Schedule A Last Year - Now Standard Deduction?

[zeros]

Client itemized his deductions last year and now is taking the standard deduction. This happens a lot with me. Do you adjust your fees accordingly? They are used to paying the higher fees.

[Rapid Robert]

Do you adjust your fees accordingly? They are used to paying the higher fees.

Yes, I do, since I charge by the form (but do not provide the itemized invoice to the client).

If you were "used" to paying your auto mechanic high repair bills because you had a fifteen year old car, and then when you got a brand new car, would you expect to keep on paying high repair bills? Do unto others...

[Lion]

More often than not -- NO. Sometimes, yes. I have to input all itemized deductions to know for sure, or I have to have the knowledge to recognize that the standard deduction is more generous, for federal and for state. I would usually NOT charge a lower fee than the prior year without a huge simplification, no more Schedule C, for instance. If a client asked, my reasoning would probably be something like, "Your lower charge for that schedule wiped out my price increase this year. That was very good timing for you!" Keep it positive. And, yes, I would usually increase my fee the next year when he itemizes again.

[Rapid Robert]

have to input all itemized deductions to know for sure, or I have to have the knowledge to recognize that the standard deduction is more generous, for federal and for state.

that's fair, if it's not clear the standard deduction is greater. I think H&R Block charges 75% of the regular Schedule A charge for filling it out even if not used. And it is possible that fed may use standard deduction while state makes sense to itemize. In those cases, yes, the fee should reflect the work. The OP didn't specify; I assumed it was a case where it was a no-brainer, such as a client who rents his home gets married to someone with little or no income, or someone pays off their mortgage all at once.

[JohnH]

If I can glance at it and clearly see that Schedule A won't help, I adjust the fee down to the current year's charge for a non-itemized return. But if I have to fill out the Schedule A to make the determination, then I charge the same for the "Analysis" as I would charge for the return with itemized deductions. I also include a copy of the unused Schdule A in their copies with a handwritten note at the bottom saying "not used - standard deduction more beneficial" (or something similar).

[Super Mom]

If I can glance at it and clearly see that Schedule A won't help, I adjust the fee down to the current year's charge for a non-itemized return. But if I have to fill out the Schedule A to make the determination, then I charge the same for the "Analysis" as I would charge for the return with itemized deductions. I also include a copy of the unused Schdule A in their copies with a handwritten note at the bottom saying "not used - standard deduction more beneficial" (or something similar).

I'm with John on this one

[TAX4US]

I am kinda like John. I may use it for a state but not Fed or the other way round. I have also found that some clients like to see it so that they know I didn't miss it. Adjust price accordingly is my way. You can always put it in at a full price then discount it out.

[taxea]

The way I set it up if I do a Sch A and it doesn't exceed the std deduction my program doesn't charge it. A simple calculation of Sch A deductions would tell you whether a Sch A would apply. HRB is wrong to charge for the Sch A that is not needed because they don't need to do all the input to determine whether the deductions would exceed the std in 99% of the returns. This is one of the ways they screw the client.

[Jiggers]

I charge for the form/schedule and items on each.

If I can clearly see that the Schedule A is less than the Standard Deduction, I don't charge for it.

I may enter the items so that the Organizer will print a Schedule A form next year.

If it isn't obvious which one will produce a tax savings, I charge a token fee for entering the items. Hey, it does take time.

[AZ-Tax]

Good Points here made

I believe one should charge something if you entered Sch A deductions even though it was not used. In AZ, you don't need to qualify for Fed Sch A to qualify for AZ Sch A.

[manyhappyreturns]

I lost a client because she wanted to deduct her husband's medical expenses, even though their tax was already zero. She kept saying, "my daughter deducts her medical every year and we have thousands of dollars of medical expenses, so my daughter says we should be able to deduct it." I explained several times on the phone and when they came in, I showed them on the 1040 and schedule A how it works, that you can't subtract anything from zero, that it would be a waste of their time and mine, and I would need to charge them for doing itemized deductions even though it wouldn't change their refund at all. Next thing I knew, her daughter contacted me and asked me to send a copy of their tax return to her because they decided to have their daughter's tax preparer do it so they could deduct medical.

I should have made them gather all the info and prepare the Sch A and charge them for it!! It was a blow to me because I had done their taxes for years and apparently after all those years, they still didn't trust me to know what I was doing. I was just trying to be kind and not go to a bunch of work and make them pay for something that wasn't going to help them at all. That happened 2 years and I'm still mad!!

[David1980]

I don't charge for the Sch A but probably should. Not only do they still bring in all their usual itemized deductions stuff which I go over to see if it'll make a difference but then when it doesn't I usually have to explain why and my clients aren't especially tax savvy so it doesn't go over well. Basically takes even more of my time than if they could itemize.

[JohnH]

I don't charge for the Sch A but probably should. Not only do they still bring in all their usual itemized deductions stuff which I go over to see if it'll make a difference but then when it doesn't I usually have to explain why and my clients aren't especially tax savvy so it doesn't go over well. Basically takes even more of my time than if they could itemize.

How about this for an explanation?

"If we use the standard deduction, your refund will be $1423.
But I can force the system to claim your itemized deductions.
If we do that, your refund will be $1318.
Which way do you want me to prepare the return?"

[Jiggers]

I lost a client because she wanted to deduct her husband's medical expenses, even though their tax was already zero. She kept saying, "my daughter deducts her medical every year and we have thousands of dollars of medical expenses, so my daughter says we should be able to deduct it." I explained several times on the phone and when they came in, I showed them on the 1040 and schedule A how it works, that you can't subtract anything from zero, that it would be a waste of their time and mine, and I would need to charge them for doing itemized deductions even though it wouldn't change their refund at all. Next thing I knew, her daughter contacted me and asked me to send a copy of their tax return to her because they decided to have their daughter's tax preparer do it so they could deduct medical.

I should have made them gather all the info and prepare the Sch A and charge them for it!! It was a blow to me because I had done their taxes for years and apparently after all those years, they still didn't trust me to know what I was doing. I was just trying to be kind and not go to a bunch of work and make them pay for something that wasn't going to help them at all. That happened 2 years and I'm still mad!!

Yep. I print the Schedule A when it can't be used and overprint it with "STANDARD DEDUCTION LARGER". They understand that.

I did lose a client years ago in a similar situation. Lady actually worked for the IRS. She wanted to deduct her $520 church donations. No other itemized deductions except about $500 in property taxes. She said that her preacher said she could and he wouldn't lie. She couldn't understand that the standard deduction was larger.

[taxea]

You need to be aware of what the std deduction is for the State. I require all of my clients to provide the info because of this and because it gets them into the habit of including it in theirs docs.
Many times it doesn't qualify for FED but does for State. In these cases I prepare the fed and charge for it so it will transfer the deductions to the state. If the deductions don't exceed either then I leave it off and don't charge a Sch A.