Our CPA misled us

[Bird Legs]

Another Question

This may be irrelevant, however, what was the reason for hubby to get behind on his taxes in prior years? Is he continuing doing the same things that he did in prior years to get behind?

[Gretel]

What an interesting thread!

Somehow I feel the wrong people are talking to each other. Hubby was the one to talk to CPA and only Hubby know his whole story. I am interested in the outcome as well. Good luck and it is a very good decision to be part of the meeting.

[JohnH]

Great Point Gabrielle

It's a very good idea to be a part of that meeting. I've had a few of those types of meetings where one spouse was previously disengaged and then suddenly decided to come along, or a new spouse showed up. Have also watched some interesting squirming and efforts to change the subject. In a few instances, I'm sure the conversation after they left my office was quite different than the ones they had been having prior to our get-together..

[veritas]

Everyone should have

three months to six months funds readily available for emergencies. Maybe slowing down on the retirement savings until you have enough set aside. Once that is done then start saving for the extras like vacations and other luxuries.

[breckgirl5]

In other words, you counted on the refund before you got it, as you spent all of your tax money on vacation.
If you spent money earmarked for taxes, thinking you were getting a refund, your financial priorities are a little off. No amount of charity work will change that fact. Helping kids in 3rd world countries is not a reasonable cause excuse for abating late payment penalties.

That is not a personal attack on you. Those are the facts. The IRS says they want their money first. They don’t care why you can’t pay. I didn’t make up those rules. Veridas didn’t make up those rules. That’s the way the law works, and it is our job to help clients understand that fact.

Bees Knees - You make it sound as if I deliberately acted wildly irresponsible. You make it sound as if I'm making excuses for not paying taxes. I'm a very responsible person and have never been late with taxes, even when I owe.

Obviously, the IRS wants their money first. Obviously, you did not "make up the rules." But to tell me that "my priorities are off," is just plain wrong. It's a poor choice of words. I'm one of the most fiscally responsible people I know. I work in the corporate world and I'm the only person I know (besides my boss) who actually maintains a budget for personal finances. What I did was rely on the professional opinion and (literally) take it to the bank. I have never worked with a CPA before. I do my own taxes with Turbo Tax. I thought I could trust his word when he told hubbie he did not owe.

If I am guilty of anything, I am guilty of trusting too much... and of not getting on the phone with the guy myself.

I am NOT guilty of "messed up" priorities. My priority is my family and helping the community. I pay my taxes, and I am helping my husband work through his back tax issues...even though that happened way before I knew him.

Accuse me of being too trusting, naive and WAY too generous with my hard-earned money (digging my husband out of financial holes).... not of being someone who's priorities are off. That's just patently false.

[breckgirl5]

three months to six months funds readily available for emergencies. Maybe slowing down on the retirement savings until you have enough set aside. Once that is done then start saving for the extras like vacations and other luxuries.

I do have about 4 month's salary set aside for savings. Now I have to dip into it to pay hub's taxes due (thanks to the CPA's mistake).

We only planned the trip AFTER we thought my tax return would cover it and hubby didn't owe. We were not going on vacation otherwise. I'd say that we definitely had our priorities in order on that front.

[breckgirl5]

The result

You all asked for the results.

Hubby & I tried to 3-way call the CPA (he IS a CPA) today. As usual, he did not answer and we waited until early afternoon for him to call back. Hubby got the call.

Apparently the issue was a dispersement that Hubby had entered into the spreadsheet of income & expneses. CPA did not see that and was going off the the W-2s only when he said hubby was getting a refund.

So, yes, it's a classic case of miscommunication. Hubby is mad now, because he says CPA should have looked more closely. I would say they both bear some responsibility.

His penalty is about $75. I do plan to deduct this from the CPA's bill of $325.

To answer some of your questions about why hubby owes from years past... he was always self employed and never hired an accountant to help him. He was young and, well, stupid about taxes. April would come, and he had never saved enough money. He was a single dad and was pretty poor. He was just trying to eat. He comes from a family that never taught him about finanes. They are all pretty irresponsible.

Now that we are married (and he is actually in a salaried position for the first time) things will be better because I am handling all the books and bills. This will NOT happen again.

[erchess]

Speed of Refund

Refunds often happen in two to three weeks or four to six weeks depending on when and how the return is filed. However, many refunds get held up because a person or the IRS computer has a question about the return or just because the return was return number whatever processed today. Think of it this way - filing a return is not like going to the bank to withdraw your money or like selling a stock on a stock exchange. It is more like expecting to receive interest on a a bond you have bought from a very financially shaky company or like expecting rent from a tenant with a history of late payments and of going to court to contest whether payments are really due. .

I certainly do think about what I will do with the money when my tax refund check comes. But I don't actually spend that money until it is in my checking account.

Don't feel bad for having failed to realize this. Our industry as a whole has a problem of clients whose unrealistic expectations come from watching the advertising of the store front firms that work mainly with the people who get the earned income credit and lead them to believe that getting a refund is like withdrawing money from a bank account.

[Gary]

Injured Spouse

In the future, don't file MFS. File MFJ but file Form 8379, Injured Spose to prevent your refund from being taken.

[dsi]

Breckgirl,

Pay the CPA his full invoice. Don't play games, that IMO is childs play. If he is reputable, he will cover the penalties that he is truly responsible for.

[DTS]

$75

Did the CPA make a mistake on the return? If so, discuss the $75 with him. I don't remember you mentioning the return was not true and accurate. If it was error-free, pay the guy his $75.

Seems the biggest error this guy did was open his mouth too soon. Not worth a $75 penalty!

Dennis

[Uncle Sam]

CPA Misled

I agree with DSI.
Pay the CPA his full bill. He spent the additional time explaining the discrepancy to you.
And I wish to point something else out.
Since you will be doing your husband's books on a software program-simply because you enter something into the system - doesn't mean that it's a proper business transaction for the business - something accountants usually don't discover until AFTER they've gone through the records adequately enough to be confident that the information is accurate. This is true especially of expenses - where a number of areas should be scrutinized and caution taken before accepting it as fact. That is what's required by professional ethics standards.

[BOB W]

Huh...............

"Apparently the issue was a dispersement that Hubby had entered into the spreadsheet of income & expneses. CPA did not see that and was going off the the W-2s only when he said hubby was getting a refund."

It would be interesting to know the condition of the information being provided, that a CPA would miss an income item. Or are you saying that he never looked at the spreadsheet???????? Or an expense got doubled up on the first (refund) calculation??????

Something that was not mentioned was Who was doing the 1120s. I assume the CPA. I would never do an 1120s from notes supplied from my client............

[JohnH]

This is an opportunity for you & the CPA

The $75 is peanuts for both you and the CPA. You should pay his full bill and then politely tell him you think he should cover the penalty & interest when you get the follow-up bill from IRS.

If he refuses, it's worth $75 for you to decide you don't need to do business with him again if you don't like his policies about accepting responsibility for his mistake (that might be useful info if you ever have a significant penalty in the future-like maybe $750). You have an opportunity to evaluate what type of businessperson you are dealing with - well worth a $75 investment to decide if this is someone you want to trust with your valuable financial dat in the future.

From his standpoint, it's an opportunity for him to invest $75 in client goodwill, since in most cases a smart CPA would gladly invest $75 to gain a NEW client. He has an opportunity here to invest $75 in retaining a client he already knows will speak frankly with him and he may be able to establish a long-lasting client relationship.

Bottom line is you will learn something about his business savy and he can let you know if he values your future business.

[Bird Legs]

The CPA discovered a Disbursement

that he originally overlooked?
Maybe I am missing something here. If this was a disbursement for a business expense or a deduction on the Sched. A form 1040, wouldn't this reduce the tax instead of increasing it?