elfling Posted April 11, 2011 Report Share Posted April 11, 2011 AOL news blip this morning on Wallet Pop: http://www.walletpop.com/2011/04/08/tax-cheaters-tend-to-be-young-single-men/?icid=maing-grid7%7Caim%7Cdl6%7Csec1_lnk2%7C55301 Our office encountered 3 of these guys this year. #1 was a fella who is not quite single. Separated w/o his child in his home at all in 2010 putting him in MFS status and owing. After our doing the return fully (printed, pkgd, et al) he left it set here for 3 weeks. When he picked up, he paid our fee but chose not to sign for efile saying he intended to file on his own as single. Guess we could "report" him, but why waste the time. #2 was the 25-year-old boyfriend of a good client. He lost a job and pension plan released fully. 1099R w/code 1. (Of course he owes.) Since he was watching the refund figure in that top right corner of the ATX program as we loaded the docs suddenly switch to tax due, he wanted to know if we'd file the return w/o the 1099R. Sorry, no. He tossed me a $10, took his docs, and said he'd figure it out on his own. #3 was actually the female half of a 30-something couple who was told by whoever that she and her hubby would probably be better going MFS. He thought it might be a good idea but wanted a professional's input. Oddly, she brought only her docs. Yes, she would be fine because her income is low enough to see no difference on the tax table. However, hubby has a much higher income (tossed me an estimate) and would hit a nasty point as MFS. Additionally we discussed the issues of itemizing. She gladly paid me a consultation fee and thanked me for my knowledge. I can live with that. Quote Link to comment Share on other sites More sharing options...
JohnH Posted April 11, 2011 Report Share Posted April 11, 2011 The #2 situation is the most interesting. Wonder what his reaction would have been if you entered the 1099-R first, and then he saw the balance due coming down as you entered the withholding, W-2, etc. I'm not advocating the following approach, but here's the practical result of what he's most likely to do next. If he files the return without the 1099-R, he's basically doing the same thing as filing the return with the 1099-R included and then requesting an installment agreement to begin 2 years from now, along with accrued FTP penalties and interest (plus whatever refund he received this year being added to the balance due). If he would stick around long enough to listen, it might make sense to him to file and request an installment arrangement right now. But in this case he's only interested in whatever current refund he can get because he's probably in financial trouble anyhow. The biggest problem occurs if he gets discouraged, doesn't file at all, and then when it finally catches up with him he's also dealing with a 25% FTF penalty. Or what's even worse, he skps filing this year and then drops out of the system altogether for a few years. That's sad. I understand the necessity for rules making it painful to cash in one's retirement funds, but I also believe there should be more lenient rules regarding penalty forgiveness when someone loses their job. Or in the current situation, there should be more restrictive rules regading mandatory withholding on 401(k) distribtuions. Maybe a 30%-35% withholding on a Code 1 distribution unless the receipient can provide documentation showing why it should be lower. Once the money's in their hands, 3/4 of them are facing a tax problem at filing time. Quote Link to comment Share on other sites More sharing options...
jainen Posted April 11, 2011 Report Share Posted April 11, 2011 >>He tossed me a $10<< And you posted that cheater's sawbuck in your ledger as taxable income, right? Quote Link to comment Share on other sites More sharing options...
JohnH Posted April 11, 2011 Report Share Posted April 11, 2011 Only if he sends a 1099 at the end of the year. Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted April 11, 2011 Report Share Posted April 11, 2011 Men, cheaters, no I do not believe that. Wait, we are talking about taxes right? LOL Quote Link to comment Share on other sites More sharing options...
Ray in Ohio Posted April 11, 2011 Report Share Posted April 11, 2011 >>He tossed me a $10<< .... "but I thought it if its less than $600 I don't have to turn it in." Right? Quote Link to comment Share on other sites More sharing options...
elfling Posted April 11, 2011 Author Report Share Posted April 11, 2011 >>He tossed me a $10<< And you posted that cheater's sawbuck in your ledger as taxable income, right? Sure I did ~ right along side the box of cookies a 94-year-old forever client handed my grandson yesterday afternoon when I took him with me to deliver her return ~ gifts are taxable to the giver, not the receiver, right? Quote Link to comment Share on other sites More sharing options...
ShawnE Posted April 11, 2011 Report Share Posted April 11, 2011 Thanks gang! I needed the chuckle :lol: Quote Link to comment Share on other sites More sharing options...
Taxgirl Posted April 12, 2011 Report Share Posted April 12, 2011 Weather gets warmer and out come the crazies Quote Link to comment Share on other sites More sharing options...
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