venting again

[Ken]

I did a tax yesterday that I am still venting about. A local CPA did last years return and charged about 3 times what I am going to charge. Now this CPA is a local well respected CPA that has been in business for awhile so I am thinking he just MIGHT have some tax preparer off the street helping him during tax season. ( I dont know).

Anyway the client has a sole prop business and the CPA did a business use of the home form. The ONLY deduction on that form was the depreciation of his home, NOTHING ELSE. It seems to me he just did that form so he could charge more for the return.

The mortgage intrest which should have been used on the 8829 form (along with other home offfice expenses, was instead found as a deduction on schedule C under mortgage intrest.

The thing that p.....s me off is that this year the client has a LOT more income and is going to have to pay a lot of money in taxes but his return is done right where as last year he had a lot less income and the return was done wrong, but I'll bet I am going to look like the bad tax preparer.

[OldJack]

Facts and circumstances... You should never fret about a previous preparer as you don't know all the facts and circumstances. The CPA may have requested utilities and other expenses for the office-in-the-home and was not given the same by the taxpayer. Mortgage interest is deductible regardless of the office, however, I usually do include it in the calculation, but it saves much more on Sch-C. I would not consider the CPA's tax return as wrong, maybe just not as complete as would be desirable but the difference in the tax is probably not worth anyones attention. You should also know that seldom does a CPA charge by the form or page. You should just be happy the taxpayer has brought the prep to you this year.

[JoshinNC]

mortgage interest on Schedule C?

How can the mortgage interest be a Schedule C deduction? It goes on the 8829 or Schedule A, unless the proprietership actually owns the home (not likely). I would explain to the client what has happened and show him in the code how it should be done.

[Matt Sova]

No question

Josh,

You are absolutely right. However, I think what Jack was eluding to is the fact that the appropriate percentage of mortgage interest was put on the Sch C. If it is done correctly and put on the 8829 the amount of tax is not going to change at all.

Matt

[Brian EA]

Sometimes it is better to let sleeping dogs lie.
Go through the prior year's return and if you think you can get him a bigger refund legally by amending then let it rip;otherwise as Old jack says, you do not know all the facts.
By the way why is the interest on the home on sch c.

[OldJack]

By the way why is the interest on the home on sch c.

As Matt said and cleared up my poor comment the mortgage interest on the office-in-the-home deduction ends up on the Sch-C anyway just not identified as mortgage interest. I assumed the correct amount was used.

[Ken]

mortgage intrest

taking the mortgage intrest on the home office form only allows you to deduct a small percentage of the intrest as business intrest. When you take the whole amount of mortgage to the schedule C you deduct the whole enchilada, which is illigal. The home is not owned by the business,otherwise he would not have been taking a home office deduction.

[Matt Sova]

Holy cow

I assumed from the original post that he only deducted the percentage directly on Schedule C, not the whole amount.

The only way I could see that is if the client owned the house free and clear and then took out a mortgage on the house and dumped 100% of the proceeds into the business.

Matt

[OldJack]

I assumed from the original post that he only deducted the percentage directly on Schedule C, not the whole amount.
Matt

Facts & Circumstances.... we really don't know and quit frankly if we think the tax return was prepared wrong it is not for us to amend or do anything about it except to inform the taxpayer for him to ask the previous preparer about it or determine the facts for us to amend if he wants it done.