One of my best friends called and asked me to prepare their tax return for this year. They have been using the same person for probably 25 years. But this person has made some mistakes the past 2 or 3 years that my friend caught looking over the return. She called this and didn't get an answer and even went to their home but no one was there. So she got a little suspicious and decided to ask me to do the return.
This is what I found on last years return: 1) They have a rental house that they bought 10 years ago. Preparer told her the house was totally depreciated as of last year. I looked at the depreciation schedule. The house was depreciated for 10 years! My friend remembered at some point the preparer said that they were going to do it for 10 years to give her a bigger deduction. Can you believe that? We can just pick how long to depreciate things now.
2) There is a very large IRA contribution on the return and it is not an even dollar amount. It is the exact amount of her schedule C income minus the 1/2 of SE Tax adjustment. They didn't even need the IRA deduction because they had no taxable income. There is form 5329 part III filled out for excess contribution for 2011 and a penalty. She said she did make an IRA contribution but not for the amount of money on the form.
3) on the schedule C, preparer took 100% of her automobile expenses for a part time business. The car has already been depreciated and they depreciated 100% business use. There is a deduction for office expense (she cleans houses) and main telephone line and work clothes.
I'd report this person in a minute but they would audit all those peoples returns and my friend would probably end up owing a lot of money. Her husband has cancer and is dying. I couldn't put her through that. All the income they have is his social security and her part time work and a little income from the rental house.
I am going to call the phone number for this person and just ask what they charge and if they are RTRP or EA and see what kind of answer I get.
Sorry...just had to vent. I really get upset when I get a new client and the previous preparer is so off the wall in what they do.
Linda, EA
This is what I found on last years return: 1) They have a rental house that they bought 10 years ago. Preparer told her the house was totally depreciated as of last year. I looked at the depreciation schedule. The house was depreciated for 10 years! My friend remembered at some point the preparer said that they were going to do it for 10 years to give her a bigger deduction. Can you believe that? We can just pick how long to depreciate things now.
2) There is a very large IRA contribution on the return and it is not an even dollar amount. It is the exact amount of her schedule C income minus the 1/2 of SE Tax adjustment. They didn't even need the IRA deduction because they had no taxable income. There is form 5329 part III filled out for excess contribution for 2011 and a penalty. She said she did make an IRA contribution but not for the amount of money on the form.
3) on the schedule C, preparer took 100% of her automobile expenses for a part time business. The car has already been depreciated and they depreciated 100% business use. There is a deduction for office expense (she cleans houses) and main telephone line and work clothes.
I'd report this person in a minute but they would audit all those peoples returns and my friend would probably end up owing a lot of money. Her husband has cancer and is dying. I couldn't put her through that. All the income they have is his social security and her part time work and a little income from the rental house.
I am going to call the phone number for this person and just ask what they charge and if they are RTRP or EA and see what kind of answer I get.
Sorry...just had to vent. I really get upset when I get a new client and the previous preparer is so off the wall in what they do.
Linda, EA
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