Our CPA misled us

[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.

[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.

[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..

[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.

[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?

[Bees Knees]

Bees Knees- I have never counted on a tax refund for anything. I typically do get about $2,000 back every year. I don't count on it, but I usually get it. AFTER I do my taxes and assess the amount of the refund, I plan what I'm going to do with it. I normally use it to fund volunteer trips to central america or vacations.

I'm sincerely wondering what is wrong with that?

Nothing wrong with that. Except, that’s not what you did. You said:

We were naturally thrilled about the refund, and the money we were saving for taxes was then spent on a vacation!

In other words, you counted on the refund before you got it, as you spent all of your tax money on vacation.

I did expect to get some heat on this board, but I thought Veridas' comments was unwarranted and personal.... it had nothing to do with the question.

You wanted our opinion. Veridas said

But if the only way you could afford a vacation is with a tax refund, you might take a look at your priorities.

That’s a professional opinion. One that many of us lecture our clients on all the time. 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. Like telling you not to spend your tax money on vacation before you have it in the bank.

I’m sorry if you are offended by that, but that is the truth. And I’m giving you that information for free.

Now, as to why your CPA mislead you, I’m curious too. I’m not defending him. He probably screwed up. That is all the more reason not to spend your tax money on vacation before having it in the bank. CPAs screw up from time to time. Nobody’s perfect.

[DonPriebe]

Maybe EIC was involved previously

Here's the thing... my husband and I got married in July 2006. We were together for 10 years before that. He has a son. I guess in passed years he was able to claim Head of Household. We knew the married filing sep thing would eliminate the HOH deduction.

MFS also eliminates any EIC that he may have been receiving in past years. That could easily be several thousand dollars.

[ChEAr$]

Here's a possibility

Since you're saying that no additional information was submitted after 4/15, it might be merely a question of quarterly estimated taxes (not) paid during the year. Not surprising to skip one or two of them, especially in view of the downturn in real estate business.

Could this have happened,, that hubby skipped one or two of these during the year?

[BOB W]

[QUOTE=breckgirl5;41165]

I just thought of a question for all of you... since we did not marry until July 2006, could he claim HOH for the first half of 2006? I'm not sure how it works. It just dawned on me that the CPA probably wasn't told this. He just asked if hubby was married and probably didnt' think to ask WHEN he got married.

QUOTE]

Marital status is always determined on Dec 31. There is no partial year considerations.

[breckgirl5]

"
WOULD YOU please explain "Financials". Did you do the bookkeeping???????

He hired PayChex to do the payroll. What we submitted were totals of all teh business expenses, plus W2s. Sorry. I used the wrong word.

[breckgirl5]

Interesting title - "Our CPA misled us", rather than "Our CPA made an error". One would get the initial impression that your CPA deliberately gave you wrong information in order to trick you into spending your tax money on a vacation.

If you were my client and I prepared an estimate back in April with a guarantee that the estimate was correct, and then we learned I had made a mistake, I'd pay the late payment penalty due on the balance due from April until the day I gave you the return. I might also pay the interest on the late payment. I would not pay the estimated tax penalty because you would have incurred that penalty even if you filed on April 15. On a $2,500 balance due, your Penalty & Interest on $2,500 will be about $30 per month. Your estimated tax penalty would probably be about $ 220.

On the other hand, if you provided me with additional information after April 15 which materially affected your tax liability, I'd refuse to pay any penalties & interest. Common sense might tell you that the $30 per month I mentioned above is a fairly insignificant amount to pay in order to get your return prepared correctly and not under deadline pressue. I'd also encourage you to get your info in to me well before the filing date next time (if there is one), in order to avoid our having to do last-minute calcuations that you want to hold me responsible for. Finally, if you insisted that I pay the penalties & interest after rushing me and not having given me all the info I needed, I'd insist that you find someone else to prepare your returns in the future.

Thank you for the helpful advice here.

[breckgirl5]

First of all, you haven't told us why there were tax estimates to be paid, if your husband was on a salary with withholding.
Second, you haven't told us if any facts were changed after the filing deadline with respect to your data - did you need to give him additional tax information AFTER 4/15 that impacted the return?
Third, although it's advisable to pay any taxes due with an extension, it's not required anymore.
As the prior poster mentioned - we're not here to give you advice when we don't know if we're dealing with all the relevant facts.

No facts changed afer the filing deadline.

Nothing more was given to him after 4/15.

[breckgirl5]

more fodder....

Breckgirl5,

Counting on a tax refund to fund something is foolish, regardless of the good you think you intend to do with it. to you?

Bees Knees- I have never counted on a tax refund for anything. I typically do get about $2,000 back every year. I don't count on it, but I usually get it. AFTER I do my taxes and assess the amount of the refund, I plan what I'm going to do with it. I normally use it to fund volunteer trips to central america or vacations.

I'm sincerely wondering what is wrong with that?

I did expect to get some heat on this board, but I thought Veridas' comments was unwarranted and personal.... it had nothing to do with the question.

Here's the thing... my husband and I got married in July 2006. We were together for 10 years before that. He has a son. I guess in passed years he was able to claim Head of Household. We knew the married filing sep thing would eliminate the HOH deduction. I was therefore planning to use MY tax refund to pay for his tax bill. When the accountant told us he was due a refund (and hubby double checked by asking him TWICE on the phone WHILE pointing out the loss of HOH).. I expected the guy knew what he was talking about. I thought, "Well, he might be a couple hundred dollars off," but I never expected him to be off by SO much (a significant refund became a $2500 bill.)

I just thought of a question for all of you... since we did not marry until July 2006, could he claim HOH for the first half of 2006? I'm not sure how it works. It just dawned on me that the CPA probably wasn't told this. He just asked if hubby was married and probably didnt' think to ask WHEN he got married.

Anyway, we left him a message this morning. We're still waiting to hear back. I do plan to be a part of this conversation, as I do believe there was some kind of communication breakdown.

[Bees Knees]

No offense, but if the only way you could afford a vacation is with a tax refund, you might take a look at your priorities.

You might want to consider not JUDGING people when you know nothing about them. Taking vacation/volunteer trips IS one of my top priorities in life. It's a necessity for me. However, I've sacrificed many other things. For example I put 20% of my income into retirement savings every month. I'm also not having children to save the $250K per child over the course of a lifetime. All of this I do because traveling and volunteering with children in 3rd world countries are my two top priorities in life.

Breckgirl5,


It is good that you save for retirement, and it is good that you volunteer to help children in 3rd world countries.

NONE of which has anything to do with what veritas said.

Counting on a tax refund to fund something is foolish, regardless of the good you think you intend to do with it. You came on a tax professional message board to complain about your CPA. When you do something foolish in the eyes of EVERY tax pro out there, don't be surprised and offended when you get some heat.

Now, would you like to know WHY you acted foolish and learn how to act responsibly concerning your tax obligations? Or are you only interested in sympathy for happened to you?

[BOB W]

Breckgirl5>>>>

Be sure to get back to us with the full story, good or bad................We all know things happen, sometimes it is a combination of factors....