Standard vs itemized

[Mark_A]

And..we just found the CPA who never prepared tax returns. If you seriously think it takes me more than 2 minutes to enter itemized deductions, you haven't prepared a tax return since 2017.

And if you think I spend ANY time looking at receipts and totaling them up, you haven't prepared a return since 2005 or earlier.

I have prepared many tax returns, including federal 1040. 1041 (Corporations, Trusts, and Partnerships) and at least 10 state returns, some manually because the software I was using didn't handle non-resident returns for those states.

It doesn't take a long time to just enter itemized deductions if they are totaled, but if one is talking about medical expenses that includes mileage to and from doctors appointments, and all the other stuff I mentioned, it takes a lot more than 2 minutes. If you can get your client to do all the work totaling those things up for you, that's great, but I wonder why they would need someone to simply enter them into a tax return software program. My experience is that clients just hand over a bunch of receipts and expect the tax preparer to figure it out, which often requires follow-up to answer questions. Once you go down the road of itemizing deductions, then usually there are some things you have to ask the client about that they didn't think about, such as all their charitable donations (including cash), casualty losses, etc.

 

[not2cleverRed]

It doesn't take a long time to just enter itemized deductions if they are totaled, but if one is talking about medical expenses that includes mileage to and from doctors appointments, and all the other stuff I mentioned, it takes a lot more than 2 minutes. If you can get your client to do all the work totaling those things up for you, that's great, but I wonder why they would need someone to simply enter them into a tax return software program.

My experience has been that the tax preparer expects the client to provide the totals.

There are many reasons why someone might not be able to "simply enter [information] into a tax return software program."

 

[Mark_A]

My experience has been that the tax preparer expects the client to provide the totals.

There are many reasons why someone might not be able to "simply enter [information] into a tax return software program."

If you ask the client what are your total medical expense deductions, how would the client know what is tax deductible and how to figure out mileage, etc? Software programs like TurboTax have an "interview" process where they ask specific questions about each of those items, and not present a bunch of IRS forms.

 

[LdiJ]

If you think the IRS is bad, you should try doing a non-resident California state income tax return (needed for an investment in a publicly traded partnership that had income realized from CA, and 10 other states). That was a real nightmare, and at the time I did it, Turbo-Tax did not handle that for California (not sure if they do now).

Your second point is exactly correct, but it takes time to do those calculations, and if a paid tax preparer is going to do that, it could affect the fee being charged. If it was just mortgage interest and state and local taxes, that might not take so long (if the client had all the documentation handed to the preparer), but some of the other stuff can be tedious (like the medical stuff I mentioned above) and easily double the amount of time needed to do the tax return.

How long has it been since you have done a tax return using professional software?

I did 17 tax returns today and I inputted itemized deductions vs standard deductions on most of them, if for no other reason than to show the client the difference between the two. I did not charge extra for doing so. Now, admittedly I have trained my clients to add up their medical expenses before bringing their stuff to me, so I don't have to charge them for that kind of time, but still.

Professional software isn't in a question and answer format, we just go put the numbers where they go. Of course you have to actually know where the numbers are supposed to go in order to use the software, but it still isn't question and answer.

 

[LdiJ]

If you ask the client what are your total medical expense deductions, how would the client know what is tax deductible and how to figure out mileage, etc? Software programs like TurboTax have an "interview" process where they ask specific questions about each of those items, and not present a bunch of IRS forms.

Considering that someone has to keep a mileage log in order to deduct mileage, I think that those people probably know how to figure that out. As far as the rest is concerned, pharmacies provide YTD records for taxes, it is pretty easy to add up your out of pocket medical expenses, and people who pay for their own insurance (rather than through their employer) know how much that costs as well.

 

[Mark_A]

How long has it been since you have done a tax return using professional software?

I did 17 tax returns today and I inputted itemized deductions vs standard deductions on most of them, if for no other reason than to show the client the difference between the two. I did not charge extra for doing so. Now, admittedly I have trained my clients to add up their medical expenses before bringing their stuff to me, so I don't have to charge them for that kind of time, but still.

Professional software isn't in a question and answer format, we just go put the numbers where they go. Of course you have to actually know where the numbers are supposed to go in order to use the software, but it still isn't question and answer.

I don't use what you call "professional" software. I don't know what difference it makes. I was just saying that if a regular person wants to try and do their own taxes, there is software available (online or running on a PC) that conducts an interview and kind of walks one through the return somewhat similar to how a tax professional might does an interview with a client.

I think this thread is getting off-subject, and my remarks may have been misinterpreted. What I was trying to say is that if there is any question about whether itemizing or standard deduction should be used, one can just input all the data an the software will choose the best option. The OP made it sound like the tax professional made the decision, which only be true if the tax professional didn't input the deductions. There might be legitimate reasons why the tax professional might not want to input the all the deductions, if they are quite sure there are not enough itemized deductions and if inputting them takes a lot of extra time (which I agree isn't always the case).

I wasn't trying to start a huge argument about this. I said I was a retired a CPA, because I let my CPA license expire, but I have done more tax returns in "retirement" than I did before that, since I was not a tax specialist during my career. I you doubt that I was a licensed CPA, I can send you a copy of my license, first obtained in 1980.

 

[Mark_A]

Considering that someone has to keep a mileage log in order to deduct mileage, I think that those people probably know how to figure that out. As far as the rest is concerned, pharmacies provide YTD records for taxes, it is pretty easy to add up your out of pocket medical expenses, and people who pay for their own insurance (rather than through their employer) know how much that costs as well.

In my case working with people to do their tax return, they may not know that mileage related to medical was tax deductible (if the total medical expenses exceeded 7.5% of AGI). So they had to go back and figure out all the doctor and hospital visits, and calculate the mileage that way. I had to do that myself for a deceased person's tax return that I prepared.

For older people there is usually Medicare Part B premiums, which might be in the SSA-1099 or might be paid separately, and Medicare Supplemental Insurance, which premium amounts can change in the middle of the year (mine does), and Medicare Part D drug plan premiums. There are also Medicare deductible amounts paid directly to providers, or amounts paid to providers not covered by Medicare. Then there are the prescription drug charges, vision, dental, and a few other items.

I don't do a lot of tax returns, but the ones I do are sometimes a little time consuming.

 

[davew9128]

I have prepared many tax returns, including federal 1040. 1041 (Corporations, Trusts, and Partnerships) and at least 10 state returns, some manually because the software I was using didn't handle non-resident returns for those states.

It doesn't take a long time to just enter itemized deductions if they are totaled, but if one is talking about medical expenses that includes mileage to and from doctors appointments, and all the other stuff I mentioned, it takes a lot more than 2 minutes. If you can get your client to do all the work totaling those things up for you, that's great, but I wonder why they would need someone to simply enter them into a tax return software program. My experience is that clients just hand over a bunch of receipts and expect the tax preparer to figure it out, which often requires follow-up to answer questions. Once you go down the road of itemizing deductions, then usually there are some things you have to ask the client about that they didn't think about, such as all their charitable donations (including cash), casualty losses, etc.

Almost any idiot can put numbers into a computer. Understanding what to put and where is the professional part.

Any client who hands over a bunch of receipts and expects me to even look at them either becomes a former client or gets billed my consulting rate of $450/hour for the work.