Lion EA

Well, my "checks" are either a script R or my initials RL or RLL in script. Years ago I always used a green pen. Think I'll return to colored markings again.

I learned the blue checkmark trick from HRB; although, they had stopped giving us blue pencils by the time I was there. I do put a check on each document and sometimes in each area from which I get info; I even put checks on client emails and notes as I enter info. I need to get a colored pencil, though.

I do need to reconsider my E&O limits. Yes, a few increased tax prep fees on the more complex returns &/or higher income returns would pay for increased coverage. Studying that is a good November project since my E&O renews with the new tax season. From my trust fund babies, I get, "Don't you get that from the internet?" One year, a client called to see why his returns weren't ready yet. He had given me NO information. "But, I sent you my whole notebook." Nope. He eventually found tax info scattered throughout his house and called brokers and PTPs, etc., for duplicate documents. And, I really have to scan everything. I've been spotty about that. Maybe I can have my retired hubby do some scanning during tax season. Some of the stacks of client documents are inches thick, like that 2" notebook I receive each year from TFB plus the documents that trickle in afterward as he finds them or as brokers send corrected 1099s.. As has been said, there are lots of boilerplate pages and booklets that can be removed before scanning the information specific to that client. I have been firing clients that are not pleasant to work with or have unpleasant boyfriends/girlfriends or sons/daughters or lawyers/trustees who want to tell me how to do my job. Maybe I'm eliminating the ones who are likely to sue. Thank you for the nudge to reassess my E&O coverage. No one is perfect, and working against deadlines and with laws always changing....

Yes, as was mentioned, payroll. I think the cap is 1/2 W-2 income. I see so many PTPs that give detailed tables with all the info, but the W-2 line is $0.

It wasn't a rationalization. It's a fact. The suggestion was that I pay the differential between what the IRS charges my client in interest and what my client earned on the use of his money, but there IS NO differential for me to pay him, he earned a higher rate than the IRS and even CT charges combined. My point/rationalization is that I DO offer what I feel is right and not zero. And, also, that it has not happened often enough for me to have a general procedure. But, I do NOT put in writing that I will pay interest; I need to CMA for when the interest would put me out of business. A risk-based fee schedule sounds interesting. How does it work? A new client comes to me who did not listen to his prior preparer (or his prior preparer had given up trying to tell him what to do) or his situation had changed drastically and he owes $100,000 including tax, penalties, and interest for his 2013 return this week. Do I base my fee on his P&I? The mistakes he made in not using the ES vouchers or new W-4 his prior preparer gave him? The possibility he's been doing something fraudulent so his prior preparer fired him when he discovered it? Which risks do I charge for and how much? I've heard of preparers adding $500 to EIC return fees to cover possible preparer penalties. Are there risks that I can put a cost on to have a fee schedule? Or, do you assess the risk return by return as you complete them and price accordingly on a case by case basis? I don't have a lot of clients, but most are very high earners. So the possibility of one lawsuit or unhappy client (along with their family members and their business returns and all their referrals) wiping me out worries me. For instance, I alerted my clients to their potential change in tax due because of the NII, using their 2012 information to provide an apples to apples comparison, and of course told them to alert me as they saw changes during 2013. But the client whose investments earned $85,000 more didn't notice and also didn't bring me his brokerage statement until this month! Luckily, he was smart enough to understand his higher tax bill as I went through his return with him. I do have clients who have no idea how income and taxes relate (the proverbial trust fund babies).

My clients are making a lot of money on their money, usually via their investments but sometimes in their businesses. So, using your logic, they would have to pay ME the differential !! My engagement letter states no interest if not preparer error. But, I have "paid" interest by reducing future tax prep fees. A 1% error on a $4 million dollar return not discovered for three years, add in CT at their 8%, would wipe out my income pretty fast, so I don't offer in writing. I would start from No and then magnanimously offer something that feels right to me. (If I ever end up giving something that feels wrong to me, I'd fire that client afterwards.) I don't remember a client ever asking for interest. (Working at a year-round HRB Premium office, I had clients from other offices come in to file claims, including one lawyer who would NOT make his ES payments and then file a claim for P&I. He said it was always paid, but I don't know what the district recommended or corporate did or did not do.)

When I worked for HRB, they had us staple all the client's original documents together in 1040 order to return in the folder. Then, if a claim came in, we were supposed to ask for their folder and make sure the suspect document was stapled in order with the rest or, if unassembled, had staple holes.. A document with no staple holes had to go above my pay grade. (Although, our district manager recommended ALL claims be paid, so why did he bother teaching us the HRB way and making us check the folders?!)

Oh, yes, the tax is always theirs.

If you're also asking about Forms 1099-MISC, that law got undone before it became effective. Schedule E types do not have to send 1099-MISC to their vendors. I used to urge my landlords to send 1099s to have a better paper trail. Currently, I don't think I have anyone with a Schedule E Page 1. Isn't a sale of a rental home a 4797 transaction?

I would pay the penalty IF I made an error. I would not pay interest since they had use of the money. HRB would send them a Form 1099 for paying on the client's behalf. So, I would suggest a discount on next year's tax prep fee (or free) instead of paying the penalty. And, if I had any doubts as to what the client gave me, as you do, then I would offer a percentage of the penalty/discount on next year's fee. I would also fire this client (after next year, if they return to claim their discount) unless their attitude changes. We're all human. Both your client and you. There was only one perfect human (or at most only one perfect human, depending on your beliefs) and we crucified him. I'm not scanning nearly enough. Really need to scan everything.

I'm going to charge an amount that's fair to me for my time and effort learning about ACA for those new forms. And, I might raise the amount I charged last year for the then-new NII forms. I might even raise prices for anyone who sends me tax information after a certain date, maybe 15 March, whether or not I put them on extension.

Isn't is current plus two prior years for e-filing?

The EA requirement is over a three-year cycle: something like 72 hours over three years with no less than 16 per year and 2 ethics per year, don't remember if the 2 is included in the 16. I don't pay a lot of attention to that as I belong to NAEA with their 30 per year requirement. And, basically, I take the courses I want and need and don't worry about it as I'm always over. This year I'll have around 40 with credits plus a seminar that gives credits only to CPAs but has topics I want for another 24 or so that I won't receive credit for as an EA and not CPA.

It depends on how swamped I am (am I having computer problems, a respiratory virus, etc.) and how messy I think their returns will be (did they already tell me wife started a business, are they always basis-challenged) whether or not I contact them in any given year. Did they finally give me 2011 and 2012 this summer? Then, I'm not going to chase them for 2013 and rush to finish 2013 on time when they've been late the last couple of years anyway. Are they new and waiting on K-1s and I want/need to show them how concerned I am over their timely filings? I do a lot of handholding. So, the ones that are nice to deal with will probably get a call/email from me trying to get their info by 15 September. I have a couple of PITAs that I won't spend more time on. If I get their documents after 15 September, I will tell them I do NOT guarantee and ask them if they want to take their business elsewhere. Had someone who now has mother's POA and gave me her 2011 and 2012 stuff 14 April 2014 when I already had a stack of 2013 extensions that have a chance of being on time. Mom's stuff had not risen to the top of my stack when son contacted me while we were at my husband's family reunion for five days in MA in August. He wanted returns completed that week while we were away. Mom is so nice, that I would've prepared her returns as soon as we were home. His threat "If you are unable to finish them this week...I will have to move in a different direction." was the last straw. I love his mother, but he's been a real pain since he first started hinting at taking over his mom's finances and moved her out of her house. I wrote back, "I am in MA on family matters and hope to be back at work Monday 21 August. I understand you will move in a different direction this week. My best wishes to your mother and to you." He's in CO and gave me almost nothing re his mother's taxes except a verbal total of capital improvements to her house that sold. I uploaded everything to my portal, and he took it to his CO business CPA firm. I'll continue to visit his mom and talk about Westport Country Playhouse, but I didn't want anything to do with him. Two trusts and mom's personal return off my stack. I really didn't charge her very much as she'd been with me for years and years, sent to me by my broker who sends me lots of clients. So this is the time of year when I decide if they're worth my time!

I'm working on lots of returns. But, my problems are the phone calls: I need a copy of my return for my mortgage company today! The IRS is going to have me arrested in an hour! Are you done with my return yet? I just have a quick question.... RIght now I don't have any questions, but I could use another tax preparer. A couple of new clients (such as a trust and a couple in Singapore for two years) so will have queries, I'm sure.

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You used the right word: Commuting. Commuting is not a deductible employee expense. His business home is Baltimore. We taxpayers are not going to subsidize his decision to live in Charlotte.

Do the medical expenses have to go over the 10% to be used to qualify for the exemption from penalty? I know you can use medical expenses even if you do not itemize. Probably worth going to the IRC to find out. And, how about their annual statements? Is there an information page at the end that has contributions for current year, for prior year? If the client won't search further, and you're talking about less than $1,000, I'd probably stop nudging them and just complete their returns also. Only $250 has got to be a small price to pay for peace of mind while awaiting a baby! Good luck.

If it's taxable, and it sounds like the $2,500 might be, it's also subject to the 10% unless one of the exceptions applies on Form 5329. Maybe # 05? But, per The Tax Book: "For a distribution from a Roth IRA to qualify for tax-free treatment, the distribution must be made after the 5-year period...Reg 1.408A-6,A-2." It would certainly help if your client tracks down those forms the plan administrator sends out each May detailing contributions. ($2,500 seems like a lot of earnings on only $3,000 in a down market.) And, any conversions have their own separate 5-year periods.

Didn't I see his video for the ALS Ice Bucket Challenge?

We have a couple of clergy experts on here, so hopefully they will jump in. His W-2 should have only pay taxable for income tax purposes in Box 1, with employer or pension giving him a letter or put his housing allowance in Box 14 so you know the amount to add to his Form SE. (You probably know it's LOWEST of amount designated in advance, FRV furnished, and actual amount spent.) Also, no Boxes 3,4,5, or 6 for active clergy. Not sure if clergy have any special conditions when qualifying for various credits. If this will be ongoing for your continuing Admin's son, Richard R. Hammer writes an excellent book on clergy taxation, the son's denomination probably has great resources available, and William F. Geisler out of San Anselmo, CA, is an expert.

Two Ritas also agree on that. (And, I have letters after my name, such as EA, MBA, and OLD LADY.)

Well, 2010 was an oddball year. So a little confusion re a 2011 DOD is understandable. Blame it on the changing tax law, and remind them that no one's perfect. Forcing 2014 into your 2013 software, because they were in a rush. You'll fix it now. Blah, blah, blah. Say it with a sincere face and offer them a discount next year (or this year if they haven't paid yet).

Two Ritas agree that traveling to work is commuting, no matter where the pay is issued from. It's really a slam-dunk if he has only one place of work -- commuting. As you say, there can be dozens of alternatives if a second workplace or temporary assignment or...come into play, but that's not what you posted. Commuting.

The decedent did not reside in the house after death. (I hope!) The estate never resided in the house. Did any of the beneficiaries reside in the house? The house was not a personal residence after DOD, unless one of the benes moved in. No personal residence exclusion. Was the house rented for profit? Step up or down. Inherited = long-term capital treatment.