[Jdn9201]

I have a friend who has offered to hire me to do her and her husband’s tax returns this year. I already have a PTIN so I have that covered. My first question is what would be the best software for me to use? Does Turbotax allow you to use it to prepare other people’s returns? Also, I’m trying to figure out how much I should charge. I obviously don’t want to rip her off but I want to be fair to myself. I thought about charging based on time (the rate would be the hourly rate I make at my job). How would I go about figuring out what to charge? She works full time (W2) and her husband is self employed (1099). I’d either be doing 1 return or 2, depending on which one produces the lowest amount of tax. Thanks for your help!

BEC - 88 8/29/15
REG - 82 11/14/15
AUD - 83 1/8/16
FAR - 80 2/29/16

[Missy]

How much do you know about what her husband does? If you need to do a schedule C the time required can vary from almost nothing, to tons of chasing. If this is his first year self employed it could be fairly labor intensive as you figure out together all of the expenses he has incurred.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Jdn9201]

Thanks Mla. Yeah the Schedule C is why I'm hung up on whether or not to do it and how much to charge. I know what her husband does but I'm not sure how well he's tracked his expenses. I do know that he hasn't received at least 1 1099 yet either.

BEC - 88 8/29/15
REG - 82 11/14/15
AUD - 83 1/8/16
FAR - 80 2/29/16

[makiu]

@jdn9201
for schedule C items, give him the options upfront that there will be an extra charge if you sum up and add up all the receipts or that he has the option to bring a detail summary. There was a time that H&R Block used to charge for this extra work….because believe me its a pain in the butt adding gas tickets, maintenance etc if it happens to be a truck driver….meals etc… just like mia stated…

Makiu,CPA

[makiu]

@jdn9201
also, this is a great opportunity to offer your bookkeeping services…QuickBooks!

[Spartans92]

Ok, I might get some hate for this comment. But to be honest when we file our own taxes do we actually go by all the expenses tracking etc like we should at work… I mean I have seen a lot of people claiming deductions to increase their return. As far as a charge rate I know HR block typically charge around 180-200 per tax return but i think it depends on the complexity as well. My great aunt usually takes hers there and I have been preparing her for the past 2 years because she knows I do my parents. Turbotax is a good software.

BEC- PASS

[Anonymous]

TurboTax is a good software, but I haven't seen that it allows for the input of preparer information. For just doing 1 paid return, I'm not sure what to suggest. Drake is the cheapest one I know of that allows for inputting of preparer information, but it's around $300 for the smallest package, and that's too much for just doing 1 return.

@Spartan If you mean that we don't all keep track of all our medical expenses cause we know they'll be way below the threshhold so not worth tracking, then yes. Knowing what is and isn't worth tracking can save a lot of wasted time. I know that in my current situation I'll never get ahead by itemizing, so I never track my deductions. If, however, you mean that on our personal returns we all just inflate things to get extra deductions, then no. Most CPAs wouldn't want to risk their license to save an extra $5 on their income taxes. And…if you do inflate your deductions and break tax law routinely on your own return, then you might want to stop that before you get your license, since you could lose your license over something like that. Do lots of other people do it? Yeah, lots of non-accountants do, and lots of non-accountants get caught eventually, too. But non-accountants don't have as much on the line as CPAs do. It's not a risk I'd take if I was a non-accountant, but it sure as heck isn't a risk I'd take as a CPA!

[Jdn9201]

Thanks everyone for the advice. Yes, I'm definitely going to ask her husband to give me a summary of his expenses. I already know they haven't done a good job tracking them (all he has that he knows of is mileage). I still haven't figured out how much to charge them. I've prepared my own tax returns since I was 16, but I work in corporate tax and have never prepared anyone else's return before. I'm comfortable doing a schedule C and know what's involved, I just need to figure out how long it's going to take me to do.

BEC - 88 8/29/15
REG - 82 11/14/15
AUD - 83 1/8/16
FAR - 80 2/29/16

[Spartans92]

@lilla, I personally don't because I know as a future CPA everything is about ethics. But I know individuals who claim deductions just to get few extra bucks and they are non accountant, just an average individual. I am unsure of any violations of tax law but I know they would say something was more than the original price, for example, house repairs etc. It is just an ethical issue I cannot justify. But since turbotax runs for errors first nothing has happened thus far. I just get really piss when I see people who does.

BEC- PASS

[Anonymous]

If they are married do one return and file MFJ. MFS is less favorable by design. You can try it, but MFJ is the way to go

If you feel the expenses on the schedule C are shady, ask the client about them in an email. If it's documented, your covered.

@Lila an interesting note on tracking deductions…..I live in a MO which has a state deduction for qualified health insurance premiums. I recently helped a friend with their return and decreased their MO tax liability. He never bothered to put his medical insurance that he pays for out of pocket into turbo tax because he knew he was below the threshold. State returns have their own little quirks. Also, I definitely agree with you. Inflating expenses and deductions is a bad idea, for anyone. The tax savings just aren't worth it.

[Anonymous]

@Spartans92 OK, glad I mis-read you. 🙂 Yes, people inflate stuff a LOT on their returns…or decrease income if they're self-employed. When people who are self-employed as an only source of income have a loss a couple/few years in a row and are still living, still eating, still driving new cars, you have to wonder… That being said, and getting back on topic, @OP I'd be highly cautious about a close friend or family member that you're worried about inflating expenses, cause if they get caught, there's more room for the IRS to say that you were an accessory to the crime (wrong term, but gets the point across!) if they think you knew the person well enough that you should have known they were being fraudulent. I've seen several cases were a tax preparer was found guilty of tax fraud due to a relative's return that they prepared, so the case is something like “Mr. and Mrs. Smith and nephew Mr. Smith CPA vs IRS” or something like that, because the CPA is a relative close enough that they presume he must have known. So, if you're doing returns for friends and family, be a little extra cautious of over-inflations. Doesn't mean you have to call their doctor's office and verify all their medical expenses 😛 but if something is clearly fishy, ask questions or withdraw.

@DoOver True, definitely worth checking the state specific items too. KY is like that as well, for out-of-pocket insurance, and I think medical bills are subjected to a much lower threshhold too but could be wrong (thankfully haven't had medical bills to worry about!). That's why as a tax preparer I always put everything the tax payer gave me into the system, even if I didn't know if it would help, cause there might be some weird quirk in their state (I live near a couple state borders, so we had some out-of-state clients) or even in KY that I didn't know about.

[Missy]

Just remember as a tax preparer it's not necessary to police what clients are telling you only to be able to demonstrate you exercised due diligence. For example if someone is trying to get the EITC and it seems fishy to you they had little kids but no daycare expenses, it's a good idea to ask and document who watched the kid but if they say a neighbor watched them for free you've done your part even if you have your doubts.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Author]

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