JohnH

I think you should keep holding out for the coffee pot and toaster oven, or maybe the microwave.

I noticed she left $5 million each to two grandkids, provided they would visit their father's grave once each calender year. Bet I'll know where they will be celebrating New Year's Eve for the rest of their lives.

I think your granddaughter's situation is the type that PMI was originally designed to facilitate, by a lending industry which tried to maintain a reasonable balance of risk. But after someone has purchased a starter home, lived in it for a few years & built some equity through principal reduction & appreciation in value, they should generally be able to purchase subsequent homes with a sufficient down payment to avoid the necessity of PMI. What I view as unwise is established homeowners who purchase homes at the outer edge of their ability to afford, betting everything on ever-increasing real estate values to take them out of their shaky upfront decision. They accomplish this either through purchasing the home with PMI or getting these secondary loans to artificially increase the apparent down payment. It's a shell game because when all the debt is added up, their LTV is so high they really have little or no investment at risk. To make matters worse, they often double up on their speculation by financing these purchases with ARM's, gambling on the hopes that they can either refinance or sell before the rate increase buries them. This strategy works fine until there's a slump in housing prices and/or a spike in interest rates (or both simultaneously), resulting in people being a slave to their mortgages or else falling into default and possible financial ruin. The end result is that everyone suffers as the market corrects itself, possibly in an inefficient and ugly meltdown. That scenario is well underway right now - only time will tell if it's a temporary painful correction or if we really haven't yet seen the bad side.

I should have edited my original post right after I finished it. It's ClicktoConvert. Here's the URL http://www.clicktoconvert.com/index.html

Mike: Following a recommendation I received on the ATX knowledgebase earlier this year, I bought "Click2Convert" for password protecting my pdf documents. I think it was considerably cheaper than buying the full-blown Adobe. I've found it to be pretty good - had a few problems related to my unfamiliarity with it but overall I've been very satisfied with it. It will password protect pdf files already created, and will convert word, excel, etc to pdf files and then let you password protect them. It puts an icon on the excel & word toobar so you can activate it from within the document. So "Click2Convert" might be worth looking at, although I'll be interested to hear if others on this forum have better solutions.

Eli: Yes, that's also a possibility. But I'm thinking about all those who signed these dual loans to "avoid" the PMI (split-second, 80/20, 90/10, etc.). Presumably those loans will be a thing of the past and the borrowers won't have any choice but to take the PMI option. I believe high LTV loans will continue to be made, but borowers may not have as many options to avoid the PMI. Technically, I don't think they ever were avoiding PMI- they were just shifitng to a more formal loan structure and getting the tax deduction on the second loan. In many cases, they paid more, even on an after-tax basis, for the second loan than the non-deductible PMI would have cost them. Another example of how the lending industry can easliy confuse the borrower, especially when they just MUST have that house they can't afford.

It's my understanding that a qualified home is a home purchased in 2007 for which the mortgage interest is a tax deductible item. It's also my understanding that the deduction is only available for 2007, which make one wonder why they bothered, unless there is some intent to extend the deduction into the future. Better yet, maybe they will make it retroactive and we can make some $ amending prior year's returns for affected clients.

Just a random thought here. Given the current crisis in the lending industry, and assuming some rationality may return to lender's practices as a result, might it be that we will seee more home loans during the remainder of 2007 which will require PMI?

I think you should factor in a reasonable amount of time to fix the occasional IRS error without charge to the client. To me, this sort of time is an overhead expense - no different than rent or utilities. Since you never know where it's going to come from or which clients it may affect at any given time, it needs to be built into your base rate. Also, no charge for straightening out your own errors (assuming you ever make one). As jainen said, the client really doesn't understand why the error happened and they are not usually in a mood to pay for fixing it regardless of who made the error. Of course, straightening out IRS notices for client errors (forgetting to give you 1099's, W-2G's, etc) should be charged at full rate, plus a premium for having to open up the software for two years back. I don't efile, but in deference to Pacun I think I'll plant a couple of trees to make up for all the returns I've paper filed so far this year. Or will Al Gore sell me wood offsets in place of carbon offsets?

This has been a very helpful discussion, and the link was great. I think I'm going to resurrect an old unused laptop I have lying around & connect a second monitor to it just for email & related tasks.

Based on their recent history, the potential consequences of making their customers mad hasn't entered into any of their decisions thus far.

Good call. Looks like the 3-year-old is pretty smart - maybe she could learn to prepare the returns. If they wouldn't accept the pleasantry of "We're just too busy right now", then my next response would be: "I was just trying to be nice, but since you insist on a straight answer I'll give you one - most knowledgeable preparers wouldn't touch your return with a 10-ft pole. And I'm pretty sure you knew that before you came in my office."

(I posted a response, but then realized you were talking about a different board, so I edited out my comment because Imy reply was irrelevant)

I appreciate the validation of the EIC question, which was my primary concern. I am also intrigued by some of the issues raised concerning claiming the 15-year-old as a dependent. I accepted what the client said with respect to not being able to claim the 15-year-old but am beginning to reconsider. We ran some rough numbers and came up short, but I think I'll suggest that if he wants to provide some more info I'll check it out in more detail. It at least deserves a closer look since they are right on the edge with respect to the dependency issue. Thanks very much to everyone who took the time to provide such a wide range of perspectives & opinions.

My dentist recently retired at a fairly young age, which got me wondering how long one can expect to do the delicate type work they do effectively. It would seem to me that a dentist might need to factor into his retirement plans a high probabilty that he/she would find in necessary to quit once the eyes, hands, back, etc start to give out, possibly well before a normal retirement age. And that, in turn, would factor into what their expected earnings & retirement preparations would be, which directly impacts the fees they charge. I've known a few old dentists, but I'm not sure I'd want to see a shaky hand coming at my face with that huge needle or a high speed drill screeching full blast. So it must be important to them to think about such things, unlike we accountants and tax preparers who can just keep going until we become unbalanced.

Thanks Pacun. Since I don't efile, most EIC clients don't bother coming to me. (or don't bother me by coming - whatever) EIC makes sense to me sometimes and then at other times I lose my train of thought. In this case it's a $1,400 difference and I just wanted confirmation.

This makes some sense to me, but I'd like to get some reassurance since I don't have a lot of experience with EIC. Taxpayer receives $15K disablity income and he & his wife have $22K in W-2 earnings. They have two children - one is a student age 19 and the other child is age 15. Both children lived in the home all year. The taxpayers claim the 19-year-old student as a dependent, but did not claim the 15-year-old as a dependent because this chld receives $9K in Social Security benefits as a minor child of a disabled parent. When I check the box to "Not Claim" the 15-year-old as a dependent, ATX still calcuates the EIC based on two qualifying children. I've done a cursory check and this seems correct, but I'd like to hear from someone with more EIC experience to confirm for me that this is how the EIC works in this situation.

I'm with jainen on this one. While most of us assume that common sense would dictate that we pay additional penalties and interest assessed on the "AMOUNT WHICH WOULD HAVE BEEN DUE" as a result of our errors, and our guarantees should express it in those terms, a careful reading of JH's guarantee doesn't make that distinction. The wording of their guarantee basically says that if they prepare your return and you are later assessed a penalty, they will pay it plus the interest. It doesn't make any distinction between penalties resulting from a balance due and penalties which were not calculated on the original return. I think this taxpayer is definitely due the addtional penalties & interest resulting from the error, and with a little creative pressure on JH they might be able to get them to pay the entire amount.

Lots of mine do as well. I just tell them that for a $200 fee, I can get them an extra 2 months.

Congratulations on a tough job well done. (Are you sure you charged enough? - you didn't say anything about a gasp from the client)

Tom: I did a little reading up on the service after posting the question, and there are several limitations. 1) You can only verify 10 at a time in real time, but there's no limit to the number of batches of 10 you can do. Larger batches can be submitted electronically and results obtained overnight. 2) It cannot be used to verify the number BEFORE the person is employed - only after they are on the payroll. (who came up with this one?) 3) It cannot be used for non-wage purposes. (That's reasonable, but I'd think a third party wouild want to lock the client pretty tightly into verifying the reasons for asking for verification) 4) The employer cannot take any adverse action based solely on the results obtained from SSA. Doing so can subject the employer (and maybe the third party if I'm reading it right) to anti-discrimination or labor law sanctions. At first blush, it looks like a minefield for the employer and/or the third party doing the verifications. On the other hand, if they do step up enforcement this may become a necessity. In any case I'm still looking for input/opinions.

An August 8 article in the NY Times says the Dept of Homeland Security is announcing that they are going to crack down on employers who hire people with false social security numbers. I know, I know - this is the 20th time such threats have been made by various government agencies and then nothing was done. But the political climate this time around may mean they plan to make a few examples and grab some headlines over the issue, especially with an election year coming up. Hopefully one of our clients won't get caught up in the snare. I'm sending all my clients info on the article and how to link to it, just as a precaution. Here's a link to the article - http://www.nytimes.com/2007/08/08/washingt...agewanted=print Actually I'm not opposed to enforcing the laws on the books, so this really isn't a rant about the article, but it brings to mind a question. Do any on this forum use the Social Security Number Verification Service (SSNVS) to provide this service for their clients? If so, how do you base your charges? More importantly, what type of disclaimer do you have them sign before obtaining the information for them? Or do you just direct the client to the site and leave it up to them to do their own verification? I'm posting this question in this forum and also over on the Tax Book Forum, as I'd like to hear the collective wisdom on this subject.

I think the funniest ones are those who call during tax season to let me know they are getting their info together and to let me know they will be calling back later to set up an appointment. (Maybe they're just checking to be sure I haven't died).

OldJack: Just so you know where we all stand, I originally thought you MEANT to say "giggle". Does that tell us something about you, or me?

Kea: With respect to knowing or not knowing which country your clients are from, don't you need to know that information when you prepare their TDF90-221 if they still have economic/financial ties to their country of origin?