JohnH

Eric is always looking for ways to make this a better forum. I saw this as an opportunity to show appreciation by clicking on the "Donations" button during this slow period of the year. Maybe others will take a similar view.

I frequently save texts. The simplest way to do it on an iPhone is to do a screen shot & print out a hard copy or convert to a pdf and save it. Not sure how that is accomplished on "lesser" devices. I'll stand by my assertion that bypassing the way younger clients communicate will adversely affect the potential growth of one's practice. But of course the way this actually plays out depends upon the makeup of the client base. And I definitely agree that we all operate differently. That's why this forum is so informative. BTW, I don't give my cell phone number to EVERY client - some only get the email address. It really is all about making distinctions. Adding names to the contact list makes it easy to refuse unwanted calls to the cell phone. Just look at the caller ID and send it to voice mail. Most of the time they will follow up with a text.

One thing that fascinates me is how many older clients are very willing to communicate via email and text. Yes, there are some who simply can't or won't get the hang of it, but the traffic runs heavily in the opposite direction. And anyone in this business who isn't embracing email/text communication going forward is guaranteeing they will lose (or never gain) business with a large segment of the younger generation. They may as well start planning an early retirement or a career change.

The best defense is a good offense. Deflecting nuisance calls & visits begins with getting them to use email and texting as their primary means of communication. If you don't start the process it usually won't get done. I get the client's email and/or text number (depending upon which they prefer to use), and I find a reason to initiate a communication with them using that method early on. Now they have me in their contact list, so the natural thing to do is send me an email or text when they have a question at some later date. I also tell them that I return phone calls within a day or two, but generally respond to texts & emails immediately. I'll reply to texts and emails after hours and weekends if it's convenient for me, but phone calls are generally during regular work hours only. That sets the expectation that they will get a reply faster, so they tend to migrate toward emails & texts as the primary means of communication. Sometimes my reply is simply "I'll look into that and get back to you", but that generally satisfies them that I'm on it. And if the question is so complex that I actually need to invest billable time in the answer, it's easy enough to tell them that in the reply. Very few questions are actually that complex. Getting clients to email and text also forces them to stick to the point and clarify their question. If not, my responses asking for clarification serve that purpose without my having to listen to them ramble. My philosophy revolves around the idea that I want to keep my clients out of my office and off my telephone so I can get some work done.

Maybe we do need a really special sarcasm emoji

Oh, OK. That is such a relief !

What? You're saying I have to report each tax prep fee even if it's under $600? But don't I get to deduct the value of my time from what I report?

You might want to take a look at the "Batok" decision to gain some guidance. But if he comes back next year with another 1099 form the same company, you might find yourself scratching your head a bit. http://www.bradfordtaxinstitute.com/Endnotes/TC_Memo_1992-727.pdf

I let the previous post time out before I finished. If your client is working part-time, he should probably have his church(es) designate all payments to him as Housing & Utilities allowance. That gives him the ability to exclude it from income, but only up to the smaller of the amount actually designated, the amount actually spent, or the fair rental value of his home (including utilities, fully furnished, and with all maintenance & other expenses paid).

I agree with Jack. If he is earning compensation for services, even if retired, then it is subject to SE tax (unless he has previously filed a 4361). You might be thinking of the fact that a retired minister can designate all or part of his retirement benefits as H&U allowance, up to the usual allowable limits. In that case, he can exclude the allowable amount from income, and since it is retirement income it is not subject to S/E tax.

I did hear one neighbor say that she is glad we are back to "normal" time. Seems that during the months the clocks are set ahead, the extra hour of daylight is killing her roses.

Judy: Thanks also for those links. One of them I already had, but the other two were new to me. I'm not comfortable making a recommendation to the client, simply because I know IRS has an agenda and they often interpret their own rules to suit their objectives. No way I'm going to be in the middle of a disagreement over a couple of hundred unfiled 1099 forms. For now, I'm telling the client I can't recommend not filing the 1099's,even in light of the information we have on hand, but they are free to make whatever decision they wish.

My wife and I are having a disagreement over which of us should get up at 2:00 am and set all the clocks back an hour. Any suggestions on how to resolve this dilemma?

KC. Just for the record, I did notice that the poster was not a tax pro. Ordinarily I would have just clicked off and not commented. But since the OP was trying to help someone else (not asking for personal tax advice) and the solution was obvious, I decided to make an exception in this rare situation. I do agree it's generally a bad idea to encourage non-preparers on this forum.

Wow! I'd say "helpful" is an understatement. Thanks very much for that link.

Client is a freight broker. He matches up independent truck drivers with companies needing single freight loads hauled from point to point. He collects from the customer and forwards the payment (minus his commission) to the truck owner/operator. He has always been diligent about obtaining W-9 forms and sending 1099-misc to all non-incorporated owner/operators. He sends about 200+ forms 1099-misc each year. Some freight companies and brokers do not send 1099-misc to any owner/operators. They base their reasoning on the 1099 instructions, which do exclude "freight" from the requirements. Client has asked me to help him decide whether to continue his practice or to adopt the practice of the companies which do not send 1099-misc to anyone. I think failing to send 1099's in this situation is highly risky. It is possible that IRS has a very restrictive definition of who can avoid sending 1099's under the "freight" exclusion, although I've been unable to find any guidance from IRS. The potential penalties are just too huge. But I'm wondering if others have encountered this situation and how you resolved it.

You could compose a letter from her stating that she has noticed an error with the ITIN and providing the correct one. The letter could also ask if this will be sufficient to adddress the issue or if she needs to take any further action. Send it to her with instructions for her to sign it and mail to the IRS. (I assume there is an address on the notice) If IRS wants anything else done to correct the problem, they will contact her.

I agree. I think is important to allow new posters a little more leeway and consideration. After all, we need to encourage them to return and be a part of this community. The ability to make distinctions is a mark of a good business mind.

I learned a new trick this year (by accident). I had to be away Oct 11-14 at a conference. So early on, I began telling people my last work day would be Oct 9. If they didn't have everything to me in time for me to COMPLETE it by the 9th, they would need to find someone else to do the work or else plan on it being late-filed. One person called to say they would have their info to me on the 9th, but I told them that wouldn't be soon enough.(I didn't bother to tell them I actually planned on working on Saturday the 10th, but that's our little secret.) Amazing how people found their stuff and got it to me early enough to complete it before the 9th. So when I returned to the office on the 15th, I spent the day double-checking to be sure a few key people had mailed in their returns and taking care of other administrative details. From now on, I'm going to schedule something the second week of October every year. It sure tamps down the stress. If I were you, I'd immediately sign up for MyFico credit monitoring service. They have several levels - I'd sign up for the highest level. It will notify you of any unusual activity and you can pull your credit reports as well. (some will say just getting the free annual credit report is good enough, but I strongly disagree. I think the free annual credit report is worse than worthless, but that's another conversation). Getting regular reports that nothing has changed, plus updates if there is any activity using your identify, is well worth the peace of mind. This is doubly true when you suspect your identity may have been compromised.

I'd file. If for no other reason, it at least starts the SOL running. That way, if it later turns out he forgot to tell you about some income, you're either filing an amendment to a timely-filed return or else the SOL has expired and there's no risk to anyone. This is even more important if the person has any sort of brokerage account. Personally, I never tell someone they should not file if I have a client relationship with them (except for those who have received a letter from IRS saying they don't need to file.. It isn't about collecting a fee - it's about limiting potential liability.

I let the clock run out before I finished my last edit, but I decided to finish the thought and then I'll shut up about it. I do see one significant service F/A's provide. By switching their clients in and out of the latest gimmick in mutual funds, or chasing that "can't lose" stock trading strategy, they help in setting prices while raking off their fees, commissions, and kickbacks. (Their clients, of course, bear the losses in both depletion of capital and excessive trading costs, but that's another story). However, their churning activity helps keep pricing honest and so true indexers can rely upon the efficient markets to know their low-cost, tax-efficient index funds are priced correctly. For that reason, I appreciate the service F/A's provide at virtually no direct cost to those of us who actually do consistently benefit from their activities.

Yes, I recognize that there are plenty of people who spend their entire lives working very hard at their profession, saving responsibly, and accumulating enough to help fund a comfortable retirement. Yet they won't invest the time and effort along the way to learn some very basic principles regarding how to manage it efficiently. They will gladly turn over that task to someone whom they perceive as working in their interest, with hardly a second thought to the inherent conflict of interest in the arrangement. They will take that person's recommendations without question, relying upon his/her smooth talk, nice suits, fancy car, impressive office, and confusing quarterly reports as their own basis for sleeping well at night. "It's all so complicated", they say. They will also spend 10 -20-30 retirement years never knowing of the $3,000 - $10,000 per year of additional retirement income they have foregone to fund those benefits for the F/A. But I do agree that outcome is far superior to throwing darts at a board to decide how to manage one's retirement.

Sara makes some great points, but I still contend that a financial advisor has a built-in conflict of interest which is impossible to overcome. The portion of the speech I quoted addresses only the portion of one's investments allocated to equities. But in his opening remarks in the same speech, John Bogle first addresses Asset Allocation. Until one has a firm grasp on their asset allocation and why they got there, they should not commit one cent to equities. Every inestor should be able to tell you their Asset Allocation off the top of their head. (at age 68 mine is 25% equities / 75% fixed income. I can explain exactly why that is so, and why & when it will change as I age) Again, here is what Bogle says: "The good plan relies primarily on a straightforward and conventional balance between stocks and bonds. How much in each category? As ever, your investment balance must depend largely on your own needs and circumstances. Typically, the allocation might range from something as crude as, say, 50% in stocks and 50% in bonds for older, moderately risk-averse investors who have accumulated substantial capital, have reached normal retirement age, and need to draw down income. Or up to 100% stocks for young, confident investors who are just beginning to accumulate their first investments in a 401(k) retirement plan, and have scores of years before income will be an issue. In short, intelligent asset allocation is an inevitably imperfect combination of (1) the years you have remaining to accumulate wealth, (2) the amount of your assets, (3) the income you require, and (4) the courage to stay the course you have set for yourself. In an uncertain world—and it will be ever thus—getting your allocation almost right is better than getting it precisely wrong." (In other places, Bogle has elaborated on the Asset Allocation in more detail, and he makes a very good case for Age-in-Bonds as a good default, even for ultra-conservative investors) So the average investor really only has one major decision to make - What is the appropriate asset allocation that allows me to sleep well at night? Afterr that, the entire investment scheme can be put virtually on auto-pillot. Periodically rebalancing the equity portion into and out of a low-cost total market index will provide a guaranteed return equal to the entire US market (up or down), minus a very small expense ratio. It is very simple, but far from simplistic.

This thread struck a nerve with me since I have seen several clients being taken to the cleaners by brokerage houses with excessive fees. And I just learned over this past weekend about one trusted "advisor" who deservedly went to prison after stealing most of the lifetime savings of a widow I know. I have given copies of the Bogle speech referenced in the previous post to many people. Unfortunately most won't take the time to understand the very basic principles he explains. But I keep trying. Below is one of the most important sections of the speech. And to prove that Bogle hits the nail on the head, look at how uninformed and mathematically challenged financial advisors constantly rage against total market index investing in a low cost fund. Try as hard as they wish, they ALWAYS fall victim to the inevitable, persistent truth of simple mathematical certainty. Facts are a stubborn thing. "There are lots of croupiers in the stock market casino. Fund managers and operators; salesmen who sell fund shares; investment brokers who execute fund portfolio transactions. Even the Federal Government finds itself among the croupiers, for fund portfolio turnover generates realized capital gains, and therefore taxes. Given all of these subtractions from the market’s return, the good plan relies on this surprising, if obvious, rule for measuring investment success. The central task of investing is to realize the highest possible portion of the annual rate of return earned in the financial asset class in which you invest—recognizing, and accepting, that that portion will be less than 100%. Let me explain. It is simply a mathematical impossibility—a definitional contradiction—for all investors as a group to reach 100% of the stock market’s annual return. Yes, it is possible to select funds that succeed in earning, say, 105% of the market’s annual return. But the odds against doing so are about 25 to one as I noted earlier. Further, history also tells us that the probable outcome is that the average fund will earn only about 80% of the market return. If this is iconoclasm, so be it. But fund shareholders as a group face just such a shortfall, and recognizing that fact is the first step toward developing a good plan for equity investing. There is an optimal—and obvious—way to closely approach the 100% target: Simply own the market. It is easy. An all-stock-market index fund, in substance, owns shares in every publicly-held business in America, and holds it for as long as the business exists. By slashing the croupiers’ take, such ownership is available at extremely low cost: No advisory fee; no sales charges; virtually no portfolio turnover and therefore nominal transaction costs, few realized gains, and minimal taxes. The all-market index fund is the croupier’s dark nightmare, and the investor’s bright dream. The simplest of all approaches to equity investing, then, is to invest solely in the shares of a single all-market equity index fund—just one fund. It is a good plan. And it works, regularly producing more than 98% of the market’s pre-tax return."

I think it's a ridiculously high fee. (And I can almost guarantee you she is paying more than 1.35% when you add in the hidden costs) But she might think he's worth it. After all, he drives a nice car, wears expensive suits, has a flashy office. Those things cost money, you know. I suggest you print this off and give it to her. http://johncbogle.com/speeches/JCB_AZ_Republic_3-00.pdf If she can understand plain English, it will help her make the right decision.