jasdlm Posted March 6 Report Share Posted March 6 I'm such a dunder brain. Client withdrew $250,000 from an IRA and had no withholding, but there is no way he can possibly owe taxes because he withdrew it over several months and not all at one time. Absolutely no way. After a 30 minute conversation (30 minutes that I'll never get back) and haranguing my staff for another 30 minutes, unfortunately, we still do not understand. I wish I were better at my job. Do you think if I recommend one of the big box preparers they might have someone who could understand more easily? I would say Rita hugs all the way around, but I'm in no mood to be that close to him or his offspring, who came to join the 'this has to be wrong' chorus. Happy Wednesday. 3 2 2 Quote Link to comment Share on other sites More sharing options...
Lee B Posted March 6 Report Share Posted March 6 We all have moments like this. The only way to move forward is to accept the mistake, learn from what you did wrong and move forward. Since I don't have any staff, I have to yell at myself. By making mistakes is how we learn what are limitations are which is why I don't do any Trust or Estate returns 1 Quote Link to comment Share on other sites More sharing options...
mcbreck Posted March 6 Report Share Posted March 6 I'd love to hear their arguments / thought process. Have a client who inherited about $5m from her brother and had NO CLUE it was coming (he was much younger, they didn't really talk, died unexpectedly and had no one else in his life). Every time I talk with her she's royally ticked off that she owes taxes on the income. Um, you retired expecting to live on $40k, now live on $200k per year and you are upset? 5 Quote Link to comment Share on other sites More sharing options...
BrewOne Posted March 6 Report Share Posted March 6 I used to teach taxes (first for Tax-Aide, then for HRB and local chapter of FSEA) but somewhere along the way I apparently lost the ability to explain taxes to anyone. 3 4 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 6 Report Share Posted March 6 Someone told him about the 72(t) rule that can avoid the 10% early withdrawal penalty if the distributions are determined as a series of substantially equal periodic payments, and he heard it as "avoid tax" and never made it all the way to how the payments must be determined !! You can bang your head against the wall or give him a Rita hug, but he knows he will "avoid tax." 4 Quote Link to comment Share on other sites More sharing options...
Patrick Michael Posted March 6 Report Share Posted March 6 My favorite is "Why is my 401(K) distribution included on my return? I already paid the tax (pointing to the withholding box). It shouldn't be on my return." Some people are convinced they are "paying" the tax twice and can't grasp the concept that the withholding is just a prepayment of the tax that is going to be due, not the tax itself. 6 2 Quote Link to comment Share on other sites More sharing options...
jasdlm Posted March 6 Author Report Share Posted March 6 Patrick! That is one of my favorite's, also! Incredible! 2 Quote Link to comment Share on other sites More sharing options...
mcbreck Posted March 7 Report Share Posted March 7 I like when it's a 45 year old, they withhold 5% and you explain the penalty is 10% before you even get to the tax. Every year the same client thinks she can deduct all the clothes she buys for work entertainment events. I explain she can't deduct dresses but every year she sends me all her receipts. Seeing the prices of those outfits, I'm glad my wife is exceptionally cheap. 3 Quote Link to comment Share on other sites More sharing options...
Catherine Posted March 7 Report Share Posted March 7 My daughter gave me a placard for my desk that reads, "I can explain it to you, but I cannot understand it for you." 13 Quote Link to comment Share on other sites More sharing options...
Sara EA Posted March 7 Report Share Posted March 7 Jasdim, when this stuff happens I turn proactive and turn the tables by telling the client that I am here all year and why didn't s/he talk with me before taking such a huge distribution. If your client (ex-client?) is on Medicare, wait until he finds out his premiums go way up in a couple of years. 4 Quote Link to comment Share on other sites More sharing options...
mcb39 Posted March 7 Report Share Posted March 7 20 hours ago, Lee B said: We all have moments like this. The only way to move forward is to accept the mistake, learn from what you did wrong and move forward. Since I don't have any staff, I have to yell at myself. By making mistakes is how we learn what are limitations are which is why I don't do any Trust or Estate returns Nor, do I!!! Quote Link to comment Share on other sites More sharing options...
Sara EA Posted March 9 Report Share Posted March 9 I plan to retire next year, and the only thing I will keep is trusts and estates! To each his or her own. Jasdim did not make a mistake. The client did, but blames the preparer of course. 4 Quote Link to comment Share on other sites More sharing options...
mcb39 Posted March 9 Report Share Posted March 9 How do you explain to an arrogant client who withdrew $68000 from his retirement account to purchase a new truck.; that if he had taken out a loan; it would have cost him a lot less than the $14,000 Federal tax withheld and the $3600 that he owes the state? His wife was furious when they picked up their return. She is the one who pays in the perfect quarterly estimates because she is self-employed. Again; they know that we are here all year long, but think they know better. I am so tired of certain people and his arrogant reply was "Well, you have to live life." I hope he enjoys "living life" when they retire and he has no retirement income left to draw on. (Rant over) 2 Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted March 9 Report Share Posted March 9 13 hours ago, Sara EA said: I plan to retire next year, and the only thing I will keep is trusts and estates That means you will have more time to share your knowledge with us here! 3 Quote Link to comment Share on other sites More sharing options...
JohnH Posted March 9 Report Share Posted March 9 On 3/6/2024 at 8:15 PM, Catherine said: My daughter gave me a placard for my desk that reads, "I can explain it to you, but I cannot understand it for you." It's very difficult for a person to understand something when they recognize that understanding it is going to cost them money. 4 1 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted March 9 Report Share Posted March 9 3 hours ago, JohnH said: It's very difficult for a person to understand something when they recognize that understanding it is going to cost them money. Oh....I love that. Is that your own or is it a quote from someone else. I am stealing that line. Tom Longview, TX 5 Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted March 9 Report Share Posted March 9 1 hour ago, BulldogTom said: Oh....I love that. Is that your own or is it a quote from someone else. I am stealing that line. Tom Longview, TX It's based on this quote by Upton Sinclair: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” 6 Quote Link to comment Share on other sites More sharing options...
JohnH Posted March 10 Report Share Posted March 10 2 hours ago, Abby Normal said: It's based on this quote by Upton Sinclair: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” It's a quote I've used many times when discussing total market indexing with financial advisors. 2 Quote Link to comment Share on other sites More sharing options...
Sara EA Posted March 10 Report Share Posted March 10 Does it work with AMT? We haven't had much 'splaining to do since the TCJA, but it wasn't easy before then and won't be again if Congress lets the new exemption amounts expire in 2025. Quote Link to comment Share on other sites More sharing options...
BrewOne Posted March 10 Report Share Posted March 10 I don't want to be the messenger if the new exemption amounts expire (in north Florida, not a lot of Schedule A's). 1 Quote Link to comment Share on other sites More sharing options...
mcb39 Posted March 10 Report Share Posted March 10 I have far too many clients who would have benefited by the "old" rules. Quote Link to comment Share on other sites More sharing options...
GLJEANNE Posted March 10 Report Share Posted March 10 Granted it can be hard to translate tax language into English, but these folks are a whole other thing. You can't fix stupid. Quote Link to comment Share on other sites More sharing options...
Lee B Posted March 10 Report Share Posted March 10 Robert Heinlein, "Never underestimate the power of stupidity." 1 Quote Link to comment Share on other sites More sharing options...
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