Tax Horror Stories, Part II

Last week, I shared a couple of tax horror stories. These are experiences my clients shared with me just recently when we started working together. These are specific stories about what happened during their interactions with their former tax preparers, and how much it cost them when that person didn’t take care to do their tax returns correctly. I’m just thankful these individuals found their way to Arcadia Financial Services, and that we are in a position to help them by straightening everything out. Here are a couple more stories.

This client sold a building in New York. He had a tax return with two other Schedule Cs and a Schedule E that produced a $2200 refund. However, that was wrong. We amended his tax return and got him a Federal refund of $24,787.00 and a NY Refund of $5,976! How could it have been that far off? The CPA who filed the original return did not do the Schedule Cs correctly; there were no auto deductions, no home office deductions, and also missing were missed costs of purchase and the sale of the business building of over $56,050.

Another client is the owner of a salon. Her former CPA told her she should file as an S-Corp. The CPA proceeded to submit the application to become an S Corp, but she did it incorrectly and the client became a C Corp, instead. So, yes, the CPA attempted to help the client get the appropriate business filing status, but she did it wrong. Therefore, the client got taxed incorrectly and had to pay more than necessary. When we started working with this client, we got her established as an S Corp. In the last year, her business has boomed, and she had three times the revenues she made during the previous tax year, but she paid LESS in taxes! May I say that again? My client MADE THREE TIMES THE INCOME REVENUE, BUT PAID LESS IN TAXES! See what good advice can get you? It is important to find the right tax professional.

We might be onto something here; sharing tax horror stories I hear from my clients could be an ongoing thing because, sadly, I don’t feel these stories will stop coming in. But for now, this will be a short, three- part series. Part Three (you’ll see the last post before the end of the month) will be the piece de resistance and this story will blow your mind. I’m working right now on saving a client $189,000! Stay tuned for that!