Preparers Make the Strangest Mistakes
May 26, 2015 2:50 PM
Ivanov Alex (Madhourse)/madhourse - Fotolia
A perennial problem
Every tax preparer knows the nightmare of correcting a clients previous preparers work so we asked some of our readers to share some of the most common mistakes and issues theyve run across.
We ran
olly - Fotolia
No documentation
Youve probably heard clients say, My other tax preparer never asked for that! Not only does it leave the client with no proof of what theyre claiming on their return it trains them to think their tax preparer can make things up without any source documents.
WARREN GOLDSWAIN/Warren Goldswain - Fotolia
Didnt 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.
Jose Gil - Fotolia
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 shouldnt have allowed them to take the EITC, the American Opportunity Tax Credit, or whatever the case may be, because theyre not actually eligible for it.
pathdoc - Fotolia
Not reporting non-W-2 income
Too, often, incurious, hasty or downright fraudulent preparers are all too happy to ignore a clients non-W-2 income, leaving honest preparers with the task of explaining why the client now has to pay tax on it.
CHIOSEA_ION/pathdoc - Fotolia
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
.
east2 - Fotolia
Forgotten or missed carry forwards
A conscientious preparer makes sure that capital losses, for instance, get brought forward and used before they expire.
vladimirfloyd - Fotolia
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 clients whose earlier tax pro had missed out on almost $100,000 of capitalization.
razyph - Fotolia
Missing unreimbursed employee business expenses
Among the other things youve probably heard clients say is, My old preparer never asked about that. This can commonly translate into unreimbursed business expenses or worse.
imabase - Fotolia
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.
