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A perennial problem

Every tax preparer knows the nightmare of correcting a client’s previous preparer’s work – so we asked some of our readers to share some of the most common mistakes and issues they’ve run across.

We ran an article on it, and got our readers to contribute even more. A sample of the most egregious follows.

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No documentation

You’ve probably heard clients say, “My other tax preparer never asked for that!” Not only does it leave the client with no proof of what they’re claiming on their return – it trains them to think their tax preparer can make things up without any source documents.
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Confused young businesswoman shrugs her shoulders in a clueless gesture

Didn’t maximize deductions and credits

Many readers saw returns where the client lost out on the full value of a deduction or credit, through either the carelessness or ignorance of the previous preparer.
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Asian / Asian-American / Filipino / Pilipino man in a business suit giving a shrug

Not checking eligibility for credits

With the IRS cracking down on various credits, good tax preparers find themselves explaining to clients that their previous preparer shouldn’t have allowed them to take the EITC, the American Opportunity Tax Credit, or whatever the case may be, because they’re not actually eligible for it.
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Not reporting non-W-2 income

Too, often, incurious, hasty or downright fraudulent preparers are all too happy to ignore a client’s non-W-2 income, leaving honest preparers with the task of explaining why the client now has to pay tax on it.
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Not providing an accurate PTIN

This might be a “fat-finger” error where the previous preparer simply put in the wrong number, but it has to leave you wondering if they were actually a legitimate preparer … .
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Forgotten or missed carry forwards

A conscientious preparer makes sure that capital losses, for instance, get brought forward and used before they expire.
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Incorrect depreciation, capitalization, etc.

In some cases, this was just a case of the previous preparer getting the rules wrong – using the wrong depreciation period, for instance.

In others, it was sheer carelessness: One reader noted a client’s whose earlier tax pro had missed out on almost $100,000 of capitalization.

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Missing unreimbursed employee business expenses

Among the other things you’ve probably heard clients say is, “My old preparer never asked about that.” This can commonly translate into unreimbursed business expenses – or worse.
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Right state, wrong preparer

Say your client moved from New Mexico to Vermont, but kept their old preparer for a while. It should surprise no one the Vermont preparer might not have been up to date on tax regs in the Land of Enchantment – and that can mean some unpleasant surprises for the taxpayer and their new preparer.
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