Well I finished the taxes last night and drove them to the accountant today. It's over.
Well I finished the taxes last night and drove them to the accountant today. It's over.
Actually, I don't detest Tax Preparation. I run a Volunteer Income Tax Assistance site at the local Air Force Base. We end up doing returns for our clientele for free. The IRS certifies us and we are limited as to what returns we are allowed to prepare for our clients, but we are able to do the majority of the individuals that come to us. We had nearly 1000 clients this year and I turned away less than 10 customers.
What I detest is how many returns there are that are done wrong. By companies/individuals that are being paid to perform that service. Many times I need to review our clients returns from previous years and I regularly find errors in how they were done. The majority of the errors I've seen have resulted in the taxpayers paying too much tax. I find it abhorrent that these people are paying the amounts charged by these tax preparation sites and sometimes by accountants as well, and they are not getting a correct product.
From what I've seen, the majority, if not the vast majority, of individuals out there go to a preparation service out there, pay their fee and expect that it is done correctly. And they typically have no idea whether they get it or not.
Self preparation using software is a viable option, but I've found many, many errors occurring there as well. Individuals either don't understand the questions, provide the wrong answer(s) or often input incomplete or incorrect data.
I'm glad to hear that so many of you out there seem to be doing okay on your own tax preparation, be it through software, accountant or other method. I do agree fully that unless you have a sound grasp of what needs to be on your return, and where it is reported, that you're more than likely to do yourself a disservice. Thankfully the IRS has less resources to go after everybody who makes any type of mistake on their taxes, but as I'm sure many can attest, they still catch many errors. Usually seems to be about Christmas time that the dreaded letters seem to show.
Hopefully everyone got their taxes already done. If not, remember that we have until Monday to get them filed.
Clint
Some of the most common errors i see are not claiming a dependent or not claiming education expenses paid for a dependent.
The time when a child who is away at school is considered a temporary absence and they are considered to still be living in the household.
Any tuition that is paid for is considered having been paid for by the individual who claims the dependent. Whether paid from student loans, out of pocket but the taxpayer or the dependent, or even if paid for by a grandparent or other family member. Can't use anything paid for by scholarships,grants or government assistance such as tuition assistance or GI Bill.
If an individual qualifies for American Opportunity Credit, education expenses include amounts paid for books and supplies. Books usually are not able to be claimed as an education expense. (Can be claimed only if they are purchased form the institution s a condition of acceptance or enrollment.)
Earned Income Credit still is often unclaimed. A child who is under age 24, a full time student, and lives with you over half the year, (remember temporary absence listed above), qualifies for Earned Income Credit.
The other most common error I've seen involves depreciation when someone is renting out homes/buildings. (This primarily happens with new rentals by individuals having never rented out properties before.)
Clint
Both the Fed and CA took their payments out today from my account. Figures when money is due, they are right on time!!
I contract with the feds. In the billing process, when they find the first error or omission, they return the paperwork and don't pay for a minimum of 90 days. You resubmit and they wait. They find another error, it starts the process over again. You get the idea. I finally went to a billing company that guarantees to correctly check all the boxes. Some folks can wait over a year for payment. Now if you are late they charge a penalty, interest, and fees. And don't make an error on the paperwork when you owe them money either.
I detest spending a half hour on a form to find out that I didn't need to do it in the first place. Now that I'm drawing my SS, it frosts me to have to pay in money (self employment tax) that will never do my benefits any good. Friend retired a second time at 92 because of this issue. Wrote the check and mailed them today. What's a refund? Don't believe we have ever had one of those. When they did that stimulus thing a few years back, we got a reduced amount.