Drake Software blog for tax pros, covering tax, IRS news, and more

New Tax Year, Same Client Mistakes

The coronavirus pandemic has thrown the 2020 income tax filing season for a loop; taxpayers and tax preparers have been given extra time to file returns, but the new deadline day of July 15 apparently isn’t helping some clients make better decisions.

Accounting Today magazine writer Jeff Stimpson spoke with tax professionals around the country to get their take on some of these perennial client missteps.

The Usual Suspects

Stimpson writes that a number of mistakes show up every filing season, no matter the year. These include missing or incorrect Social Security numbers, misspelled names, incorrect filing statuses, errors in math or incorrect bank account numbers.

Other errors are based in thought. That is, the client didn’t think their tax pro needed all the paperwork the client had in order to turn out a correct tax return. One tax pro said with the new tax laws that do away with many of the federal deductions, the client forgets that they may still qualify for itemized deductions on the state side. So, they just don’t bring the appropriate paperwork to them.

Another friction point is the client who thinks the internet knows better than their tax pro. Purported tax advice that starts out with “Google said,” or “this online message board said,” one tax professional lamented, is still just hearsay and may not be rooted in any sort of fact.

Errors of Omission

Stimpson writes that another type of client mistake is the omission. This can include unsigned forms and expired ITINs, as well as claiming incorrect deductions or credits.

Related to these are sins of withholding, with at least one tax pro finding clients struggling with the new Form W-4. Many people were under-withheld in 2018 when the first round of tax changes came throughand it’s persisted since then. Stimpson writes that tax reform reduced the amount of taxes taken out of a lot of paychecks. The problem arose when many clients didn’t recalculate their withholding and got a nasty shock at their tax bill last yearyet still didn’t follow the advice of their tax professional.

The IRS had to put off the launch of its new W-4 after complaints that it violated privacy, required too much information about other income, placed too much on employers to determine withholding amounts, and was just too complicated.

So, the original problem still exists. A Florida tax professional told Stimpson she’s still seeing clients who haven’t adjusted their withholding amounts and need to be shown just why their refund this year is less than before.

The tax pro notes that these same clients were given similar education last tax season and it apparently didn’t sink in. The client didn’t make the adjustments but had to pay the price at tax time.

Other mistakes don’t actually take place during tax season, but in the off-season. Tax professionals say many times, clients either neglect—or just don’t think about off-season tax planning at all. From buying or selling a home, children going to college, a major illness in the family and more, all, they agree, can have an impact on the client’s situation come tax time. 

Our thanks to Jeff Stimpson and Accounting Today magazine.

Bob Williams

Forget genes; I’ve got words in my DNA. Communication has been part of who I am nearly all my life. From a long career in radio news to another one in newspapers – and a University of Georgia journalism degree sandwiched between the two – language has been my life. I’ve also been fortunate to have learned the tax business from the ground up here at Drake, starting with 1040.com online forms some years ago before moving on to work on the Web. In all things tax-ish, we aim to give you tools you can use.

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