Is this The Case With Your Practice?

[Justataxguy]

Article states that preparer returns are down and self prepared are up. Seems to fit what's happening here.

http://www.theprogressiveaccountant.com/index.php?option=com_content&id=3562&view=article&Itemid=59

[JohnH]

Those numbers suggest to me that there is likely an even higher level of fraud and identity theft this year over last year.

[dkss]

My thoughts exactly

JohnH, I think you hit the nail on the head!! I also thought of identity theft and tax fraud as the reason for the increase in self prepared returns. Of course, the rapidly multiplying identity thieves will file at the start of the season. And, with the intensive vigilance in EIC due diligence by professional tax preparers, many EIC recipients (or wannabes) find it easier to lie to the box and manipulate their answers to increase their refunds - "What rules - we don't need no stinkin' rules!"

[FEDUKE404]

Maybe not

It's my observation that an increasing number of people, especially on the "younger side," are completely convinced they NEVER need any (expensive) professional tax help and forge ahead into the world of free TurboTax and the like.

These are often the same people who will only consider professional tax help when their return and/or records are a complete disaster.

There is a lot of "GIGO" occurring with some of those returns. While the software is generally excellent, some degree of tax knowledge can help. And then toss in some frequent "Well, that question doesn't really apply to me..." and we're off to the races. I've already had to repair several returns this season that were done by people who put their trust in TT. Those notices from the IRS generally do get their attention!

I think there is a good chance that tax prep as was known 20 years ago will slowly fade away. Remember that 8-track tape or even that nice VCR player you had? Such is life. It will not be the end of the world when I sign my final 1040.

FE

[taxxcpa]

Not only self-prepared fraudulent returns, but as younger computer-literate people become taxpayers and older people retire and have simpler returns or no need to file, there is less and less demand for professionally-prepared returns that only involve Schedules A and B, which anyone should be able to do themselves, especially if they know how to use a computer.

Tax preparers will always be needed for more complicated returns and by higher-income individuals. Although one of my high-income clients who has me do his corporate and LLC returns, does his own Form 1040.

[Burke]

Article states that preparer returns are down and self prepared are up. Seems to fit what's happening here.

http://www.theprogressiveaccountant....icle&Itemid=59

Not for me. I had to put a paragraph in my client letter this year that I would not be able to take on any new clients. I have more than I can keep up with, and I am trying to make my life manageable. Average 10 new ones almost every year, and have already turned down 5.

[MRPLOW]

Not only self-prepared fraudulent returns, but as younger computer-literate people become taxpayers and older people retire and have simpler returns or no need to file, there is less and less demand for professionally-prepared returns that only involve Schedules A and B, which anyone should be able to do themselves, especially if they know how to use a computer.

Tax preparers will always be needed for more complicated returns and by higher-income individuals. Although one of my high-income clients who has me do his corporate and LLC returns, does his own Form 1040.

I'm going to disagree.
Although I will agree on the basic 1040 & schedule A clients being gone to the box, I just don't think there is that many of those simple returns out there.

The average person no longer has just a Schedule A or B.
Investments are more confusing than ever. (stock sales / dividends / foreign taxes / IRA contributions & withdrawls.)
College credits are more confusing than ever. (1098-T / 1099-Q)
1099 - misc are more common than ever.
Housing market has turned people into landlords.
EIC & dependent issues are more complex than ever.
State tax returns.

I'm in a middle class area, and very few people have just a couple W-2's and mortgage interest.
Out of my 290 returns, I can't think of more than a handful that don't have something else on the return.

A growing trend in my practice is client's tax returns getting more and more complex, resulting in higher fee's each year.
It's very rare for a client's return to get less complex and easier.


The days of whipping out 10 basic tax returns (1040 & Schedule A) in a day are over. Those people either have more complex returns or if they truly are that easy are doing them on Turbo Tax.

[DonB]

Maybe some of these additional self-prepared returns are from preparers who didn't get an RTRP designation or PTIN and are still doing returns??

[Burke]

I'm going to disagree.
Although I will agree on the basic 1040 & schedule A clients being gone to the box, I just don't think there is that many of those simple returns out there.

The average person no longer has just a Schedule A or B.
Investments are more confusing than ever. (stock sales / dividends / foreign taxes / IRA contributions & withdrawls.)
College credits are more confusing than ever. (1098-T / 1099-Q)
1099 - misc are more common than ever.
Housing market has turned people into landlords.
EIC & dependent issues are more complex than ever.
State tax returns.

I'm in a middle class area, and very few people have just a couple W-2's and mortgage interest.
Out of my 290 returns, I can't think of more than a handful that don't have something else on the return.

A growing trend in my practice is client's tax returns getting more and more complex, resulting in higher fee's each year.
It's very rare for a client's return to get less complex and easier. The days of whipping out 10 basic tax returns (1040 & Schedule A) in a day are over. Those people either have more complex returns or if they truly are that easy are doing them on Turbo Tax.

I agree. Only old carryover clients are simple, and then when they retire, the state return is more complicated. Just this year, I got a new one (agreement w/church to do their ministers) and I am going to have to amend the last 3 years that they sent to an out-of-state CPA firm. They are a mess.

[Snaggletooth]

DIY Attitude

There are a number of upward-mobile, mostly younger, who believe they can't go to the bathroom without some IT device and software to show them the way. They are typical prey for Turbo-Tax, prime candidates for the commercial that tells them all they need is TT and they will be as smart as a CPA.

My observation is the carnage created by TurboTax continues. The crowd I've described above leave money on the table every year and think they're so smart that it could not possibly be happening. Their calculation approach perfection, but a sufficiently knowledgable user is required, and that's where the problem comes in.

TT might work fine for people with a W-2 and nothing else. And, as has been discussed, it allows them to claim as many fraudulent deductions as they please. This is what happens when IRS auditors focus on preparers instead of perpetrators. Most of my clientele have returns that are much more complicated than this.

Some of the biggest problems, ironically, are created by college students who fill out EZs. They don't know that when they claim themselves, they take the benefit from their parents who are usually paying the bills.

[FEDUKE404]

Telling it like it is!

There are a number of upward-mobile, mostly younger, who believe they can't go to the bathroom without some IT device and software to show them the way. They are typical prey for Turbo-Tax, prime candidates for the commercial that tells them all they need is TT and they will be as smart as a CPA.

My observation is the carnage created by TurboTax continues. The crowd I've described above leave money on the table every year and think they're so smart that it could not possibly be happening. Their calculation approach perfection, but a sufficiently knowledgable user is required, and that's where the problem comes in.

TT might work fine for people with a W-2 and nothing else. And, as has been discussed, it allows them to claim as many fraudulent deductions as they please. This is what happens when IRS auditors focus on preparers instead of perpetrators. Most of my clientele have returns that are much more complicated than this.

Some of the biggest problems, ironically, are created by college students who fill out EZs. They don't know that when they claim themselves, they take the benefit from their parents who are usually paying the bills.

Where is the "like" button??

Well played, Snaggletooth. Well played!!

FE

[taxxcpa]

I have a client who has two corporations and an LLC for which I do the returtns, but he does his own 1040 on TurboTax. He makes over 1/2 million a year.

[ttbtaxes]

Tax returns today are far more complicated than those of yesterday. Geometrically more complex. What taxpayer preparing his own return understands:

1) How Section 529 plan distributions or loans a dependent takes out for college effect the education credits or even dependent status?
2) The new repair regulation elections?
3) Whether another taxpayer is really an dependent?
4) That investment fees paid within an IRA are not deductible?
5) That investments fees paid for tax-exempt income are not deductible?

The list is endless. It underscores that ignorance truly is bliss. Many of these taxpayer who prepare their own return are akin driving and only focusing on the next turn. They don't see the road that lies ahead and the danger that awaits them.