$10,000 Hobby Income Rule

[Bees Knees]

I know from experience that I have clearly explained something to a client and they later come back and state that I told them blah, blah. Completely misinterpreting, either on purpose and or just not understanding, what they were initially advised or told.

Here is an example:

Tax preparer to client: "You don't have to issue a 1099-MISC unless you pay that person $600 or more."

Client to new preparer next year: "My previous preparer told me I don't have to report income if it is less than $600."

New tax preparer: "Your previous preparer is an idiot. What's his/her name?"

[Black Bart]

Here's another one,

and not hypothetical either.

Talking to a client some years ago (picking up his fed & AR returns)

Do I have to send in this Arkansas (bal. due) tax?
Yes.
What happens if I just don't mail it?
They'll probably send you a notice next year.
What are the odds they will catch it?
Pretty high. Their computer matching system is very good nowadays.
Do you know anybody that doesn't send theirs in?
Well, one client claims that for the last five years he has thrown the state envelope off the Mississippi River bridge on his way home.
Has he ever heard anything on it?
Says not.
What do you think about it?
I think it's a bad idea and a matter of time.

He left without further discussion and I saw him no more. Returned years later saying (somewhat exasperated) "The state is making me file three back years. And you told me to throw my papers away!"

I replied "No, I didn't. I told you a story about a man who said he threw his papers away."

He left again. And I don't tell that story anymore (it's no longer amusing to me).