Ultimate E-file Experience

[Snaggletooth]

You'll have to dig deep to beat this one.

Customer in Alabama makes a ton of money but spends it all. Owes half the state. And last year owed IRS $3500 when I filed their return, with no way to pay it. Certainly not a good candidate for E-file, as the guillotine falls on April 15th for the money.

BUT, they had a $400 refund from the State of Alabama, and wanted to get this money to help pay Uncle Sam. It was March 10th, and customer comes forward with a brilliant idea. Why not E-file Alabama, and just paper-file IRS?

Here is the problem. You can't do it. At least I can't. My software has to "piggyback" a state E-file as part of the Federal E-file, and many states are set up to receive E-files only in "piggyback" fashion. So this brilliant solution is hatched on March 14th, and customer keeps his fingers crossed that he will receive Alabama's $400 refund BEFORE the Feds
suck $3500 out of his bank account (and probably bounce the payment).

Risky? You bet. Most of you are thinking this SHOULD work, and that customer will survive the scare.

But here is the "rest of the story." Most of you don't know Alabama. When there's not enough money in their Treasury, they won't pay ANYONE. They sequester funds, and I remember more than one year they held ALL tax refunds until August or September. Of course, I tell my clients to NEVER manage their withholdings/estimated payments such that they will have a refund from Alabama. Former Governor Fob (sic) James and others have made statements like "You didn't approve my tax increase, so y'all can just wait on your money until we have it." Statements like this from politicians in any state should prompt anyone with half a brain to claim 99 dependents, and NEVER have a state refund.

Here's the question: How do you think my customers came out on this brilliant idea?
(Note: I don't know the answer, as I haven't heard from them since last tax season, and I'm very much anxious to hear how it all turned out) In particular, would love to hear from any Alabama preparers if there are any out there on the board.

[abby]

abby

I, too, have clients that play the juggling game of hoping one refund will come in time to pay the amount owed on the other return. We've had a local county return in Oregon the last couple of years, and lots of folks need their refunds to pay that.

But, the efile question, I'm not sure that this presents a problem. It's not required that you have automatic withdrawal when you efile. Most of our clients that owe prefer not to have the automatic withdrawal on April 15, and so we print them a coupon (1040-V), give them an envelope, and tell them that their return is filed, but they need to get this coupon in the mail by April 15 with a check.

And we tell them that efiling gives them a better chance of getting that other refund on time, but - especially with the state refunds - is not guaranteed.

Let us know how it worked out.

[dmj4]

same as Abby

I also efile the return and have them send the 1040V with a check to the IRS. Most of my clients do not want the IRS to do automatic withdrawl. Many of my clients do not even want to efile, even with no extra charge. I have convinced the clients with complicated returns to efile due to possible IRS keypunch errors.

[Donanita]

I also

e-file both fed & state.If a bal due on the fed & refund on the state clients will do a direct deposit for the state refund and will know in a couple of weeks(in La they know in a week) if the refund is in the bank and then they pay their bal due to the fed.

[Armando Beaujolais]

Many of my clients do not even want to efile, even with no extra charge. I have convinced the clients with complicated returns to efile due to possible IRS keypunch errors.

I tell reluctant clients that e-filing eliminates having a person open up their return and look at it. Fewer chances for errors, and less chance that an IRS employee will put the return aside for a closer look. I tell them that in my experience problems with e-file returns are a fraction that with paper returns, and e-file returns are much more likely to stay put once they're filed. In almost every case, the client's fear of an IRS letter trumps their fear of technology.

[Gretel]

Payment due & e-filing

My most convincing statement is, that this is the only way clients have actually proof that the return was filed. I e-file all 1040's now but I am hesitant with the business returns for now.