I Like Mowing My Lawn and Shoveling Snow; Do You Like Preparing Your Tax Return?

One stretch of sidewalk I have to shovel.
One stretch of sidewalk I have to shovel.

This is a blog post about DIY tax preparation and whether it’s a good thing or a bad thing.

Here’s what I tell people about using a professional to prepare their tax return: if you know what you’re doing and you feel comfortable doing it yourself, then do it yourself.

I say it with no animosity. That’s really how I feel. More people are choosing to prepare their taxes themselves, and as I’ve written before, that’s not a bad thing.

One of the neighborhood kids keeps bugging me about snow removal and lawn mowing. I’ll give the kid credit: he’s a good entrepreneur. He provides these services to several people in the neighborhood.

But I always politely tell him no.

I like mowing my lawn and shoveling snow.

Certainly my life would be easier if I outsourced these tasks. I live on a large corner lot, making my lawn the biggest in the neighborhood. I also have 66 yards of sidewalks and 603 square feet of driveway and decks to clear of snow — with a shovel (my snowblower died 2 years ago and I’m too cheap to fix it).

And yes, I really did measure the exact amount of sidewalks, driveway and deck area one time.

I could pay someone else to mow the lawn and remove the snow. It would free me up to do other things.

But I enjoy the tasks. I’m good at it. And I know what I’m doing.

I see no value in hiring someone else to mow my lawn or shovel my snow.

The same principle holds true for people who choose to prepare their own taxes. If they know what they’re doing and they enjoy doing it, then I encourage people to do it themselves because they won’t see value in the work of a tax professional.

Ridiculous IRS Situations I’ve Recently Dealt With

lion-159448Here are just a few of the more ridiculous things I’ve dealt with involving the IRS over the last few months.

Will Our Refund Ever Come?

A client in a same-gender marriage filed an amended tax return in October 2013. They’re still waiting on their refund.

The IRS had a question about something on the return, which we answered months ago. Since July, the client has periodically gotten letters stating that the IRS needs “45 more days” to review their information.

I’ve tried calling. I’ve written letters. Nothing helps.

My understanding is that the IRS Taxpayer Advocate will only take things like this on if the client is suffering from a financial hardship by not receiving the refund (and they explained that “financial hardship” means the client is, for example, on the verge of being foreclosed on for not paying the mortgage).

My client is not in desperate financial straits … they just want this amended return processed. It’s been 15 months now.

But the client waits and waits.

We Need 45 Days, And We’ll Send Letters With Odd Dates on Them

A client filed an amended tax return in August 2014. In the fall, they got a letter saying the IRS needed “45 more days.”

Of course!

The issue was resolved in December, which is great. But even that was weird.

On December 21, the client got a letter in the mail – the letter was dated December 29.

The December 29th letter (received December 21st) said the client’s refund would be coming in the next two weeks.

A few days after the 21st, the client got their refund.

IRS Seemingly Loses $4,000 Check

A client filed their 2013 tax return in June 2014 and paid more than $4,000 in taxes owed. A few weeks later, the IRS sent the client a collection letter saying that the client owes more than $4,000 and containing the usual threats.

I wrote a letter to the IRS, including the check number and the date the IRS cashed the check, and telling the IRS to cease and desist with the collection attempts and instead review their records to find out what happened to the check.

The client got several “we need 45 more days” letters.

Finally a few weeks ago, the IRS sent a letter saying they found the payment, it had accidentally been misapplied in their system, and apologizing for any inconvenience.

H&R Block Doesn’t Really Have ACA “Specialists” On Staff

One can read all about the ACA. But you can't call yourself a specialist or an expert til you've actually dealt with ACA issues on real tax returns.
One can read all about the ACA. But you can’t call yourself a specialist or an expert til you’ve actually dealt with ACA issues on real tax returns.

Last week, H & R Block invited people to come in for a free Affordable Care Act review with one of Block’s “ACA specialists.”

ACA specialists? Really?

Here’s the thing about the ACA: no one in the tax industry can claim with a straight face that they are a “specialist” or “expert” on the ACA.

I have read the law, sketched out examples in my own notes, taken continuing ed, and given presentations about the ACA. But I am not an expert on the ACA.

No one, no matter how much we’ve read or how much CPE we’ve taken, can call themselves an ACA specialist until we’ve actually dealt with ACA issues in the real world over the course of several tax seasons.

What is a Specialist?

Here’s Block’s definition of what their ACA “specialists” are:

ACA Specialists are tax pros at H&R Block, that have completed several hours of training both online and in person, to help them be prepared.

Excuse me, but using this ridiculous definition of “specialist,” almost anyone in the tax industry could claim to be an ACA specialist.

Good grief, using Block’s crazy definition of a “specialist,” I could read a few articles about the brain and say I’m a “specialist” in neurology. My 6-year-old once took a few cooking classes at the local YMCA. Does that make him a “specialist” in cooking? Apparently so, using this definition.

I’ve taken many hours of CPE on the ACA over the last 2+ years. I’ve done many hours of my own research. So have almost all reputable tax pros.

But we’re not experts on the ACA just because we’ve taken CPE or read the law– even the presenter of the CPE isn’t an expert.

One could perhaps claim to be an ACA expert after at least one tax season (I would say at least 2 tax seasons) spent dealing with all angles of the ACA.

Until a person has actually prepared tax returns dealing with ACA, they can’t be a specialist or expert on the topic, they’re just someone who’s read a lot about it.

Again, What Is a Specialist?

Some of my fellow tax pros say that I’m one of the leading authorities on LGBT tax issues, in particular same-gender marriage.

One could say I “specialize” in those issues.

How did I gain that knowledge?

It started with one client, in a same-gender marriage, who needed my help in 2009.

I started reading and researching LGBT tax issues so I could help this client. At this point, I wasn’t an expert or a specialist. I was just someone who had read a lot about the topic.

Then I actually started preparing tax returns for people in same-gender marriages. Through word of mouth, I picked up more clients in same-gender marriages. (Nearly 40% of my clients are members of the LGBT community.)

As time passed, I prepared more tax returns for people in same-gender marriages and dealt with all sorts of complications and issues — over the course of YEARS.

It wasn’t until 2011 or 2012 that I felt comfortable holding myself out as an authority on the topic … because I had actually dealt with these issues in the real world for real clients.

Block Doesn’t Have ACA Specialists

If you see anyone who claims to be an expert or specialist on the ACA, just know that it’s all a bunch of marketing hype.

Until a tax pro has actually prepared tax returns dealing with the ACA, and dealt with multiple angles of ACA issues over the course of several tax seasons, no one in our industry can claim to be an expert or a specialist on ACA.

Image courtesy of user “193584” on Pixabay.com

The IRS’s Preparer Directory Will Be Bad News for Enrolled Agents

certificate-40983_1280
An example of what a person with an “AFSP” will hang in their office?

I haven’t ranted about preparer regulation for awhile, so it’s time to get on my soap box or high horse again.

The IRS will soon be rolling out it’s registry of tax preparers. This will include Enrolled Agents, CPAs, attorneys, and people who have completed the ridiculous gold-star-attaboy-go-get-’em-tiger “annual filing season program.”

The new program is called “AFSP — Certificate of Completion.” Will anyone use that as a designation? Is it even really a designation?

Even more ridiculous is the directory. Here’s what the National Association of Enrolled Agents has unearthed about the directory (my emphasis added):

(T)he lookup feature will allow taxpayers to search by credential (or the non-credential “record of completion”), by ZIP code, and by distance from any given ZIP code (as narrow as 5 miles and as broad as 250 miles). Results are sorted by distance from the ZIP code and then displayed in alphabetical order by last name (i.e., 0.1 mile sorted by last name then 0.2 miles sorted by last name and so forth).

It is exceedingly unlikely that any advantage whatsoever on the lookup feature (which we suspect will not be used all that much) will come from signing up for the new program. As one of our Facebook followers succinctly noted:

“This list (it is not a directory) will show names and designations, no addresses, no telephone numbers, no email addresses. Just how useful is that to taxpayers or those who appear on the list? The list will not replace a Google search for “tax preparers in my zip code.”

While there’s not a lot of upside to signing on for the “gold star,” lots of downside comes from providing numbers to a program and from helping to confuse taxpayers and tax professionals.

From the December 12, 2014, NAEA E@lert

So the search function will show no contact information, just a list of preparers sorted by distance from the taxpayer performing the search. It appears that designations will be listed. But unless there’s a clear explanation of what the designations mean, what good will it do?

And my fear is that EAs will get left in the dust … again.

Think about it. The list will show CPAs, attorneys, EAs and “AFSP-Certificate of Completion” people. Of those:

  1. Everyone’s heard of CPA and attorney
  2. The IRS will be publicizing the AFSP
  3. Hmm. As usual, there’s one designation left out.

Image courtesy of user Nemo on Pixabay.com

Sorry, But There Really Isn’t a “Gray Area” for Most Taxpayers to Push

ID-100260524Every tax season, one or two new clients who have never worked with me before will say things to me such as “I really want you to push the gray areas. Not go past them, but push right up to that line.”

Every single person who has said that to me has been what I would consider a “typical” taxpayer.

Maybe they’re married. They have W-2s, a mortgage, maybe some student loan interest, and maybe they have kids and some charitable contributions.

NEWSFLASH: for the vast majority of taxpayers, there is no gray area to be pushed.

Your income is whatever your W-2 says it is.

Your deductions are whatever they are. Mortgage, property taxes, charitable, car registration. I suppose there could be a gray area if someone is claiming employee business expenses. But even then, those expenses are not likely to end up being deductible anyway.

No matter what the H & R Block commercials say, there is no magic wand that a tax preparer can wave to make a bigger tax refund appear.

Your withholding and your tax credits control how large your refund is – not some sort of magic worked by the preparer.

Image courtesy of Stuart Miles / freedigitalphotos.net