Sara EA

I don't think this is government overreach, just one of many attempts to stem abuse of the charitable donation deduction. Remember before charities had to provide 1098C for car donations? People would take the blue book value for donating an old car that had been sitting rotting in a field for ten years. I recall that in the year the form was required deductions for cars dropped something like 80%. Conservation easements are another area of rampant abuse that is in focus. And we all have a lot of clients who say "same as last year" or pick a number off the ceiling when we ask about their donations. We don't get those answers so often now that we remind them they have to have receipts.

The credit has been based on a max of $3k in child care expenses per child (up to two) since 2001, so you are right that it hasn't kept up with inflation. Actually, it didn't cover the cost of care in 2001 either. A look into the Congressional Record shows that there were (and are) policymakers who balked at adjusting the amount because they believed that mothers should stay home to care for their children. Well, that worked in 1901, and maybe 1951, but here we are in 2025.

You don't have the type of clients I have. It takes me that long just to sort most of my clients' docs, longer if I have to open the envelopes. Why, oh why, can't they at least open their mail? Especially annoying are the ones where you have to fold this flap first, tear here, tear there, tear your hair out.

Doing returns in front of the client makes a clean desk mandatory. You can't have a scrap of paper with another client's info on your desk when someone else is sitting there. Maybe we all should schedule one in-person client a week to force us to clean up those desks (like when company's coming). You have to be careful when you have a monitor for the client's viewing. When I worked at Block, any client notes you wrote last year came up when you opened that client. One preparer had written "This client is a PIA," and that's the first thing that showed on the screen.

Two monitors work for me. One for what I'm working on and the other with prior year or reference info. In an online class, one to see what's going on and the other with the text. My son, who works in IT, has six. Sorry, I'm not that good at multi-tasking!

Paid by the inch? And just how did you calculate that? Reminds me when our dad used to pay us for each dandelion we pulled out of the yard with the puller gizmo. Who counted when we each had a bushel basket filled to various heights? We lived in a rural area, so money didn't mean much anyway because there was nowhere to spend it.

Why did your clients sign up for the Dependent Care FSA if one spouse doesn't work and was available to care for the child? I find the credit to be extremely valuable for working couples. With one child, only $3k of child care expenses can be used to calculate the credit. By taking the Dependent Care FSA, $5k is not subject to income or employment taxes, which saves a bundle. With more than one child, they get that benefit plus another $1k to calculate the credit.

She should be eligible to deduct a theft loss on Form 4684 and Sch A. I had a client in the exact same situation. He didn't admit to me what happened until his financial situation became dire. Once he did, he felt comfortable enough to admit that it had happened twice. IRS accepted the first submission with no problem but questioned the second. He eventually prevailed. Still, all he saved was the tax, which would have been an added burden on his depleted bank account. He never got his money back and had to sell his home and move in with his children. The part of me that wants to think there is good in all people is facing the fact that there are many exceptions.

Way back in the day when I worked at Block, I found you could get on your hands and knees and beg clients not to go for a bank product, usually to no avail. I'd point out that for the exorbitant fee you could buy a couple of weeks of groceries or a tire for the car. (That really was back in the day.) Maybe a few really did need the money now because the rent was overdue, but I think the majority were EITC recipients and the refund was free money to them so it didn't matter if they got $3k or $2700 because either amount made them a lot richer than they were.

My hunch is that since the home was in a revocable trust, the decedent was considered the owner and got to take advantage of CA's generous cap on property taxes. Once she died, the trust became the new owner and a much higher (long-delayed) tax was calculated. Most likely taxes are exempt from the statute of limitations. If a CA attorney says it's legal, this is probably the case.

I thought the clients have to file, not the preparers.

The OP did prepare the original return, so no biggie to amend it. We have occasionally taken back fired clients. For the most part they were grateful and changed their ways once they realized they had crossed a line and we meant business. It won't hurt to amend the return, see how it goes, and then decide if the client has improved his attitude.

Also instant gratification. Picking up that "deal" on Amazon and having something desired in your hands the next day is much easier and more exciting than sticking that $500 in the bank and someday being glad you did.

I agree with Tom. There will be a 1099S issued to the trust, and neither IRS nor CA will know the basis unless you file the tax forms. The trust may actually show a loss that can be passed through to the beneficiaries. It may have paid tax prep fees for the decedent's final tax return and will pay for the 1041 and CA forms (allowed to deduct even if not paid by the filing date if amount is known). If the house was sold within six months or so of death, the sales price is the FMV, but surely there were closing costs that will net in a loss. The trust can also deduct any real estate taxes paid before and at the time of sale. Were there any attorney fees to handle all this? Did the trustee receive a fee? Court fees? More deductions.

You can't take a loss when selling to a related party.

One investment choice that 401ks have that IRAs don't is a stable value fund (essentially insurance contracts that pay a nice rate of interest and can't lose money). In my experience, Fidelity has very knowledgeable agents and they are not paid on commission so really do look out for their clients. Your sister should start there.

Don't the cc companies base swipe fees on volume? Small business pay more, so I understand why some of them charge that fee to the customer. We had a service person at our home this week, and I asked if he preferred check or card. He said check. We always try to use cash when we patronize small local businesses because they get to keep all the money. I send checks to charities because many of the online donation sites charge upwards of 5% for cards, money the charities can put to better use than Visa or Mastercard. That said, although our tax office is a small business we saved a fortune in time and expenses when we began accepting credit and debit cards. Prior to that, many clients "forgot" their checkbooks so we billed them, often multiple times. Our office manager used to spend a good half day a month printing and folding bills, stuffing envelopes, standing in line at the post office. The card fees were worth it. CT gas stations got around the no surcharge rule by offering cash discounts.

A lot of estates don't go through attorneys or Probate. A personal representative, usually a family member, takes responsibility for tax filings and signs the returns as such. I don't demand documentation to deal with them if I already know them. If there is a refund and an administrator will be appointed, you do need the court appointment to file the 1310 but not to just deal with the person filing the taxes.

How would you know if the contractor has business cards or a state listing? If a client's records show payment to a plumber, say, do you look up the state records and call the guy for a card? I can see denying the deduction when a client says their nephew helps out once in a while and gets paid under the table.

UltraTax has had MFA since the beginning of the year. It's no big deal and takes maybe 15 seconds extra to log in. The big deal is that we only have one cell phone for the office, so everyone had to give Thompson Reuters their personal cell numbers.

What happened to both of you is sick. More and more people are realizing that you just can't trust online reviews. They can be written by bots, family members, competitors, AI, or jerks like you two encountered. I used to chuckle over the HRBlock reviews when clients degraded them because their refunds weren't big enough. And whose fault is that? Unfortunately too many people turn to reviews without a critical eye and believe everything they read. Hopefully that will change as people sense that reviews are too often gamed and not reliable. Not soon enough.

How much data does Google collect behind your back? Anyone look at the Google Voice privacy policy?

I never believed that the IRS keeps track of the 8606s anyway. What's in it for them? If you take a distribution and claim that some portion was post-tax, the onus will always be on you to prove it. You are the one who will have to produce 8606s from possibly decades ago, records that will long ago have disappeared from IRS systems. I even wonder how long gifts reported on 709s are retained by IRS.

This is reported as the sale of the home, so it is capital not ordinary income. With a recourse loan, the amount realized is the FMV of the home as reported on the 1099A. Basis is the usual: purchase price plus improvements. There may be a capital gain, but a loss will be personal and disallowed. Ordinary income will come into play when a 1099C is issued.

Back before there was the Security Summit, there was one year when ID theft soared. We had 12 cases in our office alone, compared to one or two in prior years. It took a lot less time to resolve then, and people got their refunds within a few months. I guess the IRS had more staff then. It takes a human and time to determine who the real taxpayer is. My most memorable case was a physician who made hefty estimates. Before he even filed he got a letter informing him that his refund was increasing by $46k! Apparently the thief filed the usual fake return claiming a refund of $3k or so, not knowing that estimates had been paid. I immediately called the IRS to alert them not to pay out the refund, but I don't know if they ever did. I hope they realized that I was representing the real taxpayer because the thief wouldn't call and tell them to send less money.