Worth it to Amend incorrect CPA prepared tax returns?

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panhead
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Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 7:28 am

I've been posting questions lately about problems I've found with my tax returns over the last three years prepared by my CPA. Going forward I will be doing my own returns, but I am trying to decide if it is worth it to try to amend the previous returns. The first two years (2014/15) The return mishandled the cost basis on my RSUs. This resulted in my tax being about $1000 less for each of these years, ie, I paid about $2000 less in taxes than I should have for these two years. In 2016, the problem went the other way. This time RSUs and ESPP were mishandled resulting in my paying about $2750 more than required. This doesn't include my state taxes, which would also need to be amended. I imagine I would be owed close to $1000 all said and done.

So, what to do? Just amend 2016 and see if I get audited for the first two years? Amend all three years? Wait till after filing in 2018 and amend 2015/16 since 2014 will have aged over three years? Wait till after April 15th 2019 as both of the first two years will have aged 3 years? Do nothing and just suck it up?

I'm also trying to decide whether I should ask my CPA to do any of this. I doubt he would do any of it until after the tax season rush is over so 2014 wouldn't get done anyway due to the three year aging. Even though it would be a lot more work for me, I don't think asking him makes a lot of sense as I am going to have to explain to him what's wrong and how to fix it anyway.

Well, what do ya'll think my best plan of action is?

bberris
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by bberris » Wed Dec 06, 2017 8:04 am

File all the incorrect returns. It won't look good if you only file returns where you were due a refund because clearly you could see the error.

Copy your CPA, get a refund of his fees and reimbursement of any penalty.

Sidney
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by Sidney » Wed Dec 06, 2017 8:17 am

I am not an expert but I believe if you know that a return that has been filed is incorrect you have a legal obligation to amend and correct the error if the original return understates your tax liability. To ignore it hoping that they don't detect it would seem to me to constitute fraud. I also think that might void the three year "statute of limitations" on audit risk.

Hopefully others will chime in here.
I always wanted to be a procrastinator.

panhead
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 9:18 am

Sidney wrote:
Wed Dec 06, 2017 8:17 am
I am not an expert but I believe if you know that a return that has been filed is incorrect you have a legal obligation to amend and correct the error if the original return understates your tax liability. To ignore it hoping that they don't detect it would seem to me to constitute fraud. I also think that might void the three year "statute of limitations" on audit risk.

Hopefully others will chime in here.
That is a very good point and I absolutely do not want to do anything illegal. I suppose the way it works is that I am ultimately responsible even if a paid preparer filled out the return.

panhead
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 9:19 am

bberris wrote:
Wed Dec 06, 2017 8:04 am
File all the incorrect returns. It won't look good if you only file returns where you were due a refund because clearly you could see the error.

Copy your CPA, get a refund of his fees and reimbursement of any penalty.
Yeah, I'm leaning toward this though its a lot of work. I seriously doubt I will ever get a dime back from him.

Edited to add:

I'm considering either this route or doing nothing out of laziness. If the net effect is the IRS owing me money, I'm sure they would be ok with inaction on my part :D . That being said, $1000 ain't chump change.....

tomd37
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by tomd37 » Wed Dec 06, 2017 10:21 am

Panhead - Look at the wording of the 1040 signature section

"Under the penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and accurately list all amounts and sources of income I received during the tax year. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge."

Regardless of who prepares your tax return (even free volunteer tax preparation services such as VITA and TCE), the taxpayer(s) is/are responsible and liable for the tax return.
Tom D.

spectec
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by spectec » Wed Dec 06, 2017 10:58 am

Provided that statement was true at the time the taxpayer signed the return, then he has done nothing wrong. There is nothing in the statement that obligates the taxpayer to amend the return if new information comes to light at a later time. There is considerable discussion within the tax preparation community as to whether an amended return is "required" vs "recommended" in this situation.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

panhead
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 11:21 am

spectec wrote:
Wed Dec 06, 2017 10:58 am
Provided that statement was true at the time the taxpayer signed the return, then he has done nothing wrong. There is nothing in the statement that obligates the taxpayer to amend the return if new information comes to light at a later time. There is considerable discussion within the tax preparation community as to whether an amended return is "required" vs "recommended" in this situation.
Yes, I didn't know that there were mistakes in any of the returns when they were filed. My CPA did the return, I took a cursory look to make sure that the forms I expected to be there were there, and that was it. This year (2017) I was thinking of doing my own taxes as the cost to have the CPA do it has been increasing substantially over the years. I started looking at my partnership return and found a mistake in it which I asked about here as well. After that, I started reviewing my personal return from 2016 more closely and found the mistakes I talk about above. I went back to previous years to see how it was done, and although done differently, I was able to determine they were incorrect as well (this was the reason for my questions about the taxation of RSUs, in yet another thread.

Your comment is curious. If I go through the work to amend them all, I should get close to $1000. If I do nothing, I'm out this amount. It does seem shady to only amend the 2016 return which is the only one where I paid in too much.

Side note: I have called my CPA yet again. Waiting to hear back.

thangngo
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by thangngo » Wed Dec 06, 2017 11:42 am

panhead wrote:
Wed Dec 06, 2017 7:28 am
I've been posting questions lately about problems I've found with my tax returns over the last three years prepared by my CPA. Going forward I will be doing my own returns, but I am trying to decide if it is worth it to try to amend the previous returns. The first two years (2014/15) The return mishandled the cost basis on my RSUs. This resulted in my tax being about $1000 less for each of these years, ie, I paid about $2000 less in taxes than I should have for these two years. In 2016, the problem went the other way. This time RSUs and ESPP were mishandled resulting in my paying about $2750 more than required. This doesn't include my state taxes, which would also need to be amended. I imagine I would be owed close to $1000 all said and done.

So, what to do? Just amend 2016 and see if I get audited for the first two years? Amend all three years? Wait till after filing in 2018 and amend 2015/16 since 2014 will have aged over three years? Wait till after April 15th 2019 as both of the first two years will have aged 3 years? Do nothing and just suck it up?

I'm also trying to decide whether I should ask my CPA to do any of this. I doubt he would do any of it until after the tax season rush is over so 2014 wouldn't get done anyway due to the three year aging. Even though it would be a lot more work for me, I don't think asking him makes a lot of sense as I am going to have to explain to him what's wrong and how to fix it anyway.

Well, what do ya'll think my best plan of action is?
Are you certain that you know the correct treatment of RSU and ESPP? Did you have a discussion with your CPA and both agree that your returns were done incorrectly? Collect all the facts: grant date, vesting schedule, signed documents, whether Section 83(b) election was made, how much was included in your W-2, if any, etc. and get a second opinion.

Ultimately, you are the person who sign your own return and be responsible for everything in it. If it was done incorrectly, you will need to amend your returns for all the years. I know it is an administrative hassle. Unless you know what you're doing as far as tax treatments on RSU's and ESPP and amending the returns, get your CPA involved.

Billionaire
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by Billionaire » Wed Dec 06, 2017 11:59 am

There was a similar topic on the forum recently. I always suggest amending all the returns. Otherwise, your sleep will be impacted.

Last year, the CPA firm that prepared my mother's trust botched it. I had to point out errors to them before and after the return was filed. The 2015 return was perfect. A different person prepared the 2016 return. Get this, when I first started talking to him about some of the numbers, he said he is primarily an auditor and doesn't usually do tax returns. Never again. I'll prepare the Form 1041 for 2017.

panhead
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 12:04 pm

thangngo wrote:
Wed Dec 06, 2017 11:42 am
Are you certain that you know the correct treatment of RSU and ESPP? Did you have a discussion with your CPA and both agree that your returns were done incorrectly? Collect all the facts: grant date, vesting schedule, signed documents, whether Section 83(b) election was made, how much was included in your W-2, if any, etc. and get a second opinion.

Ultimately, you are the person who sign your own return and be responsible for everything in it. If it was done incorrectly, you will need to amend your returns for all the years. I know it is an administrative hassle. Unless you know what you're doing as far as tax treatments on RSU's and ESPP and amending the returns, get your CPA involved.
Yes, I am certain I understand the tax treatment of my ESPP as well as my particular flavor of RSUs. It is actually quite clear what was done and why it was wrong in 2014/15. Now for 2016, it's out the window. The basis used for the RSUs makes no sense whatsoever, in addition to the fact that the w2 income wasn't added to the basis for the ESPP shares. That being said, I am going to consult with my CPA to see what he says. The partnership return had a mistake that he admitted was wrong, so let's see if I'm right again...

I can redo all of the returns myself and mail them in, but yeah, it's a huge hassle. If my CPA agrees that mistakes were made I'll see what level of support he will offer. If none, I'm not sure what I'm going to do, but I'm leaning toward doing nothing.

panhead
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 12:11 pm

Billionaire wrote:
Wed Dec 06, 2017 11:59 am
There was a similar topic on the forum recently. I always suggest amending all the returns. Otherwise, your sleep will be impacted.
Yes, I'm either going to do this or do nothing. I'll decide after speaking to my CPA.
Billionaire wrote:
Wed Dec 06, 2017 11:59 am
Never again.
I'm with you, from now on, I'm going to do my own taxes.

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celia
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by celia » Wed Dec 06, 2017 12:24 pm

panhead wrote:
Wed Dec 06, 2017 11:21 am
If I go through the work to amend them all, I should get close to $1000. If I do nothing, I'm out this amount. It does seem shady to only amend the 2016 return which is the only one where I paid in too much.
Personally, I would forget about all the amending and just do it yourself going forward. The cost (in time) to you would likely be over $1,000.

I spent a lot of time helping someone else out who had botched returns in the past, done by a CPA. After doing all the calculations correctly and researching the "obligation" to correct things, I think they ended up doing nothing (as they believed the returns were true at the time they electronically signed them). I spent a lot of time on it (as a volunteer) and do not regret it as it was a learning experience for me (and them), but it certainly wasn't worth the time that went into it. The IRS never did notify them and they found someone else to do their taxes going forward.

panhead
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 12:30 pm

celia wrote:
Wed Dec 06, 2017 12:24 pm
Personally, I would forget about all the amending and just do it yourself going forward. The cost (in time) to you would likely be over $1,000.

I spent a lot of time helping someone else out who had botched returns in the past, done by a CPA. After doing all the calculations correctly and researching the "obligation" to correct things, I think they ended up doing nothing (as they believed the returns were true at the time they electronically signed them). I spent a lot of time on it (as a volunteer) and do not regret it as it was a learning experience for me (and them), but it certainly wasn't worth the time that went into it. The IRS never did notify them and they found someone else to do their taxes going forward.
Thanks for this information, this is the way I'm leaning. I also agree that time wise it's probably not worth it, though I do believe the learning experience would be.

MrJones
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by MrJones » Wed Dec 06, 2017 2:13 pm

On a related note, if you've already figured out the problem, I found filing the amendment to be far easier than what my imagination had led me to believe. Over the years I've done this at least thrice, once when I owed and twice when IRS owed. The whole process was surprisingly smooth each time.

panhead
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 2:40 pm

MrJones wrote:
Wed Dec 06, 2017 2:13 pm
On a related note, if you've already figured out the problem, I found filing the amendment to be far easier than what my imagination had led me to believe. Over the years I've done this at least thrice, once when I owed and twice when IRS owed. The whole process was surprisingly smooth each time.
I looked at it. It seems to be a pain at the federal level to go through all of the AMT calculations as well as regular calculations. I may take a stab at redoing the 2014 return since it would need to be done soon and see how it goes. Nice that the federal only wants forms that changed instead of the whole return. My state requires everything when amending a return. I'm thinking I could scan the old return and print out the pages that don't change, while redoing the ones that do. If this goes pretty quickly, I may amend all the returns. Apparently the feds want each amended return in a separate envelope. I wonder if I need to include a check for each return that I owe on? If I mail all three without checks, would they be able to figure out the net refund I am due? I'm thinking no....

thangngo
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by thangngo » Wed Dec 06, 2017 3:01 pm

panhead wrote:
Wed Dec 06, 2017 12:04 pm
thangngo wrote:
Wed Dec 06, 2017 11:42 am
Are you certain that you know the correct treatment of RSU and ESPP? Did you have a discussion with your CPA and both agree that your returns were done incorrectly? Collect all the facts: grant date, vesting schedule, signed documents, whether Section 83(b) election was made, how much was included in your W-2, if any, etc. and get a second opinion.

Ultimately, you are the person who sign your own return and be responsible for everything in it. If it was done incorrectly, you will need to amend your returns for all the years. I know it is an administrative hassle. Unless you know what you're doing as far as tax treatments on RSU's and ESPP and amending the returns, get your CPA involved.
Yes, I am certain I understand the tax treatment of my ESPP as well as my particular flavor of RSUs. It is actually quite clear what was done and why it was wrong in 2014/15. Now for 2016, it's out the window. The basis used for the RSUs makes no sense whatsoever, in addition to the fact that the w2 income wasn't added to the basis for the ESPP shares. That being said, I am going to consult with my CPA to see what he says. The partnership return had a mistake that he admitted was wrong, so let's see if I'm right again...

I can redo all of the returns myself and mail them in, but yeah, it's a huge hassle. If my CPA agrees that mistakes were made I'll see what level of support he will offer. If none, I'm not sure what I'm going to do, but I'm leaning toward doing nothing.
Let's wait and hear what your soon-to-be former CPA says.

Amending a return is fairly simple. You can learn and do it yourself. On Form 1040X, be sure to clearly explain the reason for amending the return. Include a table that have 3 columns: "as original filed", "as filed", and "difference" to show your calculation. You will need to recalculate your AMTI and AMT liability if applicable, but it should follow the same methodology as the original return.

In the package, include the following in this order:
1) Form 1040X.
2) Form 1040, as amended: include pages that have changed. Put a header of each page: "As Amended"
3) Form 1040, as original filed: include relevant pages that have changed. Put a header of each page: "As Originally Filed"

Make sure you have the correct mailing address. It depends on where you filed your original return. You can find this information on Form 1040X instruction.

Amend 2016 return first to get the refund. Make sure you keep detail records of cost basis of your RSU's, FMV at vesting date, related W-2 supplement, selling price, date of sale, etc. just in case the IRS requests additional information.

For state, you should wait until the IRS accepts and processes your amended 2016 tax return.

Feel free to ask any follow-up questions. I'll try to help when I can.

quantAndHold
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by quantAndHold » Wed Dec 06, 2017 3:06 pm

My experience is that the IRS will take three years to figure out that you underpaid, then will send you a very large bill that isn't correct (They have a tendency to calculate everything assuming a cost basis of $0). Then you will need to amend anyway, to show them where their error is and calculate the correct amount for yourself. In the meantime, you've racked up 3 years of interest. As soon as you get done paying the feds, your state will send you a bill with the same wrong numbers, and you'll need to amend that return, too.

For the one that's already 3 years out, I might skip it and hope it quietly times out, since you would already owe 3 years of interest. For the newer ones, I'd amend. It really isn't that hard to do. My approach for a complicated return would be to get the correct year of your favorite tax software, plug in the numbers the CPA gave you, then amend that. The major tax software packages know how to do amended returns.

inbox788
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by inbox788 » Wed Dec 06, 2017 3:44 pm

I had to deal with an issue that crossed tax years. The problem in year 1 was incorrectly corrected in year 2 by my CPA. If you look across both years, it's a wash, but if you at each year individually, and strictly follow the rules, there was a potential for underpayment fees and penalties. Worst, if you ignore year 1 and only account for year 2, I might have been liable for additional taxes. I think it would have only been an issue if I was audited exactly 3 years after year 1, so only year 2 was still on the books, but year 1 had already rolled off.

After considering the amounts involved, I did the expedient thing and ignored it. I'm not sure it was the best thing to do, but I didn't want to waste hours of my time, CPA time, and IRS time over a relatively small issue. If it helps you sleep at night, then go through the work, but if it's mostly a waste of time, I wouldn't fault you for doing nothing. I don't know if the IRS would feel differently or if there is a threshold the IRS considers small potatoes that can be ignored.

Anyway, I've had years where I wasn't totally clear what my CPA did and/or didn't fully understand the returns. Numbers didn't match TurboTax shadow return, but since I didn't know whether to trust the software or the CPA, I chose the latter and crossed my fingers. So far the only time the IRS has come calling they found a $30 mistake that cost me $10 in extra taxes. I had to waste both my time, CPA time, and call the IRS several times for clarification. I don't think the $10 covered the salary for the folks answering the phone, let alone the half a dozen or so notifications and collections mailings.

MarkNYC
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by MarkNYC » Wed Dec 06, 2017 4:20 pm

Duplicate
Last edited by MarkNYC on Wed Dec 06, 2017 4:27 pm, edited 1 time in total.

MarkNYC
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by MarkNYC » Wed Dec 06, 2017 4:21 pm

thangngo wrote:
Wed Dec 06, 2017 3:01 pm

Amending a return is fairly simple. You can learn and do it yourself. On Form 1040X, be sure to clearly explain the reason for amending the return. Include a table that have 3 columns: "as original filed", "as filed", and "difference" to show your calculation. You will need to recalculate your AMTI and AMT liability if applicable, but it should follow the same methodology as the original return.

In the package, include the following in this order:
1) Form 1040X.
2) Form 1040, as amended: include pages that have changed. Put a header of each page: "As Amended"
3) Form 1040, as original filed: include relevant pages that have changed. Put a header of each page: "As Originally Filed"
For item #3, I would advise against mailing a copy of the original 1040 along with the 1040X, for two reasons:

First, the IRS does not need it. They already have the original tax return items and amounts in their records. They are not going to spend time examining a mailed duplicate to see if the numbers on the duplicate return exactly match the original records in their system. They will simply compare the amended return information to the original tax return records in their computer system.

Second, the IRS instructions for amended return Form 1040X don't ask for a copy of the original tax return. On the contrary, they state "Don't attach a copy of your original return, correspondence, or other items unless required to do so."
Last edited by MarkNYC on Wed Dec 06, 2017 4:29 pm, edited 1 time in total.

panhead
Posts: 207
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 4:26 pm

thangngo wrote:
Wed Dec 06, 2017 3:01 pm
panhead wrote:
Wed Dec 06, 2017 12:04 pm
thangngo wrote:
Wed Dec 06, 2017 11:42 am
Are you certain that you know the correct treatment of RSU and ESPP? Did you have a discussion with your CPA and both agree that your returns were done incorrectly? Collect all the facts: grant date, vesting schedule, signed documents, whether Section 83(b) election was made, how much was included in your W-2, if any, etc. and get a second opinion.

Ultimately, you are the person who sign your own return and be responsible for everything in it. If it was done incorrectly, you will need to amend your returns for all the years. I know it is an administrative hassle. Unless you know what you're doing as far as tax treatments on RSU's and ESPP and amending the returns, get your CPA involved.
Yes, I am certain I understand the tax treatment of my ESPP as well as my particular flavor of RSUs. It is actually quite clear what was done and why it was wrong in 2014/15. Now for 2016, it's out the window. The basis used for the RSUs makes no sense whatsoever, in addition to the fact that the w2 income wasn't added to the basis for the ESPP shares. That being said, I am going to consult with my CPA to see what he says. The partnership return had a mistake that he admitted was wrong, so let's see if I'm right again...

I can redo all of the returns myself and mail them in, but yeah, it's a huge hassle. If my CPA agrees that mistakes were made I'll see what level of support he will offer. If none, I'm not sure what I'm going to do, but I'm leaning toward doing nothing.
Let's wait and hear what your soon-to-be former CPA says.

Amending a return is fairly simple. You can learn and do it yourself. On Form 1040X, be sure to clearly explain the reason for amending the return. Include a table that have 3 columns: "as original filed", "as filed", and "difference" to show your calculation. You will need to recalculate your AMTI and AMT liability if applicable, but it should follow the same methodology as the original return.

In the package, include the following in this order:
1) Form 1040X.
2) Form 1040, as amended: include pages that have changed. Put a header of each page: "As Amended"
3) Form 1040, as original filed: include relevant pages that have changed. Put a header of each page: "As Originally Filed"

Make sure you have the correct mailing address. It depends on where you filed your original return. You can find this information on Form 1040X instruction.

Amend 2016 return first to get the refund. Make sure you keep detail records of cost basis of your RSU's, FMV at vesting date, related W-2 supplement, selling price, date of sale, etc. just in case the IRS requests additional information.

For state, you should wait until the IRS accepts and processes your amended 2016 tax return.

Feel free to ask any follow-up questions. I'll try to help when I can.
Thanks for the detail and offer of help, I'll be sure to update when I hear from my CPA!

panhead
Posts: 207
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 4:27 pm

quantAndHold wrote:
Wed Dec 06, 2017 3:06 pm
My experience is that the IRS will take three years to figure out that you underpaid, then will send you a very large bill that isn't correct (They have a tendency to calculate everything assuming a cost basis of $0). Then you will need to amend anyway, to show them where their error is and calculate the correct amount for yourself. In the meantime, you've racked up 3 years of interest. As soon as you get done paying the feds, your state will send you a bill with the same wrong numbers, and you'll need to amend that return, too.

For the one that's already 3 years out, I might skip it and hope it quietly times out, since you would already owe 3 years of interest. For the newer ones, I'd amend. It really isn't that hard to do. My approach for a complicated return would be to get the correct year of your favorite tax software, plug in the numbers the CPA gave you, then amend that. The major tax software packages know how to do amended returns.
HA! I've had that happen to me before as well. I got a letter with a huge tax bill from the IRS that made my heart stop. Once I finally figured out that they assumed a 0 cost basis I felt better. I still owed, but it wasn't as bad.

panhead
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 4:29 pm

inbox788 wrote:
Wed Dec 06, 2017 3:44 pm
I had to deal with an issue that crossed tax years. The problem in year 1 was incorrectly corrected in year 2 by my CPA. If you look across both years, it's a wash, but if you at each year individually, and strictly follow the rules, there was a potential for underpayment fees and penalties. Worst, if you ignore year 1 and only account for year 2, I might have been liable for additional taxes. I think it would have only been an issue if I was audited exactly 3 years after year 1, so only year 2 was still on the books, but year 1 had already rolled off.

After considering the amounts involved, I did the expedient thing and ignored it. I'm not sure it was the best thing to do, but I didn't want to waste hours of my time, CPA time, and IRS time over a relatively small issue. If it helps you sleep at night, then go through the work, but if it's mostly a waste of time, I wouldn't fault you for doing nothing. I don't know if the IRS would feel differently or if there is a threshold the IRS considers small potatoes that can be ignored.

Anyway, I've had years where I wasn't totally clear what my CPA did and/or didn't fully understand the returns. Numbers didn't match TurboTax shadow return, but since I didn't know whether to trust the software or the CPA, I chose the latter and crossed my fingers. So far the only time the IRS has come calling they found a $30 mistake that cost me $10 in extra taxes. I had to waste both my time, CPA time, and call the IRS several times for clarification. I don't think the $10 covered the salary for the folks answering the phone, let alone the half a dozen or so notifications and collections mailings.
$30???? Are you kidding me???? This is one of the stupidest things I have ever heard of. Do you have an ex gf/bf at the IRS that is out to get you?? :mrgreen:

panhead
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Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Wed Dec 06, 2017 4:30 pm

MarkNYC wrote:
Wed Dec 06, 2017 4:21 pm
MarkNYC wrote:
Wed Dec 06, 2017 4:20 pm
thangngo wrote:
Wed Dec 06, 2017 3:01 pm

Amending a return is fairly simple. You can learn and do it yourself. On Form 1040X, be sure to clearly explain the reason for amending the return. Include a table that have 3 columns: "as original filed", "as filed", and "difference" to show your calculation. You will need to recalculate your AMTI and AMT liability if applicable, but it should follow the same methodology as the original return.

In the package, include the following in this order:
1) Form 1040X.
2) Form 1040, as amended: include pages that have changed. Put a header of each page: "As Amended"
3) Form 1040, as original filed: include relevant pages that have changed. Put a header of each page: "As Originally Filed"
For item #3, I would advise against mailing a copy of the original 1040 along with the 1040X, for two reasons:

First, the IRS does not need it. They already have the original tax return items and amounts in their records. They are not going to spend time examining a mailed duplicate to see if the numbers on the duplicate return exactly match the original records in their system. They will simply compare the amended return information to the original tax return records in their computer system.

Second, the IRS instructions for amended return Form 1040X don't ask for a copy of the original tax return. On the contrary, they state "Don't attach a copy of your original return, correspondence, or other items unless required to do so."
Thanks for the clarification. I started reading the instructions for 1040X as well.

MrJones
Posts: 74
Joined: Sat Mar 18, 2017 2:23 am

Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by MrJones » Wed Dec 06, 2017 4:49 pm

panhead wrote:
Wed Dec 06, 2017 2:40 pm
MrJones wrote:
Wed Dec 06, 2017 2:13 pm
On a related note, if you've already figured out the problem, I found filing the amendment to be far easier than what my imagination had led me to believe. Over the years I've done this at least thrice, once when I owed and twice when IRS owed. The whole process was surprisingly smooth each time.
I looked at it. It seems to be a pain at the federal level to go through all of the AMT calculations as well as regular calculations. I may take a stab at redoing the 2014 return since it would need to be done soon and see how it goes. Nice that the federal only wants forms that changed instead of the whole return. My state requires everything when amending a return. I'm thinking I could scan the old return and print out the pages that don't change, while redoing the ones that do. If this goes pretty quickly, I may amend all the returns. Apparently the feds want each amended return in a separate envelope. I wonder if I need to include a check for each return that I owe on? If I mail all three without checks, would they be able to figure out the net refund I am due? I'm thinking no....

Good point about the pain: I should have mentioned that I used tax filing software (HR Block, but any is fine), because of which it was very easy to print out just the forms that changed along with the 1040X and mail it. Obviously, it's harder in your case not having that (sidenote: yet another reason to fire your CPA).

I've found it best to keep each year separate with the IRS. In fact, that is how they might want and process it. So pay for each of the years you owe, and expect to get a refund separately for the year where you are owed.

Billionaire
Posts: 265
Joined: Sat Jan 04, 2014 3:05 pm

Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by Billionaire » Thu Dec 07, 2017 7:01 am

panhead wrote:
Wed Dec 06, 2017 12:11 pm
Billionaire wrote:
Wed Dec 06, 2017 11:59 am
There was a similar topic on the forum recently. I always suggest amending all the returns. Otherwise, your sleep will be impacted.
Yes, I'm either going to do this or do nothing. I'll decide after speaking to my CPA.
Billionaire wrote:
Wed Dec 06, 2017 11:59 am
Never again.
I'm with you, from now on, I'm going to do my own taxes.
I would get your accountant, at no charge to you, file all the amended returns before the end of the 2017. It's not that difficult of a change. Just think, $1,000.00 in your pocket!!! Yummy, yummy.

panhead
Posts: 207
Joined: Fri Feb 22, 2013 10:53 am

Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Thu Dec 07, 2017 7:11 am

MrJones wrote:
Wed Dec 06, 2017 4:49 pm
panhead wrote:
Wed Dec 06, 2017 2:40 pm
MrJones wrote:
Wed Dec 06, 2017 2:13 pm
On a related note, if you've already figured out the problem, I found filing the amendment to be far easier than what my imagination had led me to believe. Over the years I've done this at least thrice, once when I owed and twice when IRS owed. The whole process was surprisingly smooth each time.
I looked at it. It seems to be a pain at the federal level to go through all of the AMT calculations as well as regular calculations. I may take a stab at redoing the 2014 return since it would need to be done soon and see how it goes. Nice that the federal only wants forms that changed instead of the whole return. My state requires everything when amending a return. I'm thinking I could scan the old return and print out the pages that don't change, while redoing the ones that do. If this goes pretty quickly, I may amend all the returns. Apparently the feds want each amended return in a separate envelope. I wonder if I need to include a check for each return that I owe on? If I mail all three without checks, would they be able to figure out the net refund I am due? I'm thinking no....

Good point about the pain: I should have mentioned that I used tax filing software (HR Block, but any is fine), because of which it was very easy to print out just the forms that changed along with the 1040X and mail it. Obviously, it's harder in your case not having that (sidenote: yet another reason to fire your CPA).

I've found it best to keep each year separate with the IRS. In fact, that is how they might want and process it. So pay for each of the years you owe, and expect to get a refund separately for the year where you are owed.
Yeah, if I had done it myself for all of these years I would have the software and this would be a relatively easy exercise. Without it, it's pretty painful. I agree with keeping the returns separate.

panhead
Posts: 207
Joined: Fri Feb 22, 2013 10:53 am

Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Thu Dec 07, 2017 7:11 am

Billionaire wrote:
Thu Dec 07, 2017 7:01 am
panhead wrote:
Wed Dec 06, 2017 12:11 pm
Billionaire wrote:
Wed Dec 06, 2017 11:59 am
There was a similar topic on the forum recently. I always suggest amending all the returns. Otherwise, your sleep will be impacted.
Yes, I'm either going to do this or do nothing. I'll decide after speaking to my CPA.
Billionaire wrote:
Wed Dec 06, 2017 11:59 am
Never again.
I'm with you, from now on, I'm going to do my own taxes.
I would get your accountant, at no charge to you, file all the amended returns before the end of the 2017. It's not that difficult of a change. Just think, $1,000.00 in your pocket!!! Yummy, yummy.
Money? I like money! (Mr Crabs from SpongeBob)

panhead
Posts: 207
Joined: Fri Feb 22, 2013 10:53 am

Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Thu Dec 07, 2017 7:22 am

Thanks for all of the replies and suggestions. My CPA called me back last night and we discussed the returns and what happened. He is a partner in this firm and he primarily does the reviews not the actual returns as he has staff for that. He instantly saw the mistakes and what I was talking about and agreed it got overlooked. He is a heck of a nice guy but I can't justify the expense of his services anymore and obviously the mistakes are a deal breaker. I will say that since the reporting change for RSUs and ESPPs (and whatever else it affected) since tax year 2014, I understand how this is a pain for preparers since the information is not all in one place, and in many cases the basis has to be calculated.

So, in any case, he is amending 2016 for me now, and once that is done and accepted, we will look at 2014 and 2015.

I will be buying taxact (most likely, still trying to see what's best for my situation) this year and doing my own taxes from here on out. I want to say thank you to everyone once again for taking the time to help me with this, the level of knowledge and expertise that can be found here is amazing!

-Pan-

spectec
Posts: 948
Joined: Mon Jul 14, 2014 8:00 am

Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by spectec » Thu Dec 07, 2017 11:08 pm

Maybe he's planning to take a long, long look at 2014, since the statute of limitations on it expires in 4 months (unless you originally filed an extension). :)
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

Billionaire
Posts: 265
Joined: Sat Jan 04, 2014 3:05 pm

Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by Billionaire » Fri Dec 08, 2017 6:27 am

I work for the IRS. Thanks for the heads-up. I'll be looking for your amended 2016 return.

panhead
Posts: 207
Joined: Fri Feb 22, 2013 10:53 am

Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Fri Dec 08, 2017 7:08 am

Billionaire wrote:
Fri Dec 08, 2017 6:27 am
I work for the IRS. Thanks for the heads-up. I'll be looking for your amended 2016 return.
That explains your screen name! :happy

panhead
Posts: 207
Joined: Fri Feb 22, 2013 10:53 am

Re: Worth it to Amend incorrect CPA prepared tax returns?

Post by panhead » Fri Dec 08, 2017 7:09 am

spectec wrote:
Thu Dec 07, 2017 11:08 pm
Maybe he's planning to take a long, long look at 2014, since the statute of limitations on it expires in 4 months (unless you originally filed an extension). :)
Maybe?! :sharebeer

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