JohnH

Any client who would tell me an extension is out of the question would then hear me say that my preparing the return is then out of the question. I came very close to having one of those conversations a couple of weeks ago, but they backed off before it went quite that far. I'll say it again - you can let your clients run your business or you can run your business. If you let them do it, some of them will run all over you.

Reminds me a bit of an acquaintance a few years back who bought his first house, then when tax time rolled around he started telling me how his tax guy was an idiot because he didn't get to deduct the mortgage interest on his return. At first I speculated that maybe his interest just wasn't high enough to get him over the Std Ded threshhold with it being a mid-year purchase. Silly me. In a moment of weakness I agreed to take a look at the return, and it was prepared perfectly, including a deduction for points and property taxes allocated form the HUD-1. Nice job. Turns out the thought he could deduct the interest paid on the mortgage against his tax LIABILITY, not against his TAXABLE INCOME. At least I never had to discuss taxes with him again, since I suppose after that I was as much of an idiot as the tax preparer.

I've been over the edge a long time. Oh, and speaking of time, the possibilities regarding numbers are endless...

I'm counting up my reasons why I am tired of numbers vs the reasons I'm not tired of numbers. So that's two lists with at least a dozen items on each so far. Then I'll assign each reason a weight and calculate a frequency distribution. I'll get back to you once I calculate the ratio, mean, median, and mode.

My prediction - Monday Apr 14 around 2 pm. That turns out to be correct. It's easy to predict when you have 20/20 hindsight.

It's easy to make mistakes when you're thinking backwards. Thanks for adding those dates to the list.

4/13/14 through 4/19/14

Same here - everything Yardley said so well...

My thinking was that they accepted a slightly higher interest rate in exchange for not having to pay any (or as many) closing costs. As such, they are deducting the "negative points" via their normal interest deduction. Net result is exactly the same as if they had paid points at closing and then amortized them over the life of the loan. I'm sure the lenders are doing this to in some manner benefit the borrower. They are always looking out for the best interests of their customers. :)

Last-minute illness. Another good reason to have a proactive (or pre-emptive) extension policy, beginning in mid-March. The unexpected does happen - that's why they call it "unexpected".

NC follows pretty much the same rules as IRS - no penalty on refund returns filed late, and the extension is still valid even if someone owes and doesn't pay it all. But they do like to hear from the taxpayer, just to stay in touch.... And NC sticks the filer with a flat 10% FTP penalty if they owe money after the 15th, plus a 1/2 of 1% monthly interest charge.

Between the Drake input screens and broker compliance in 1099-B reports this year, I've even stopped foaming at the mouth when clients bring in reports with multiple sales. Drake still need to make one or two tweaks to the spreadsheet layout to streamline the process even more, but what they have is very easy and well thought out. I'm beginning to be happy IRS made the changes for broker reporting.

You can file NC extesnion online through their web site.

I've been ignoring the negative entry. The deduction is taken via the normal home mortgage interest deduction as the loan is paid off, so there's nothing to adjust on the tax return either way in conjunction with the refi. I came to that conclusion after sitting and staring at a HUD-1 for a half hour or so when I first ran across this entry. I would like to hear if anyone has another view of how to should be handled. (Hopefully that won't entail amended returns for 3 or 4 of my clients.)

You might try explaining to him that the asset "Land" is no different than the asset "Cash". He can hold cash in more than one account at the bank, or he can hold some of his cash in the bank and some more of his cash in the form of land. So when he writes the check to pay for the land, the portion that goes to pay principal is simply being moved from one location to another. It is no different than moving cash from one account at the bank to another account at the bank. The only difference is that he can't write a check from his "land" account, and he can't easily divide, spend, or add to his "land" account in the same way he can divide, spend, or add to his "cash" account. If he can grasp that, you're well on your way to getting him to understand the other half of the transaction, in that he really doesn't own the portion of the "land" that is offset by a liability. By paying the principal down, he reduces the liability and the offsetting transaction is that his net worth increases by exactly that same amount. If you can ever get a client to understand his business and personal life as a set of flows between balance sheet accounts rather than focusing only on the P&L side and the associated taxes, you can help him become pretty good at really grasping financial concepts.

Many thanks to Eric & KC for setting up this forum, and thank you to all of you who contribute your valuable time to participate. Like others, I have learned much on this forum, saved myself much research time in a few situations, and definitely saved some money in other situations. And the laughs & chuckles are priceless. And a special Happy Birthday to KC. Hope you have a great one.

Yes, extensions should be filed for any returns not expected to be filed by the 15th, or any case where there is uncertainty about whether it will be filed on time. This should be done irrespective of whether there is a balance due or a refund showing in the return. You never know when a client forgot to give you some income info , or one or more of their deductions turns out to be incorrect. So even though the original return showed a refund, if the examination shows a balance due on the original return, a FTF penalty will be assessed. You don't want to be in the middle of that. A "protective" extension solves all those problems.

He will probably do just fine if he calls IRS. If he doesn't get a sympathetic person on the first call, just call back with new or additional information he forgot to tell the first person he spoke with. The telephone collections people have lots of leeway.

Happy I got the standing desk in place DURING tax season. It's a great work area when I want to do research, sort paperwork, assemble client files, etc. In a few weeks I'm going to install a computer on it and then really put it to good use.

if they are suddenly trying to get it done by the 15t, I'm betting they are either applying for a loan or IRS is breathing down their neck. Both would be deal breakers for me.

Smoothest tax season ever for me. Looks like I'll be done by Friday (with about 30 extensions waiting for me after a short vacation)

Don't forget, you can stuff a LOT of paperwork into a $5.60 Priority Mail envelope. And that includes the cost of a tracking number.

Yep, he's an engineer. Probably a very good one. Has all the qualifications & character quirks.

I like that idea. Maybe it should be used with all new clients and with any existing clients (if any) who have a tendency to let things slide. Any time info is accepted, just assume it's incomplete and get written permission to file the extension at your discretion. I think I'll do that next year, and I think it will be a separate statement altogether. Maybe it should have their phone numbers and email address as well.

You could also mail a paper extension request to the client, with instructions that that they must send it in by Apr 15 in order to avoid FTF penalties of 5% per month. The "Amount You Are Paying" box #7 should be blank (not zero, but blank, so they can fill in any amount they are sending with the extension) I would include instructions mentioning the fact that they are supposed to pay the estimated balance due, but a partial payment or no payment is permissible, and they will pay interest and FTP penalty of about 1-1/4 % per month on any unpaid balance. I would also include a short disclaimer that this extension request is based on partial information they have provided, and that I will not be responsible for any subsequent penalties or interest when the return is completed. Then I'd forget about it until they contact me.