Curious About What Your Software Allows

[MsTabbyKats]

This is another post about the guy who bought my business....software related.

At this point, it's obvious that he really has a lot to learn.  But, I sold him a business.  I didn't hire him.  And I'm advising him way more than I anticipated.

Anyway....he did a return for a couple with 2 toddlers in TX.  Client owed about $4500.  Preparer suggested MFS...maybe that would help? (You see where this is going.)

With MFS they came out, when combined $550 ahead. (Again, you see where this is going. Sounds unreal to me.)

Then client calls me to say...."It was done wrong.  He gave me the standard deduction and itemized my wife's return." (We aren't there yet.)

I suggest to the preparer to amend and make it joint...because they would be missing the daycare credit.  Preparer just wants to amend the guy....and sends me the amended MFS return to review at the client's request.

So...on a MFS we have a $1200 daycare credit as well as a rental real estate loss of $10,000!  (His AGI was $85,000). Al least it was itemized!

Between the standard deduction, the daycare credit and the loss that shouldn't have been allowed....of course they came out ahead on the original MFS returns.

So...here's my question.  When I used Tax Act I had to "review" and mistakes were caught.  I couldn't e-file if I didn't correct the mistake...or check a box saying this was an exception and allowable.  But...possible errors were brought to my attention.

With ATX or any other software...would these errors be flagged?

(For the record...client asked for his money back and is going elsewhere.)

[Jack from Ohio]

You need to quit babysitting this guy.  His lack of knowledge and how he treats HIS customers is not your issue.

Walk away.  If clients call, tell them you no longer have any connection to the business and they should talk to him.

Not your circus, not your monkeys.

This is the best advice you will receive about your situation.

[MsTabbyKats]

I was asking about the software.  I'm pretty much finished with advising for anything other than "special situations".

I simply don't understand why these things weren't flagged.  He just told me his software cost $7000!

 

 

[Lion EA]

My software does a great job with diagnostics.  ProSystem fx.  And, I pay half of what he does!  In fact, some things it doesn't let me do without overrides from CCH, but those are really rare (maybe once in the last decade).  I can look at diagnostics at any time without leaving data entry, get diagnostics at the beginning when previewing return, have even another set of planning and diagnostics this year over and above what I've always had.  I actually save the diagnostics with my electronic copy so I know in the future what I looked at this year.  I always test MFJ vs MFS and get lots of help from the software and a great comparison table that helps me see what would be lost/gained with MFS, not just the $ difference but how it gets there, and can adjust on the table for joint items that have some options.  I can force standard or force itemized, but it will use that for both (unless I have a not-living-together situation with a child that would qualify for HoH).  I spent 11 years at HRB and had great diagnostics in that software, too.  If he was using his software to the fullest to help him split the MFJ return into two MFS, he should've had fairly accurate returns or at least warnings all over the place if he tried to force one standard/one itemized.  He must've started at least one of the returns from scratch without benefit of his software's help.  I won't comment on anything non-software!  (Except to say that depending on the terms of your contract with him, perhaps you can have another preparer's contact info handy to refer your former clients to when they call.)

[Jack from Ohio]

40 minutes ago, MsTabbyKats said:

I was asking about the software.  I'm pretty much finished with advising for anything other than "special situations".

I simply don't understand why these things weren't flagged.  He just told me his software cost $7000!

 

 

He may be overriding the software.  Your choice to keep getting messy with all his incompetence. 

So, you are going to teach him how to use his software?  I would cut all contact, including those things you consider "special situations."  If you do not break all ties, it will never end.  Before long, you will start considering all hos "problems" to be "special situations."

[Roberts]

Yeah, I can't imagine a tax software that doesn't do a review which would catch these things. I've used Drake, ProSeries, ATX, TaxWise, Intellitax, TaxAct and OLTPRO - all do a review which catches basic errors.

Unless he's overriding the software and sometimes software allows you to override and it isn't an error - it's marked as an override which is a redflag to verify yourself.

Is your payment from him already set and locked into place or is your fee based upon retaining clients? It's bizarre that he's asking for such basic tax prep help. I could see asking for client information and why things were done previously but not this.

[MsTabbyKats]

He paid me $XX in Oct.  The agreement is that he pays me everything over that amount that he bills by 4/15.  Of course, I have no way of really knowing what he bills.

I sold him the business literally 5 days after I was diagnosed with breast cancer;  as soon as I was diagnosed I decided to retire (been toying with this for years...but cancer was the straw that broke the camels back) and he already paid me more than I expected.

I told him that I do many 1040-NRs and that the majority of my clients are non-Americans, so even if it's a 1040....ask about foreign accounts.  He said he had experience with non-resident alien returns.  He knows less about them that the basic issues he missed this time.

I have lots of negative feedback...but most of it is because he takes forever to get back to people.  He likes phone calls...not e-mail.  My typical client is a 35 year old PhD, MD or IT engineer.  They don't know what phones are!

The agreement is that I would help him with a smooth transition, which I took to mean.."She had another baby last March.  Don't forget to ask her for the info."  Definitely "teaching" was not part of the deal.  He claims to be a CPA, have an MBA with a concentration in accounting and a Masters in taxation.  He also has an office in a very expensive part of town.

The good news is that my husband said he could tell I feel better (I do) because I'm talking about something other than breast cancer.

[Janitor Bob]

On MFS returns, ATX provides a warning/reminder that if spouse itemizes, taxpayer must also itemize...but it is small and can be easily ignored.

As a side observation, this preparer's lack of tax knowledge frightens me...this is basic stuff.

[Terry D EA]

My software has the diagnostics as well and I can't imagine either that any reputable program doesn't have them. Considering Jack's statement that he may be overriding might have some truth to it. I do think you should back out of this as gracefully as possible so you don't drive yourself nuts. I understand where you are coming from and I would feel the same way if I sold my business and subjected my very long time 18+years clients to someone who is so incompetent. I really don't have an answer that fits or lessens the frustration you are feeling other than you have to take care of yourself and try to be confident that your past client's understand your situation. Prayers for you going up.

[joanmcq]

He had to have checked that the hubby was a real estate pro ; MFS doesn't allow rental losses otherwise. And with two separate returns, if you don't check that the other spouse is itemizing, you can have one spouse with a standard and the other itemizing. 

Oh, and TX is a community property state bet he missed that too.

[Jack from Ohio]

...and change your phone number(s).

[jklcpa]

You should definitely take that cruise you were thinking about. Get away from it all, including this guy's phone calls and ineptitude.

[SFA]

MsTabbyKats: if you regret selling to this man, confront him. Sounds like he is in over his head. Do you want some or all of your business back? The clients trusted your judgement when you turned them over to him. I disagree with the others on this forum.  I believe that we do owe the clients a fighting chance to have their work done by a qualified professional when we sell. The clients believe that you have encouraged them to stay with the practice after its sold. Tell the buyer that he either delivers the quality that matches his credentials or your endorsement of his service to the client list is over and whatever he has paid to you is his loss because you are not going to back or endorse him any longer. I might even call him a fraud for taking on work he was not qualified to do and because of that he has breached the contract. How's that ?!

[MsTabbyKats]

Joan....you missed that he checked the box about not living with hi spouse for more than 6 months, thus giving him dependent care benefits.

Yes, we are going on the cruise 2/28....and I will have very limited internet.

No, I do not want the business back.

Since I posted yesterday, that client said he did want the buyer to amend.  Buyer sent 1040-X to me for approval and I listed forms that had to be attached with a cc to client.  Client called to thank me and I told client from now on it's between you and him...and that I sent that e-mail so we have it in writing that he was instructed.

There were 3 other lack of response incidents.

He called me at 8:30 am (I was in the shower) with a "quick question".....which I won't return till later.  I know who it's about....an on/off married client who moves around fron state to state and his wife separately moves from state to state...so they will have a complex state issue.  On easy years the client does it himself.

i checked his CPA credentials.....and last year he e-filed about 180 returns....and a similar number in 2014.

I am going to change the auto-response on my e-mail to basically the contact information.

Guess what.....it's 9:06 and he just called again.  No message this time.

Going to the mall, lunch and gym now.

 

 

[mcb39]

1 hour ago, SFA said:

MsTabbyKats: if you regret selling to this man, confront him. Sounds like he is in over his head. Do you want some or all of your business back? The clients trusted your judgement when you turned them over to him. I disagree with the others on this forum.  I believe that we do owe the clients a fighting chance to have their work done by a qualified professional when we sell. The clients believe that you have encouraged them to stay with the practice after its sold. Tell the buyer that he either delivers the quality that matches his credentials or your endorsement of his service to the client list is over and whatever he has paid to you is his loss because you are not going to back or endorse him any longer. I might even call him a fraud for taking on work he was not qualified to do and because of that he has breached the contract. How's that ?!

Having been diagnosed and treated for breast cancer myself, in June, I can sincerely say that my determination and desire to continue with my business has been the BEST decision.  My assistant had the same diagnosis and surgery as I had; one month earlier.  My husband has a cancer diagnosis and treatment this year also.  I can only say that the busyness of a tax practice is keeping us all sane.  Focusing on our clients rather than ourselves is a plus.  You find out that "Everyone has a story"!  My clients would be hounding me the same way as MsTabbyKats.  In that respect I agree with SFA.  What I am reading between the lines is that MsTabbyKats should have kept her business and just cut back.  Perhaps she should pursue the possibility of working with or for the new preparer.  And I am talking about working for money.  The alternative would be to consider buying the practice back; for much less. 

[MsTabbyKats]

17 minutes ago, mcb39 said:

Having been diagnosed and treated for breast cancer myself, in June, I can sincerely say that my determination and desire to continue with my business has been the BEST decision.  My assistant had the same diagnosis and surgery as I had; one month earlier.  My husband has a cancer diagnosis and treatment this year also.  I can only say that the busyness of a tax practice is keeping us all sane.  Focusing on our clients rather than ourselves is a plus.  You find out that "Everyone has a story"!  My clients would be hounding me the same way as MsTabbyKats.  In that respect I agree with SFA.  What I am reading between the lines is that MsTabbyKats should have kept her business and just cut back.  Perhaps she should pursue the possibility of working with or for the new preparer.  And I am talking about working for money.  The alternative would be to consider buying the practice back; for much less. 

Sorry but you're  wrong.  I don't need or want the money.  DH and I, to put it bluntly...have a lot. My tax prep business started as a hobby...but grew.

Now is the time to enjoy my life.  I have lots of other things to focus on....and the buyer's lack of knowledge and mayana attitude is hindering me.

If the new preparer offered me $1000/hr my answer would be "no". 

The issue is that I build relationships with the clients over 20 years....and I don't want them to be screwed.

Ok.....shopping, lunch & gym now. (I lost 17 lbs since the dx...and am buying all new clothes.)

[mcb39]

5 hours ago, MsTabbyKats said:

Sorry but you're  wrong.  I don't need or want the money.  DH and I, to put it bluntly...have a lot. My tax prep business started as a hobby...but grew.

Now is the time to enjoy my life.  I have lots of other things to focus on....and the buyer's lack of knowledge and mayana attitude is hindering me.

If the new preparer offered me $1000/hr my answer would be "no". 

The issue is that I build relationships with the clients over 20 years....and I don't want them to be screwed.

Ok.....shopping, lunch & gym now. (I lost 17 lbs since the dx...and am buying all new clothes.)

Sincerely apologize for misreading between the lines.  Wishing you the best of luck and adventure in this new life. 

[MsTabbyKats]

35 minutes ago, mcb39 said:

Sincerely apologize for misreading between the lines.  Wishing you the best of luck and adventure in this new life. 

No problem......

I was thinking of "retiring" for a few years.  Instead, I fired clients, outsourced clients, only accepted a few new clients.  As soon as I had to repeat the mammogram I told DH "if it's anything...I'm finished with taxes".

I obviously don't know my health future, but right now I feel great.....and I want to take advantage of that.

[RitaB]

On ‎2‎/‎18‎/‎2016 at 11:31 AM, MsTabbyKats said:

He paid me $XX in Oct.  The agreement is that he pays me everything over that amount that he bills by 4/15. 

Well, I can see why you'd try to help him. Sorta.  If he makes nothing, neither do you.  Tough situation.  I hope $XX was a lot. Hope it gets better, but if not, we've all had some flat tires, it's part of life. 

[kcjenkins]

21 hours ago, MsTabbyKats said:

I was thinking of "retiring" for a few years.  Instead, I fired clients, outsourced clients, only accepted a few new clients.  As soon as I had to repeat the mammogram I told DH "if it's anything...I'm finished with taxes".

I obviously don't know my health future, but right now I feel great.....and I want to take advantage of that.

Great decision.  Time to put your life first, and make good memories, and enjoy your husband.  We never know how long we have but I know that it's the things we put off that we most regret when we run out of time.  

[MsTabbyKats]

OMG....I know I need to "divorce myself" but:

One client would only use the new guy if I promised to review.

So, new guy sent me the return to review.  I really and sincerely hope he sent me the wrong return...like maybe this was a preliminary version.

1. One W-2 (there were 3) was left out     2. Code P on W-2 was left off (no 3903 generated so IRS will put $$$ into LIne 7)      3. Part year CA/NJ...but he did Part year CA/NY   4.1098-T...no worksheet showing excess payments went towards school expenses...so spouse will be double taxed on about $13K

Well, the good news is that when everyone gets audited it won't be my responsibility. (And this is what I consider a simple return.)

 

[MsTabbyKats]

To add:

Client sent me his version (new guy did send me old version)...and all W-2s are there.  He did do a NJ return...but left on a NY (no income, no residency in 2015).  Other mistakes still stand.

[Jack from Ohio]

You keep enabling him, and you will never leave his business.  PERIOD.  Either Divorce him or marry him.

[MsTabbyKats]

If you recall...I was supposed to be on a cruise this week.  Well DH and I both got the flu so we had to cancel....and I told "new guy" not to call (no voice) but to e-mail.  I didn't hear from him for 10 days...nor did I get any complaints.  I thought I was home free.

I promised clients I would be there for a smooth transition...and this one client I promised I'd review everything.  DH thinks "new guy" will tell me to mind my own business, lol.  But, I really hate leaving someone in the position where the IRS will add $15K to his income.

Most of my clients were "more than clients" sending me checks.  Personal connections were built.....I don't want them to be screwed.

The cruise is rescheduled for 4/3...but the divorce will be final on 4/15 (or whatever date it is this year).

[jklcpa]

Agree with Jack eleventybillion percent.

You haven't cut the ties and your divorce won't be finalized next month because you keep allowing yourself to be involved over and over again. At the point when your should-be-former clients start receiving notices a year from now, will you still be hand holding this guy and looking these over for him or for your former clients that contact you directly?

I said it before and I'll say again, cut the ties now. It is up to the guy to meet the clients' needs and expectation, and if he doesn't, the clients should seek out other preparers.

At this point, you are free labor for him, and he and your former clients will continue to take advantage as long as you let them.

As far as reviewing the returns, if you weren't *so* available to these people, this preparer would make the decision to finalize the returns without your input. The return is between him and the client, and it is also the clients' responsibility to know what is on the return and what they are are signing.  Your reviewing and providing guidance opens up a can of worms that exposes you to potential liability.