When times get tight, people moonlight. When people moonlight, they often get paid in cash. When people get paid in cash, they don’t always tell their tax preparer right away if at all.
“Usually I find out about it by accident,” said Susan Floyd , an Enrolled Agent with Paducah, Ky.-based Egner’s Tax Service. “Even though I ask every year if they have any other income, they usually say no. Once I was talking about my roof and one client said, Oh, I do roofs as a supplemental income.’ He had done that for years without ever turning it in to me. I prepared his return correctly and advised him that he should amend his past returns to reflect the income and expenses. After paying me for the return, taking it with him and not returning the signature forms, I assume he took the return somewhere else.”
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