Correcting Tax Returns

[Steven Hamilton II]

I just spent several hours today correcting a few very incorrect tax returns prepared by CPAs who advertise their services here. In one cases this is going to cost the client a substantial amount of money. In the other case it left a great deal on the table. 

Make sure your Tax Accountant doesn't outsource their tax preparation work. Also make sure they have Errors and Omissions insurance. 

If they have the time to spend on BP answering a lot of questions this time of year I'd have some concerns.

[Michael Plaks]

I had many experiences similar to that mentioned above when we "inherit" a client from another accountant. In most cases, these are accountants not specializing in real estate, though. 

Can't speak for others, but I personally would appreciate if a colleague of mine ever catches an error in the work of my firm and brings it to my attention. As @Linda Weygant said, nobody is infallible. I hope I'm close, though :)

Some of the red flags? OMG, a long list, @Joshua Thompson.

• Schedules C with zero income and large expenses, particularly interest, taxes, and repairs
• Flips reported at gross profit instead of full selling price minus cost of goods sold
• Flips reported as short-term capital transactions on Schedule D
• Schedules E with zero income and large expenses
• Schedules E with repairs several times higher than the rent
• Missing depreciation
• Losses from rental properties or K1s not showing up on 1040 (not always a mistake, but often is)
• All expenses grouped into some $40,000 "miscellaneous business expenses"
• Missing deduction for use of a business vehicle

there are another 20-30 very common errors and oversights, soon to include the missing 20% QBI deduction.