Key tips and advice the working tax pro can use.
Amending Returns When Not Original Preparer
I have on many occasions amended a form 1040 that I did not originally prepare when someone brings me the original return and the document they forgot to provide the original preparer. "Hey, Preppie, I forgot to give my 1099-R to my preparer and now he's dead (or whatever). Can you amend this tax return?"
I look at the return, verify there is no 1099-R already on it, and then produce a 1040X with the 1099-R added in.
Today someone asked me to amend their 2016 1120S. I did not prepare the original. She gave me a copy of the original return and a copy of an invoice for ~$26K of goods purchased stating, "I forgot to give this invoice to my CPA."
It seems like a very bad idea for me to amend this return without seeing ALL the documentation for 2016. Would you amend with just a stray invoice, the original return, and her word it had been left off the original return?
No. I would want to see the original trial balance, too. Then, to correct it for the $26K I would need to know how they paid for the 26K. Is cash on the trial balance wrong? Should there be a payable for the 26K? etc.
Last edited by sjrcpa
on 8-Nov-2019 7:49pm, edited 1 time in total.
For every amendment I prepare, I explain that when I sign it, I'm signing regarding everything on the return, not just the item being changed.
That's why some amendments are more costly than the original version.
I require all of the original documents used for the original return.
My antenna goes up when a new client says they need to amend a return prepared by another preparer. My first few questions are:
1) Why, and did you discuss this matter with the prior preparer.
2) If the answer is no, then why not.
Depending on the answer I will either agree to do the 1040-X with full documentation reflecting the change or more than likely refuse to do it f it appears after the fact adjustments on flimsy grounds to get a refund.
When you amend a return it is not just the one item you are amending, it opens up the return for scrutiny for every line item that you may have absolutely no knowledge.
90% of the 1040-X requests are to include EIC or a dependent, because they either forgot about it or did not know and that should be a red flag!
Just saw this thread - thought I'd dig it back up.
With the exception of amendments involving EIC or other such suspicious items, I'm pretty lax about verifying other information if the client tells me in writing (such as email) that it's "all correct expect for this one change".
I accept P&Ls written on a cocktail napkin, as long as they are not rounded numbers, and I don't need to see a trial balance. I'm preparing their tax return, not auditing their work.
Who am I to verify it? At what length would I then have to go to really verify it? Reconcile their bank statements? Do I go to their job site and make sure that last computer is really in service and not off at college with their son?
If an expense appears to be unreasonable, not ordinary, or has a personal/recreational nature like auto expenses, travel, meals, utilities, etc (lots more here I'm not mentioning) - then I will explain the rules and ask them to verify/update it.
We've discussed this before. Some of us do, some of us don't.
It might sound to many of you like I'm a loose cannon, but actually I'm very much by the book.
I haven't see a reference to where I have to do anything more than I've mentioned above.
Red flags are a different story.
For those of us in this business for a while, I think we all know the problem areas with business expenses that raise red flags.
1) Business Entertainment
2) Travel and Lodging
3) Misc Expenses. I like to dig this one up.
I agree with others that it is NOT our job to verify if a piece of equipment on the depreciation schedule has been taken off service. I rely on the taxpayer to give me that information when I go over the list of assets. I am sure oftentimes that laptop after a year or two ends up with the kid in college!
I do require to see mileage and travel expense records. More than once I have found plane tickets for the wife or girl friend added to the airfare! I am sure they cheat on food expense for the wife or girlfriend as well but I don't think IRS has any tracing rules for that
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