Tuesday, April 24, 2012
A TAX SEASON STORY
I forgot to include the following item in yesterday’s review of the recent tax filing season.
A long-time client, whose returns I have been preparing since 1984, got married in 2011 to a non-client whose tax returns had been prepared by a CPA firm.
The couple had given their 2011 “stuff” to the spouse’s CPA for review, and the CPA generated joint federal and NJ state tax returns for the couple.
The client asked me to review the preliminary returns generated by the CPA before finalizing and filing them.
Based on a quick review of the federal return, and my knowledge of my client’s prior returns (a copy of my client’s 2010 federal and state returns had been provided to the CPA along with the 2011 “stuff”), it appeared that the federal return was ok (I did not verify actual entries to original source documents such as W-2s and 1099s, nor did I check the math – I merely reviewed it for “theory”).
However as soon as I looked at the CPA-generated 2011 NJ-1040 I discovered a glaring error – to the tune of about $1,800.00.
Having me, a previously unenrolled preparer, review the returns generated by a CPA (who does not have to take a test to verify tax knowledge as I must eventually do) saved the couple about $1,800.00 in state income tax!
I did not need to enter the information into a tax preparation software package to find the error – my naked eyes spotted it right away.
I have been saying for years that I have found more errors on tax returns, federal and state, prepared by CPAs than any other category of preparer – including “self-prepared” returns.
Needless to say I felt great joy! And so did the client and his new spouse.