How many ask clients for a copy of mileage log for review?

[LawrenceGR]

Bus Miles

I have sheet for my clients that I mail to all that took bus miles the last year for them to fill out and sign, I do not ask to see milage logs. On the charity contrib I go through every recepit and tally them, in 2007 when the rule changed I informed all clients "no proof, no deduction" it has worked out. I simply tell folks I can't afford to pay those penalties at rates I charge.

[taxxcpa]

Going thru receipts

I have sheet for my clients that I mail to all that took bus miles the last year for them to fill out and sign, I do not ask to see milage logs. On the charity contrib I go through every recepit and tally them, in 2007 when the rule changed I informed all clients "no proof, no deduction" it has worked out. I simply tell folks I can't afford to pay those penalties at rates I charge.

Going through a lot of receipts is often useless in the case of medical expense. People bring in a shoe box full of prescription and doctor's bills and when they are added up, they come to far less than 7½ % of AGI. I try to avoid this by estimating the 7½ and asking them if they think the medical expense was more than that amount.

[FEDUKE404]

Going overboard with proof issues

I have sheet for my clients that I mail to all that took bus miles the last year for them to fill out and sign... On the charity contrib I go through every recepit and tally them, in 2007 when the rule changed I informed all clients "no proof, no deduction" it has worked out. I simply tell folks I can't afford to pay those penalties at rates I charge.

It almost sounds as if you are auditing your clients before you prepare their taxes. While I stress accurate and complete information be provided to me, I never get anywhere near requiring "proof" for me to complete a tax return.

Perhaps I am missing something here, but why would you feel responsible for the clients' inability to provide contributions receipts/business receipts **IF** you had, as a routine matter, informed them of the pertinent rules?

Just as a curiosity, do you require a copy of a marriage license, birth certificates, and Social Security cards before you file a joint return for a couple with dependents?? For college kids, do you need a course schedule or perhaps even a police records check before claiming a Hope credit?!?

Either you do a lot of pro bono work, or you charge a bunch extra for time "proving" everything before you ever file the tax returns.

FE

[mactoolsix]

Mileage logs & donation receipts

I work for a large tax prep firm (in the amount they charge & the size of the returns they do) with two preparers, a couple people that do data entry, and a review process that sometimes goes to five steps. We always ask for the mileage log - almost require it if there are extensive miles claimed - outside sales, Sch. C etc. and we always make a copy of it. During review it is checked for accuracy and an in-office Vehicle Expense Sheet is filled out.

For donations under 250, we tell the client they need to keep their receipts & checks. If they bring them in, we keep copies. Over 250, we require to see the receipt and check for the "magic words." If they aren't there, we don't allow the deduction.

Admittedly my boss is a bit annal, but he has never lost a dollar to an audit. The clients are told up front what documents they need to retain. In the end we can't do the job without the clients cooperation, and we have very few that don't oblige.

I guess in the end it justifies the larger fee.

Mike

[LawrenceGR]

Not going overboard

I don't go overboard with this, I want to make sure people haven't understated their contributions. If they have a list of contributions, I will, go through and match the receipts to the list. I do not require marriage licenses and some of the others things you have mentioned. I get most of clients from other clients, so I'm maybe a little more trusting some and yes, I do a LOT of pro bono work.

[Gretel]

Just as a curiosity, do you require a copy of a marriage license, birth certificates, and Social Security cards before you file a joint return for a couple with dependents?? For college kids, do you need a course schedule or perhaps even a police records check before claiming a Hope credit?!?

Either you do a lot of pro bono work, or you charge a bunch extra for time "proving" everything before you ever file the tax returns.

FE

Each one of us needs to find the method he/she feels comfortable with. Since we don't know about many cases yet when IRS will impose preparer penalty we can only go by our gut feeling and our necessity for safety (covering our butt). There is no need to judge another preparer for the way he handles this.

Preparer penalties came into life to weed out the bad preparers. I don't think anyone having an interest in this board falls within this category. However, at a seminar last year I learned that this is not the way the IRS is handling this. One preparer has been slapped with this penalty just because he forgot to check the box which reclassifies a passive activity as non-passive. Honest mistake and, when preparer protested, he was told to go to court. I am not willing to risk paying $1,000 for any of my clients.

Coming back to donation receipts. Clients rely on us to tell them what they can and cannot deduct. Most of them honestly don't know and if they just total all "donations" made, it most certainly is wrong. Unless, cash donations are listed by name and have receipts attached that can be verified if necessary, there is no way to come up with the legit amount of cash donations.

Me, I was shocked to see how many of the donations where ineligible after I started the process above.