Having prepared tax returns for a number of years, we have come to the conclusion that individual income tax returns have their own personalities, as do the taxpayers that they represent.
Take, for example, the return that has W-2 income that just won't quit but doesn't have any investment income. We call this one the "spender" because we always wonder "where the money went." But when you ask, the answer is usually, "I don't know, but if you find it, let me know." (We never found it.)
We also have the opposite - the "savers," with huge amounts of interest and/or dividend income compared to their W-2 income. They have many bank accounts and own many individual stocks. So, they want each piece of income listed separately on the tax return, instead of showing it any other way.
Then we have the "generous" - the cash and non-cash contributions to charitable organizations that are equal to or better than the tithe. Just wonder how much of this is true. Now that the IRS has changed the rules on receipts, the "cash" contributions have gone down compared to the past.
And the "stingy," whose income is high, but whose contributions are low. Maybe charity does start at home.
The "aggressive" are the ones with deductions that are so large, it scares us just to read them. The amounts are always rounded numbers like, "Publications - $2,900." Amazing how this all adds up to round numbers.
And the IRS's favorite taxpayer- the "timid." Those are the ones that are lucky to have claimed "exemptions" for themselves. They should get a birthday card from the IRS every year because they never try to deduct even the most deductible expenses.
That is why they are the IRS's favorites.
Even the address on the tax return can tell you something. Sometimes the spouses live in separate states. You hope one day they can live in the same taxing jurisdiction. Then there are the complicated family structures where the identity of dependents changes from year to year ("John" in even years and "Joey" in odd years).
Then there are the "sneaky." These clients come to you with a complicated question in the middle of tax season. They know the answer they want, and ask very specific questions to lead you there. You have to pay close attention - no multi-tasking (or "multi-taxing") when listening to these clients.
SELF-STARTERS AND EX-FACTORS
The "self-starters" are risk-takers. You usually see them with a Schedule C. These entrepreneurial taxpayers are not afraid to start out on their own. Schedule E (rental income) taxpayers have a lot in common with the Schedule Cs, but they are one step down in aggressive risk-taking. They prefer to manage concrete things like buildings, rather than stocks or other financial instruments. Interestingly, you hardly ever have a taxpayer with both a Schedule E and a Schedule C, unless they are a real estate professional.
Some take a more laid-back approach to investing, preferring to let others do the work. You can tell these by their passive-income K-1s. A subspecies is the taxpayer with multiple K-1s from non-publicly traded partnerships. These are usually investment partnerships bought through a "friend." These taxpayers have a taste for exotic investments.
Then we have the "ex-factor" taxpayers - either payers or receivers of alimony. Sometimes you think of the recipient as receiving a benefit from their term of service with the ex-spouse. On the other hand is the divorced taxpayer who is not paying alimony. You wonder what he gave up in the settlement.
Then we have the "double-dippers." These are taking a pension while still drawing a salary. However, if the taxpayer's retirement distribution is accompanied with the 10 percent penalty tax, they have a different issue.
You also have the "credit seekers," who use every tax credit that they can qualify for. They have positioned themselves during the year for a nice credit, either through an energy-efficient vehicle or home improvements.
Taxpayers also have their own habits of dealing with their tax information. There is the "dribbler," who sends in his information piecemeal. You may receive 20 different submissions from him. It's hard to know if he's better or worse than the "holder," the client who doesn't give you anything until April 14 because he had to wait for that last K-1.
Then there is the "blender," who sends you information spanning several years. Not only do you have to cull the documents to find the current year, but sometimes you find a document from a prior year that you have not seen before, forcing you to amend that prior year.
DAZED AND CONFUSED
The "confused" is the taxpayer who lets his broker handle all his investments, and has no clue about his financial situation. He doesn't know how many brokerage accounts he has or what transactions have been made throughout the year. An even more extreme type is the client who doesn't know his own occupation or whether he had any income or expenses on his Schedule C. The most extreme example we have ever encountered is the client who filed under incorrect Social Security numbers for both himself and his spouse for over 25 years. But perhaps the IRS was really the confused one - they accepted the returns!
The "meticulous" is the client who provides every medical and prescription receipt. Or how about the "overkiller" who gives you every single receipt from the tax year and expects you to decide what is deductible?
The "lazy" is the client who doesn't provide all his information, but expects us to find it out for him. He expects us to contact his mortgagor, real estate tax assessor, employer and broker, for, respectively, his Forms 1098, real estate taxes, W-2 and 1099s. Then there are the clients who are not so much lazy as unreasonable, such as the teacher who claimed unreimbursed business expenses that were much higher than last year's, but provided receipts for only half that amount.
The "one-timer" is the client with an otherwise straightforward return with one unusual item, such as a railroad pension, requiring hours of research.
The "parent" is a taxpayer who wants you to do his grown children's returns but can't get the W-2s for you, or is unsure what states his children worked in.
The "professional" is an accountant who doesn't want to do his own tax return. Watch out! They will often try to get you to do something they wouldn't do themselves. We're reminded of a client who paid $50 at a charitable auction for an item that was worth $200 and wanted us to deduct $200.
Interesting, and thankfully rare, is the "I never asked" client. He is the one who files MFJ (married filing jointly) for the first time and doesn't know his spouse's legal name. Another kind of relationship problem was indicated by the unmarried couple who bought a house together. One client wanted to claim 100 percent of the First-Time Homebuyer Credit on his return without telling his partner. Not a great start to the relationship.
Some clients are beyond aggressive - they live in a fantasy land, like the client who wanted us to deduct her dog's veterinarian bills.
Some clients surprise you. You wonder how a little old lady ended up with six rental properties.
We are sure that you have come up with your own nicknames for the returns that you prepare. Let us know what they are.
