being counted. By the way, it's the same reason we warn clients not to fall behind in their alimony for the first three years. See page 15 of Pub 504 at http://www.irs.gov/pub/irs-pdf/p504.pdf.

>>her lawyer says her settlement will be nontaxable<< He's probably right, assuming he can get the papers signed before the ex talks to his OWN tax guy. If set up correctly, such a settlement will be considered non-taxable property division, not alimony.

>>looking forward to this year << I am anxious about the stock losses. A lot of people are going to be disappointed to learn their losses aren't deductible, either because they are in an IRA, or exceed $3000 net, or are tied up in some ISO details, or the stock is not totally worthless yet, or something else. I also expect a lot of job changes--401(k) withdrawals, flakey new Schedule C's, Section 179 recapture. I've got some very uncomfortable interviews coming up.

>>feeding the beast as it confiscates what we earn and redistributes it to others<< The way it does that is through the tax system. Don't you feel awkward using such language when you personally profit from the system? As for me, sometime between last night and this morning I finished my CPE. Man, that Spidell stuff is harder than I expected! It's great, though--I learned some very interesting things about LLCs in California. (www.caltax.com) Now I've got more roses to prune. It's 2:00 and I don't think it's going to get above the current mid-50's.

>>What if you could have all 3 styles and choose what style you wanted to enter the information? << Since you have studied Lacerte and ProSeries, you already know that this has been a standard feature for more than a decade.

>>If you don't have nothing nice to say, don't say it<< Since you feel that way, roger, please apologize for calling me a bitter trash-talker who should get voted out of the community. Whatever happened to "our philosophy is transparency not dictatorship or censorship"? For a week we have given you an enormous volume of technical and organizational advice, even though the moderators originally felt the topic was not totally appropriate for this forum. We've given you some pretty clear clusters on your poll and explained why we have difficulty with it. That seems to me consistent with your concern about "making rash decisions without taking into consideration what the end-user (which is us, the tax professionals) will have to go through." Yes, we have donated hours to your project. I can't find a single question of yours that hasn't been directly addressed, but this seems to be a one-way sort of conversation. We have tried our best to be "positively insightful." You have responded with defensive trivialization and blind narcissism.

>>a bus went by with an HRB advertisement on it for W2 Loans<< I wouldn't get on that bus. I'm waiting for W-4 loans.

>>I paid and pre-paid as any items as I could<< In my opinion, it is best to pay tax on the net income your records reasonably support. Reducing your tax to zero by pre-paying expenses is a hard position to defend.