lesson learned.....

Don't have time to be posting, but I am so angry that need to vent it out, so thank you in advance for your patience in reading this post.

I prepared a tax return on Monday afternoon for a client who has been with been quite a few years. Works for the local public school system with 2 college age children. Doesn't even crack $20K of income.

In looking over the closing statement from the house she sold in February 2008, I see she paid the closing costs for the buyer, which is unusual, especially since this market has not been too heavily effected as other parts of the country. In discussion, come to find out that she had a real bad real estate agent, and it cost her money.

During the conversation, it is mentioned that she even had to move from the house, and let the buyers stay there until they were ready to close. She says that at least she collected some rent. Rent? That was never told to me. She then bemoans the fact that the apartment she had to rent until she found a place was more money then what she was collecting.

So with all that in my mind, we discuss the rent and how she should have told me about it because it should have been reported on her 2007 return. She is not happy about that, and wishes she did not say anything. So I tell her let's just worry about 2008. She tells me she rented the house for two months, as the closing was February 29th.

I put down the gross rent, and don't worry about anything else. Normally you would deduct homeowner insurance (mortgage interest & r/e taxes were already on the return on another schedule), homeowner association dues, etc., but for the two months I tell her that we won't worry about it, and just leave as is, and ignore amending 2007.

Yes, this was not correct on my part. She should have picked up the income for 2007, and I should have amended the returns. If I did that, she would have been paying me a fee for amending the returns, and she would have owed taxes on the amended returns, and if the income was high enough, her $4000 refund, would have turned into her owing money (because of the Earned Income Credit). Even if lesser income, she was looking at about a $400 tax payment plus my fees.

After hearing her story, I thought this was a good idea.

Bad idea.

Seems the increase in her income for 2008 because of the rental income, has played with her FAFSA application, and does not make her eligible for as much financial aid. So now she is ranting about me rushing through her returns, giving her no guidance, and looking to screw over her numbers.

I explained to her that I would correct 2008 to reflect certain expenses and change the rental income figure, but in doing so, I feel obligated to also correct 2007, because I know of that unreported income. Can you say "not happy"?

So, I have a client that does not report income to me. When she does, and I tell her it is income (she says she did not know this would be income), she tells me she wishes she did not say anything. I skip the amended return, lose a fee, place the rental on as "gross only", don't charge extra fee for rental schedule, and also save the client about $400 tax dollars, which could go as high as $4000. And, she is not happy.

This has been my back and forth in emails for the past two days.

Lesson learned:
Do it by the book, even if it is for $1. Charge the client for everything. Stop worrying about the client and there "back story". Sometimes it takes me 23 tax seasons before I learn certain lessons.

Until the next time.....

and the nominees are.....

Work has me really backed up, so this will be short as I have been at this desk for almost 13 hours. So far 28 returns completed, 12 in the "pile of shame" (means they are missing information), another 12 have appointments set, and 27 are in the pile on my desk waiting to be worked on. And it is only February 11th. I can't remember ever having so many returns already in the office this early into tax season. This is a good thing, and I feel blessed that I am busy, but I also feel a bit overwhelmed because this is busier then normal.

Combine the large number this early with still wrapping up corporate work from 2008, and the January work that needs to be done for corporate clients (payroll and sales taxes), and I keep leaving here each night thinking nothing is getting done.

I will say that I am much calmer then I have been in prior years, and that is a good thing. I normally would be in "sweat mode" and not sleeping at night thinking of that large pile, but I know it will all get done.

OK, enough about me. On to my lovely wife. Once again, she and her morning show partners have been nominated for a ACM Award (scroll down to find Morgan). This is the 4th consecutive year that they have been nominated (ACM or CMA), and the 8th time in her career that Morgan has been nominated (CMAs and ACMs). I am extremely proud of her.

If you can, please visit Chris' page. He writes about some tests his baby daughter will be going through on Thursday (2/12). Thoughts and prayers to him and his family from all of us would be appreciated.

The Hurricanes have been playing better, but can't separate from the rest of the group fighting for those last playoff spots in the Eastern Conference. A nice 4 or 5 game winning streak would be the medicine to take some pressure off the guys.

And then there is the Stimulus Bill. You know I finally came around (thanks, Chris) and didn't want the Bailout. We see now how well that worked out. Doom and gloom if we didn't do it (guess these last 4 months have been roses and honey). Well, I hate this garbage even more. God save us, because these clowns in Washington are doing their best to ruin us.

OK, done. Off to the DVR to watch Lost with my ACM Nominated wife (But she can't get too close because she is fighting a cold. Don't want germs. :-0 ).

Until the next time.....

unkind cuts.....

A few things to post about, but this is going to be short and crisp as I am battling a slight head cold that has made me fuzzy (or fuzzier then usual).

The economy / job loss situation has finally hit close to home as my buddy, Casey, was let go from his job. He has been pretty upfront about it, and wrote about it yesterday. Just Sunday he and his family were at our house for some eats and football. We knew it could happen on Monday, but we had a good time and did not discuss it. Hopefully, it was a distraction for him / them.

His company, Caterpillar, has really been hit hard by the slowdown. Also, they like many others with these massive layoffs, are not letting go people, as much as they are just slashing divisions or departments. Have a hard time believing that all the employees not let go were better at their jobs then Casey was at his.

And it is not only companies with problems adding to this mess. Starbucks is laying off 6700 people because profits are down 39%. They did not lose money. They made money, but not as much as prior years, so they are laying off people to help their bottom line. Remember that next time you get that double latte.

Tax season has officially started for me, and let me know that in a 48 hour period. When I left my desk on Saturday afternoon, I was "empty". By Monday evening, I had 17 returns on my desk. Good problem to have, but it was a little surprising.

The start of February is such a mess for because there is normal monthly work, income tax clients, and then those business clients who just could not get me everything in January to complete the prior year. Those are the clients that put the "monkey wrench" in things, as I need to get their backlogged work done, so they are caught up, and we can get their 2009 work up to date.

Otherwise, things are going well. Supposed to hit the high 60s around here this weekend (after snow showers last night, and a low of 18 degrees tonight). Hopefully, I will be able to get a short ride on the motorcycle. I also hope this head cold will be gone by then. Don't want to sneeze in a closed helmet. :-)

And with that, I'm done.

Until the next time.....