Friday, January 27, 2012

The 'I wouldn't know what I was looking at' Case


A complicated case with very little that would be relevant to our clients. I did like that the court noted that taxpayer should not blame the preparer when ‘a cursory review of the return should have revealed errors. Even if all data is furnished to the preparer, the taxpayer still has a duty to read the return.’ TP’s regularly comment that they would not know what they were looking at when we ask them to look over a return before we finalize it, however, if you know your salary is around $100k and the wages box reads $30k then please question it! This is the type of thing we are asking you to look for.

It is common for clients to accumulate all tax forms they receive in an envelope which they eventually drop off to us, often without ever looking inside! I recommend first going through the paperwork and comparing it with the organizer we send out to make sure that you did receive everything. This is especially important if you have recently changed addresses. Commonly missing forms are: first year/last year mortgage forms when a refi or HELOC occurred, interest/dividends earned on new bank accounts/investments, 1099-R forms in first year of pension/distribution or for an early withdraw form an IRA/QRP, SS in the first year, W-2/1099, one-off individual stock sales forms for short-term or temp work.

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