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|| SportsShooter.com: Member Message Board
Tax Return Mistake...
Randy Abrams, Photographer
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Bath | NY | US | Posted: 5:02 PM on 09.24.10 |
->> Not a direct photographer question, but I just received from the IRS a bill for $460 due to an incorrect entry on my 2008 tax return. Ironically that year was the first that I used a CPA to do my taxes. I took the IRS info to him today and he admitted that he "missed" something and that the IRS was correct and that I'd have to pay the amount. He also admitted that he missed the same thing on my 2009 return. Now I was almost expecting him to say that he would cover the amount as it was his mistake (I mean I paid him to do the taxes to make sure they were correct). Am I wrong in expecting this? I know my business insurance covers errors and omissions. I would assume he has a similar insurance. What kills me even more is he didn't even offer up a sincere apologize.
Should I go back to him and push a little harder for him to help cover this bill? |
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Mark Peters, Photographer
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Highland | IL | USA | Posted: 5:10 PM on 09.24.10 |
| ->> No. I would expect him to cover any penalties or interest, but not the base amount due. |
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Butch Miller, Photographer
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Lock Haven | PA | USA | Posted: 5:17 PM on 09.24.10 |
->> You are not wrong to feel the way you do ... and you really should ask your attorney for advice.
What written agreement did you have with your CPA? ... often tax preparers will offer to cover fines, and/or interest for errors and be on hand to answer any questions if there would be an IRS hearing or audit, but you are still liable to pay the tax itself ... in the absence of a written agreement, unless you can prove the accountant acted in a malicious manner and sought to commit harm to you, it's likely to cost you considerably more than the $460 unexpected tax burden to seek satisfaction. Also I doubt any insurance company would easily be convinced to cover a sub $500 dollar expense without considerable effort on your part as well ....
It's too bad your accountant made the error, but they may be under no obligation to cover your loss without extensive effort on your behalf to recover your costs. |
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Brad Barr, Photographer
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Port St. Lucie | FL | USA | Posted: 5:34 PM on 09.24.10 |
->> You incurred the tax, he incurred the penalty (if there is any) by not filing it correctly. You own the tax....i'm sure he'd cover any late fees or penalties that were the result of his error.
Fair is fair. He didnt create your debt, only failed to note it on your tax form. You would have been liable for it originally and still are. |
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Shaun Sartin, Photographer, Photo Editor
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Glenview | IL | | Posted: 6:26 PM on 09.24.10 |
->> Randy,
My dad is a CPA. I'm surprised your CPA just doesn't have you refile or amend your returns, or rather he doesn't do that for you. My dad represents folks when dealing with the IRS on these issues (not his mistakes) :) I've forwarded him the link to read. We'll see if we can't help you on this. Drop me a private message and we'll go from there.
Shaun |
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Jim Colburn, Photo Editor, Photographer
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McAllen | TX | USA | Posted: 7:13 PM on 09.24.10 |
->> He should pay any interest or penalties but if you owed some taxes it's up to you to pay them.
I had photographers (and an accountant or two tell me for years that I should be taking a deduction for a home office but my reading of the rules told me not to. Turns out I was right.
Ditch the CPA, read the IRS instructions very carefully and then buy TurboTax. |
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Jody Gomez, Photographer
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Murrieta | CA | USA | Posted: 7:22 PM on 09.24.10 |
| ->> I have had a CPA do my taxes three times. I have been audited three times and had to pay additional. Moral of the story - do you own taxes. :~) |
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John Korduner, Photographer
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Baton Rouge | LA | United States | Posted: 7:23 PM on 09.24.10 |
| ->> I don't know how much accountants charge, but a refund for his preparation fee is well founded... Premised on his inability to do it correctly multiple times combined with your justifiable interest in having a third party review them for accuracy. |
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Randy Abrams, Photographer
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Bath | NY | US | Posted: 7:39 PM on 09.24.10 |
->> Thanks everyone for the replies. I think what bugs me the most is his smug, matter of fact, attitude concerning the mistake. Sure it isn't the end of the world, but not I think he could have handled it a little better. The interest penalty was only $27 so I'm not even sure trying to get him to pay it is worth it. I opened up my business that year (2008) so that was the first year I had a CPA do the taxes as I had a lot of gear to depreciate and some to right off, plus I incurred a loss (business profit wise) so I want to make sure I got everything right.
Oh well, live and learn. I will probably be looking for someone new to do my taxes next year though. |
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Jeff Stanton, Photographer
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Indiana | IN | USA | Posted: 10:31 AM on 09.25.10 |
->> Randy, indeed he is not liable for the additional tax. In fact, he's not liable for anything if I'm not mistaken. Places like H&R Block used to advertise they would represent you and explain to the IRS how they arrived at the decision to do what they did on your return, and pay the penalty and interest, but I'm not sure any of them do that now.
Business taxes can get real complicated and I have always felt a good professional preparer was always the way to go. He's not the only tax preparer around. Find another one, perhaps somebody you know could recommend one and move on. The IRS will work with you on payment. You may be able to give them heads up on the 2009 return and make them an offer to pay both at a reduced rate. It never hurts to ask. |
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Sam Santilli, Photographer, Photo Editor
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Philippi | WV | USA | Posted: 9:21 AM on 09.27.10 |
->> Randy, talk to some of your local photographer friends and see who they use. A good CPA keeps you out of trouble. Especially one who knows how to work with photographers. If you are shooting on for a newspaper and do a few outside gigs, you could probably get by doing the taxes on your own. But if you have your own shoppe with employees, you really need a pro doing your taxes.
Do not be a GWC (Guy/Gal With a Calculator). Amazing how some people on this thread say do your own taxes, and we as an industry complain about about GWC's. Your time needs to be focused on photography and getting more business.
Bottom line is get a new CPA. |
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Ed Coombs, Photographer
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Available upon | NY | | Posted: 9:59 AM on 09.27.10 |
->> All CPA's don't necessarily know taxes. How do I know? I'm also a CPA, and I do not even do my own taxes. My wife does. My "specialty" is systems/ internal controls/ audit.
Get a new accountant/ attorney to do them. Asking for them to file amended returns, free of charge, is not unreasonable. ESPECIALLY if you provided all the information and he "missed it." In a lot of cases the client doesn't provide accurate information to the accountant in which case it is the clients fault.
I can honestly say, I do not miss public accounting |
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Dennis Wierzbicki, Photographer
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Plainfield | IL | USA | Posted: 10:41 AM on 09.27.10 |
->> Jodie said: "I have had a CPA do my taxes three times. I have been audited three times and had to pay additional. Moral of the story - do you own taxes. :~) "
Or, get a new Accountant... |
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Michael Fischer, Photographer
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Spencer | Ia | USA | Posted: 1:58 PM on 09.28.10 |
->> If you're running a business and doing your own taxes, you have a fool for a client.
Will Turbo Tax assist you when the IRS decides to audit you?
Will Turbo Tax assist you when the Labor Department does a surprise audit to see if you're paying your employees according to code?
Will Turbo Tax assist you when one of your employees embezzles from you and the police need you to do forensic accounting to use as evidence?
Before anyone posts that those things don't happen, two of three have happened to me in the last 24 months. ( I haven't been audited by the IRS... knock on wood )The embezzlement was documented by the CPA firm and we recovered thousands of dollars, including the cost of the forensic accounting.
A good CPA is a business partner who can offer sound advice. Won't be cheap, but do you want a cheap partner?
As for Jody's complaint, I believe one audit from the IRS will usually trigger 3. Like any partnership, it's gotta be "right". If it isn't for whatever reason, find a new partner. I don't mean Turbo Tax, either. |
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Jim Colburn, Photo Editor, Photographer
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McAllen | TX | USA | Posted: 2:37 PM on 09.28.10 |
->> "If you're running a business and doing your own taxes, you have a fool for a client."
IYHO perhaps.
"Will Turbo Tax assist you..."
I've known quite a few people using accountants that have had problems whereas nobody I know using TurboTax has.
YMMV of course. |
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N. Scott Trimble, Photographer
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Lake Oswego | OR | USA | Posted: 2:48 PM on 09.28.10 |
| ->> I used Turbo Tax this year, and got the same mistake. The IRS fessed up it was an error on their part that some tax people and Turbo and others got the wrong algorithm to figure out this one particular segment. I bitched and moaned, but the bottom line was, I owed back the money, even though it was their error. Same amount too! |
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Michael Fischer, Photographer
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Spencer | Ia | USA | Posted: 9:39 AM on 09.29.10 |
->> Jim, I have been involved in the running of businesses that have sales as high as $100M (as a CFO) as well as my own that is a mere $2M.
At no time have I ever heard anyone suggest not using a CPA to produce financial statements and reports. None. Nada. Zip.
Your argument - that you know of no one using Turbo Tax that has been audited - implies that you know the total universe of Turbo Tax users and that no one has been audited.
Come on, we both know that's not the case. You imply that using a accountant will lead to problems with the IRS. Of course, the issue could be that some people using accountants have problems and that's why they go to accountants.
I know you love playing the role of gadfly around here. That's fine.
But a few of us are struggling to get photographers to improve their business skills so that they can survive and thrive in a totally ugly business climate. Turbo Tax may be fine for simple personal returns, but I stand by my earlier post - that a good CPA is worth their weight in gold. A computer program cannot provide the assistance a good CPA can. I would prefer that people actually take business courses, but professional accounting is typically a good alternative.
I have the business credentials to back up my arguments. Can you enlighten us as to what your business background consist of - or is this just one more situation where you enjoy stirring the pot regardless of whether or not it actually helps others? I have nothing to gain by making recommendations other than to help others be successful and profitable.
Instead of shooting from the hip, try to understand that talent alone will not allow people to survive in this business. I've known a lot of very talented shooters that struggled because they lacked business skills. I've also known mediocre photographers with good business skills that cleaned up. So my motivation is clear: Encourage people to gain business skills and using a GOOD CPA is one way to do it.
That's my humble opinion...and it's backed by almost 40 years of experience and education.
Please, tell me what your business background is.I await your response. |
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Jim Colburn, Photo Editor, Photographer
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McAllen | TX | USA | Posted: 12:13 PM on 09.29.10 |
->> "I have been involved in the running of businesses that have sales as high as $100M (as a CFO) as well as my own that is a mere $2M."
Congratulations.
"At no time have I ever heard anyone suggest not using a CPA to produce financial statements and reports."
For companies in that range it's no surprise.
"Your argument - that you know of no one using Turbo Tax that has been audited - implies that you know the total universe of Turbo Tax users and that no one has been audited."
That is a completely absurd statement. What I said was that of the people I know that have used TurboTax, and that would not include any companies grossing between $2,000,000 and $100,000,000 but individuals that are mainly photographers, none using TurboTax have had an audit. Whereas several of the same sorts of people, ones that I know, using accountants, have been audited. Very simple really.
"You imply that using a accountant will lead to problems with the IRS."
Nope. Just passing along my experiences with the product, a product used by around 10 million people a year.
"I stand by my earlier post - that a good CPA is worth their weight in gold."
The general problem then seems to be finding a good one.
"A computer program cannot provide the assistance a good CPA can.
How about a computer program written in consultation with lots of tax accountants? Did you know that many accountants use similar programs (TurboTax makers Intuit have a couple but there are others) for the bulk of their work? Just Google "accounting tax software" to see what's on offer. Even your acountant may be using something similar.
"I have the business credentials to back up my arguments."
You obviously have business credentials but you're really over thinking this whole thing.
As an individual professional photographer I have used TurboTax for years with excellent results but it would probably not be a good idea to use it for your $100million corporation. |
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Todd Spoth, Photographer, Student/Intern
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Houston | TX | USA | Posted: 2:07 PM on 09.29.10 |
->> Good to see you're still making friends, Jim!
~~*lUv*~~
-Todd |
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Jim Colburn, Photo Editor, Photographer
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McAllen | TX | USA | Posted: 3:15 PM on 09.29.10 |
| ->> KMA Todd. |
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Patrick Smith, Photographer
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Salt Lake City | UT | USA | Posted: 3:42 PM on 09.29.10 |
| ->> We’ve got a situation here…{jerseyshorevoice} |
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Sam Santilli, Photographer, Photo Editor
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Philippi | WV | USA | Posted: 3:47 PM on 09.29.10 |
| ->> A good ol' fashion Texas high noon shoot out brewing? My money is on Jim. Happy shooting. |
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Michael Fischer, Photographer
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Spencer | Ia | USA | Posted: 8:18 PM on 09.29.10 |
->> Jim wrote:
How about a computer program written in consultation with lots of tax accountants? Did you know that many accountants use similar programs (TurboTax makers Intuit have a couple but there are others) for the bulk of their work? Just Google "accounting tax software" to see what's on offer. Even your acountant may be using something similar.
Of course .. I doubt there are many that don't use a accounting package. But that isn't the point. The point I've evidently failed to make CLEAR is that it isn't about putting numbers in a column, it's about knowing the tax code and knowing which rules apply in which situations. A good CPA can usually save you enough because he or she understands the code to know which rule to apply when - and be able to justify a decision if the IRS comes calling.
Long story short, Turbo Tax can't know which rule applies all the time - and as a result - will usually leave money on the table. That's how CPAs pay for themselves.
Plus, CPAs can usually offer you advice and insight that can help you build your business from a Mom and Pop to something larger if that's your goal. Turbo Tax doesn't offer that.
As for the search for a good accountant - that can be a challenge. Sam's advice - talk to other photographers and see if there's someone who stands out - who knows photographers and something about the photography business - is excellent advice.
Or call around and interview CPA candidates. One of the questions should be " How many of your clients are engaged in professional photography?" Take it from there.
And, I did notice, you didn't answer my question regarding your business background but that's ok. The lack of response spoke volumes.
Warmly,
Michael |
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Thomas E. Witte, Photographer, Photo Editor
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Cincinnati | OH | USA | Posted: 8:41 PM on 09.29.10 |
->> Why is it every time I come in the forums anymore I have to step around puddles of urine? Since I'm not the judge of this particular contest, I can tell you that one of you piddled the furthest while the other piddled the most. Depending on which you were going for, you both won.
As a late entry, I say get a new accountant. I've been using one (actually I have a team of three) since I was 18 and only had a problem once... When I was 17 - hence why I hired one the following year.
TurboTax is fine and all for people who (for example) have 9-5 jobs and/or very easy, simple returns to file. We on the other hand have Schedule C's, Form 4562, Royalties versus Wages/Commissions, W2's that 75% of the time are incorrectly processed (separating royalties from wages and commissions)... the list goes on and on.
I didn't hire a CPA to protect me from an audit - I hired them to minimize my tax liability; which they are masters at. It's to the point now where I more or less tell them a target range of what I'd like to pay and they'll spend time trying to get to it. Granted I'm paying them by the form and by the hour but sometimes it's worth it.
On top of that, they also provide amazing financial planning which is mainly why I'm why I'm living how I am today.
Using TurboTax to me just seems akin to a photo editor shooting an assignment themselves in order to save money. |
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Thomas E. Witte, Photographer, Photo Editor
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Cincinnati | OH | USA | Posted: 8:42 PM on 09.29.10 |
| ->> P.S. Avoid national tax services. Find and support a local CPA. The personal service you'll receive is second to none. |
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Jim Colburn, Photo Editor, Photographer
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McAllen | TX | USA | Posted: 11:04 PM on 09.29.10 |
->> "...you didn't answer my question regarding your business background..."
There was no point to your challenge, so I ignored it. |
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Michael Fischer, Photographer
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Spencer | Ia | USA | Posted: 11:39 PM on 09.29.10 |
->> There certainly was a point: You didn't offer good advice. You were pulling it out of your butt. This is an area you lack expertise in.
The chances of you ever admitting you might not have expertise in something is remote, Jim, if not non existent, so I'll let it go at this: You go ahead and work with Turbo Tax. Everyone else may want to consider looking for a good CPA. Ask around. Interview prospects. Follow Thomas' and Sam's advice if not mine. A good CPA IS worth their weight in gold (that means they will find you deductions that you would otherwise miss and save you money that will more than pay for their services).
I am not the kind of person that will evade paying taxes: I will however look for every single deduction I can get. And that means hiring a CPA that knows the tax code and understands my business.
Good luck.
M |
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Thomas E. Witte, Photographer, Photo Editor
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Cincinnati | OH | USA | Posted: 11:48 PM on 09.29.10 |
| ->> Let's put it this way; would you use a program called TurboAttorney? |
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Mark Loundy, Photo Editor
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San Jose | CA | USA | Posted: 12:28 AM on 09.30.10 |
->> At the current price of gold and assuming a CPA who weighs 185 lbs., that would come to about $5.3 million.
I think I'll have to give this some thought...
--Mark |
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Jim Colburn, Photo Editor, Photographer
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McAllen | TX | USA | Posted: 5:42 PM on 09.30.10 |
->> Hey Mike? What's so wrong with your life that you have to take a simple attempt at factual exchange and turn it into a personal pissing match?
You like CPAs. Maybe you are a CPA or married to one. Don't know, don't care. I've successfully run my business, that of freelance photographer, for decades using my reading of the rules and TurboTax. I'm not a $100million business or even a $2million business but my experiences and observations are just as valid as yours.
I'm happy for you that and have the time to find an accountant worth his weight in gold but please realize that other people have had bad experiences with accountants and prefer to use other methods to do their taxes. You do what you like and let other people do what they like.
Stop trying to be the BSD of photo finance, it doesn't suit you. |
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Jim Colburn, Photo Editor, Photographer
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McAllen | TX | USA | Posted: 6:40 PM on 09.30.10 |
->> "...would you use a program called TurboAttorney?"
For something simple like a rental lease or an uncomplicated will? Sure thing. Many attorneys use computer programs for that sort of thing and have a para-legal do the work.
I wanted to have a simple legal thing done a few years ago in Maryland. A lawyer quoted me $900 for the process. When I went down to the District Courthouse and asked the lady behind the counter (where such things were filed) if there was any way to file the papers myself. She grinned a real big grin and handed me a small stack of photocopies with step-by-step instructions on how to type up what I needed, find past cases and order the photocopies of past cases. All I had to do then was pay a $75 filing fee and wait three weeks for the court to mail me the thing I needed.
A few years before that I got the instructions from the US Trademark office and registered a trademark for a business that my wife had. It took a half dozen phone calls to some very helpful people at the Trademark office and a $400 or so filing fee and a few months later I had a trademark that lawyers usually charge thousands to obtain.
What I mean to say with all of this is that if you're reasonably intelligent and can follow instructions you can probably save yourself a bunch of money. There are people out there working at courts and government offices that can be all too willing and able to help you out. It might be worth a try.
I won't be too surprised if Mike thinks that everything legal should only be handled by lawyers. |
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Wesley R. Bush, Photographer
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Murfreesboro | TN | U.S. | Posted: 8:05 PM on 09.30.10 |
| ->> I just got an audit letter in the mail. From what I can tell, it looks like our tax person entered a 1099-R as a 1099. Now I owe $572. Crap. |
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Wesley R. Bush, Photographer
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Murfreesboro | TN | U.S. | Posted: 8:27 PM on 09.30.10 |
->> Correction:
Transposed a number from the 1099-R into a federal withheld total. Still sucks. Kind of don't need to pay back money from 2008 right now. |
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Chuck Steenburgh, Photographer
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Lexington | VA | USA | Posted: 8:55 PM on 09.30.10 |
| ->> Lots of people use TurboPhotog, a program put out by that company GWC - why not TurboAttorney? :-) |
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