Client is mostly an OK client of many years, and is likely not hiding income, but often becomes difficult when dealing with my staff and ends up in a contest with them over.... nothing, really.
Client has a sole prop for some contracting and some royalties.
Us (for the 2nd time we are asking this year - and every year):
The P&L you provided does not indicate your total self employment income, I see you had one 1099-NEC for $109,672.00 was this the only income you had in 2022 outside of the royalties?
Him (as usual):
I’m not sure how to add up my self employment income. I have many 1099s, including interest, royalties, 1099G, 1099Q, and my son’s income (w2). I uploaded all those files.
So, we probably have the correct number, but we don't really know for sure if he has cash or other income for his contracting work (though admittedly unlikely).
Here on the 31st of March, I really don't have the patience to get into a "match" with him over nothing. This back and forth is nonsense and he is stressing our my staff.
Simple and polite way to tell him to give us the verification we need?
Dear XXXX
Not all income that a taxpayer receives will always be on a 1099. We have a responsibility to make sure that we report all of your contracting income specifically and appropriately and we have no way to know if you have received cash income or income from self employment that is not on a 1099.
For us to proceed, we please need you to verify that all of your contracting/self employment income (other than your royalties) is listed on just the one 1099 you have provided us and that there is no other contracting/self employment income (other than your royalties).
You mentioned that you are not sure how to add this up, so allow me to provide more guidance. All we really need to know/verify is how much you received for your services as a contractor and for other self employment activity (other than your royalties). The correct amount is very likely listed on the 1099NEC you received, but we must know affirmatively if you had other income for your services that does not appear on a tax document (and if the 1099 is correct).
To avoid this back and forth, we would appreciate it in the future if you would be willing provide this number on your profit and loss report or our P&L worksheet that we provide.
What do you think?
And do you fire him after tax season?