Filing Requirements

[geekgirldany]

Clients are MFJ over age 65. Have only SS Income and $6,000 pension.

They don't have to file according to TTB Filing Requirements. My question is will the IRS send a letter asking for the 2010 return?

I haven't ran across this in awhile. Actually have two clients that won't have to file. So want to tell them if then can expect a letter or not.

Dany

[JohnH]

I'd tell them they MAY get a letter, let me know if they do, and leave it at that.

[Fuzzy Faced Leader]

Agree with John, but I would tell client they probably won't get a letter, and explain why they don't need to file, but if they get any correspondence from IRS, notify you.

[Larmil]

Agree with John, but I would tell client they probably won't get a letter, and explain why they don't need to file, but if they get any correspondence from IRS, notify you.

I have many such clients as my clientele is getting older. I ALSO advise them to check with me each year (no charge of course) in case their situation changes or the rules change.

I remember the early 1980's when double digit prime rate caused a lot of people living on their savings to suddenly become 'non-filers'.

[geekgirldany]

Thank you all for responding!
Dany

[dyne]

Each year I have a number of taxpayers who come to me who are not required to file returns since their income is less than the filing requirement amount. I usually prepare a return for them and give it to them to show them what their income is and that it is less than the amount required to file. I mark it DO NOT FILE and TELL them not to mail it. In most cases this is easier than me trying to figure it out manually. I tell them if IRS ever contacts them they can mail a copy of that return to IRS to show why they were not required to file.

[taxxcpa]

Filing

Once I prepared a return for someone who did not need to file and told her to file it which would establish the fact that her income was too low to require filing, and told her not to file thereafter.

I thought that would prevent the IRS from asking why she quit filing in the future years.
It must have worked since she had no problems thereafter.

[Jiggers]

I also have clients that may or may not have to file. Depends on different circumstances each year.

I tell them to bring in their tax information and I will review.

I have a sheet that shows filing requirements, tax brackets, standard deductions, itemized deductions, etc.

I then review their information and make a copy for my file with the above sheet showing nothing needs to be filed. They also get a copy of that sheet.

Now if they get a CP2000 or letter looking for the return, I can show them what they brought in and what I used.

[spanel]

I take a slightly different approach.. they are in our office anyway and the tax return is inputed anyway..

I tell them, we dont have to file your return (not required), but for a very small fee, we will efile your returns, so the possibility of you ever getting a letter is 0.

Chris

[taxmom34]

wasn't there some kind of news expose about preparers who were taking advantage of people below filing requirements , getting paid for filing returns? even the IRS was sending letters telling people they were not required to file the previous year.

[geekgirldany]

If they don't have to file then to me it really isn't right to tell them I will file it for them anyways so they won't get a letter. I don't have to put it in my tax program to know they don't have to file. So my time spent is minimal.

[Henrij]

Check state

I do a couple of ladies who are not required to file Federal but we file Indiana so they get the $40 old age credit (free file, of course.)

[geekgirldany]

True there are credits like that. And of course if there is any fed or state withholding they can get back.

[dtlee]

wasn't there some kind of news expose about preparers who were taking advantage of people below filing requirements , getting paid for filing returns? even the IRS was sending letters telling people they were not required to file the previous year.

Here in New York, things are not that simple.

The state still has the requirement that a return be filed if federal adjusted gross income plus New York additions exceed $4,000 ($3,000 for dependents). I have never seen anyone with a tax liability anywhere near that level, but most New York City residents generally get $63 (or $125 jointly) just for filing.

Many preparers here ignore the state filing requirements and tell these taxpayers they are not required to file. So does the media. Thus, when I quote the state requirements, they wonder why they've never heard it before. For the non New York City clients,I tell them that New York is required but they won't owe any tax if they decide not to. For the city residents, I remind them of the $63. However, many taxpayers need to also submit a tax form as it "would have been completed" or an equivalent for a reduction of their property tax even if they don't file. It is basically the same amount of time for me to create a return that "would have been completed" as it would for me to create the actual tax return.

Thus I tend to file these returns more often than not even though I don't charge much for them.

However,I was surprised the other day by one of them. The taxpayer had no withholding and was not required to file the federal or state return, but when I computed them, she had refunds totalling over $160.

[BOB W]

Same here Doug, I file all returns because of NY issues. Many just come in knowing they don't have to file, but do. Local town searches tax returns from state records to verify income tax "paper reported" returns to them with state records, or I've been told.