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Reconcile 1040 returns?

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#1
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2
Joined:
14-May-2019 3:57pm
Location:
Idaho
How do the tax preparers on this forum "reconcile" the supporting documentation of a return to the tax return itself?

In other words, what checks are in place at the preparer level to ensure the return agrees in total to the underlying support and no amounts are transposed, skipped, etc?

Do you use a different process depending on return complexity? Or is process consistent no matter complexity?

The firms I've worked for have had various methods of preparing returns:
One firm was concerned that the preparer could explain federal taxable income and reconcile it via excel to the supporting docs.
Another firm took a spreadsheet approach and reconciled individual lines of the return. (total wages, total withholding, etc). Basically entering data once in a spreadsheet and once on the return.
A third firm checks the support against the input screen in the tax software.
 

#2
makbo  
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23-Apr-2014 3:44pm
Location:
District 13
I worked for another small and prosperous firm for a few years, and every return went through at least two levels of staff review after the initial raw data input (so 3 preparers in all, including the owner signing off on the return). Overkill most of the time, IMO. And the owner would not use QB tax summary reports and other tools to reconcile entity returns, always wanted a spreadsheet with JEs in a certain format, which always slowed me down.

As a solo, I am most concerned about typos or omissions for W-2s (and 1099-Rs showing withholding). Basically, the same docs you'd have to attach to a paper filed return. So after initial data entry, I come back a few days or weeks later and double check only those documents (withholding), and use the checkmark feature in my software to show that I've done a second review.

As for other data entry, I actually rely much more heavily on the 2-year comparison. If the numbers are greatly different, or if prior year amounts are missing this year, I follow up.

And of course, I make sure I clear, acknowledge, or at least understand, each of my software's diagnostics.
 

#3
Gjkycpa  
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155
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29-Apr-2014 1:53pm
Location:
Corbin, KY
Pretty much same as Makbo.
In prior years we would print a summary and check off each line item with supporting documents. In beginning of tax season we would also check the tax programs math calcluations and actual tax calculations. Once we were comfortable with program we do a reasonableness check comparing 3 years. As we try to continue to move towrads paperless this year we began using the green tickmarks on the screen (Drake), instead of printing summary.
 

#4
ATSMAN  
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1189
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31-May-2014 8:34pm
Location:
MA
In a solo practice the process is not as robust as you may want it to be because you are also the reviewer. What I do is prepare a checklist of all the input tax documents that has two important figures for your average run of the mill returns. Taxable amount and tax withheld (Fed and State). Then after I prepare the return my software allows me to link back the figures to the source and I match the source figures to the actual checklist. This catches 99% of transposition errors etc.
For complicated returns or multi state returns with differences/adjustments, the entire process is manual at each level and does take additional time (30 minutes to an hour) just to make sure the correct figures were inputed. This is where most of the errors happen.
 

#5
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528
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21-May-2018 7:50am
Location:
Hilton Head Island, SC
I go through everything twice. First round, everything is marked with a check mark in Adobe Acrobat using TTC. Final review, everything is marked with an "R" for "reviewed," also using TTC. I focus on anything that has to be included with a paper return or contains withholding or estimated payments.

Rarely catch anything missing, but since I chose to no longer have a partner, it is all up to me. I now try to give myself a few days between initial prep and review to clear my head, even though I am doing work in between.
 

#6
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1148
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22-Apr-2014 1:34pm
Location:
North Carolina
My software has input sheets that I print out. From the 1099's, K-1's, etc. I write everything on the input sheets. The last page is a "Control Totals" page, which I enter the totals from everything as it should show on tax return (ie, total wages, interest, pensions, charitable contributions, etc.). I then key into the computer from the original W-2's, 1099's, etc. If my software totals come up different from my Control Totals, I check it out. I also look at the two year comparison for anything that looks odd.

Manually writing the numbers is an extra step, but it has helped me catch keying errors a few times! Since I work alone and don't have others reviewing my work, I feel this is necessary for me.
 

#7
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1554
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24-Apr-2014 7:54am
Location:
Wisconsin
When there are multiple sources of withholding, I turn on my ten-key and validate totals there.
I will review a return a couple days after preparing the return.
I review the 2 year comparison with the clients.

That has been sufficient for me.
 


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