Top tax myths you have heard

[kcjenkins]

Tabby, the problem with doing as you suggest is not that the client goes away happy, it's that the client goes away believing that the item WAS deductible, when you should have educated him/her on why it was not. Not only for future, but also so they don't go around telling their friends "my tax preparer said it was deductible". Which, by putting it on that Sch A, you in fact did do.

I'm not talking about something that IS deductible, like our fees, work boots, or union dues. Sure, we all do that, if we are smart, just so the client sees we did take them into consideration. I'm only talking about the temptation to put on something that IS NOT deductble.

[MsTabbyKats]

Tabby, the problem with doing as you suggest is not that the client goes away happy, it's that the client goes away believing that the item WAS deductible, when you should have educated him/her on why it was not. Not only for future, but also so they don't go around telling their friends "my tax preparer said it was deductible". Which, by putting it on that Sch A, you in fact did do.

I'm not talking about something that IS deductible, like our fees, work boots, or union dues. Sure, we all do that, if we are smart, just so the client sees we did take them into consideration. I'm only talking about the temptation to put on something that IS NOT deductble.

I probably wasn't clear with my post....(It's not tax season and I'm out of practice).

I was talking about things when the client insists to put them down, even though I know it will not affect the return. (To be honest...it's been a long time since I've "forced an A". I run "a dummy A" and tell them it won't affect anything, and they are generally OK with that. Sometimes, if they ask, I'll send them a pdf of "the dummy" so they can see for themselves.)

Such as: The handyman who makes $30,000 and wants to deduct his bike. I tell him if he can relate this to his job, I can put it down. But, if he wants to put down "the suit he bought" for an interview, I don't include. (Oh yes...how many people want to deduct business attire because they wouldn't wear it for any other purpose????)

I shouldn't have used "the ring" as an example....poor choice on my part. But, that was a true story. However, that guy wanted to put down so much nonsense I gave him his papers back. In thinking this over....I do have a high rate of "giving papers back". I'd rather NOT have the client than have an unhappy client.

My bottom line is that nothing is in writing that makes me look like an idiot.

[Jack from Ohio]

When the client is insistent that the small items that are deductible but will not have any effect are important, I put them on Schedule A, print it as part of the return and charge accordingly. They have the satisfaction of saying... "I deducted by work boots, union dues and my uniforms."

[jainen]

>>something that in some universe could possibly be a deduction<<

I agree with MsTabbyKats! If it is "something that in some universe could possibly be a deduction," I put it in. When it makes a difference, I'll look more closely, but if it doesn't change the tax anyway, whether because of standard deduction, AGI limit, AMT, or whatever, I let the client keep it.

[kcjenkins]

Well, if it's "something that in some universe could possibly be a deduction", I would not, because I live in this universe, and as I said, I do not want them to go around telling their friends "my tax preparer said it was deductible". Which, by putting it on that Sch A, you in fact did do. I never wanted my reputation marred by that sort of thing. And I never, so far as I know, ever lost a client by telling them "You came to me for my best professional advice, and I am giving you that when I tell you that the tax law does not allow you to take that deduction". I think, based on her follow-up post, that Tabby agrees with me, actually, on this.