Success Snapshot: How Mr. P’s previous tax return mistake nearly cost him $197,000 and serious IRS headaches.
Situation/Problem: TAX SURPRISE
Mr. P came to KFS as a new tax client and wanted us to prepare his current year income tax returns. After completing his return, we noticed there was a $1,014,000 loss-carry-forward on Mr. P’s previous year’s return. To us this stood out as very odd because Mr. P had income of about $75,000 for both years. (A loss-carry-forward is when you have more deductions in one year than you have income.
You’re allowed to carry these losses for future years to legally offset any taxable income.)
KFS Solution: We knew something wasn’t right. We began to dig into Mr. P’s receipts for the previous return and we found the problem. Mr. P had sold some stocks that year and had a loss. However the loss was actually only $1,014. The previous tax preparer had made a data entry error and added 3 extra zeros to the loss-carry-forward by accident. We showed our discovery to Mr. P. and needless to say, it was a dramatic WOW moment to him!
Mr. P’s Results:We corrected Mr. P’s previous year return to prevent his certain and unwanted tax surprise looming in his future! If we had not noticed this mistake, Mr. P would have continued to use the $1,014,000 loss carry forward incorrectly for approximately 13 years in the future. We estimated this mistake could easily have cost Mr. P at least $197,000 or more in a serious IRS backlash of taxes, interest and penalties! Mr. P can now breathe much easier knowing that he escaped a nasty IRS tax surprise and is relieved that all our work undergoes a double-check review by a second KFS staff member to ensure our accuracy.
Success Snapshot: Dr. H reduced some recurring worries and gained some more time for himself.
Situation/Problem: CPA NOT RESPONSIVE
Dr. H is a successful, specialist surgeon who produces high cash flow and income. He also directs a more sophisticated investment portfolio. His office assistant does all the day-to-day accounting of writing checks and making bank deposits. With a large cash flow to oversee, a high-demand schedule and very limited time, Dr. H needs a reliable, responsive accounting resource to delegate the review of cash flow and confirm correct processing so he doesn’t have to be concerned with it. He needs results quickly because he doesn’t have time for these routine but necessary tasks. He mainly needed quick, regular calls to his CPA to receive updates, to confirm proper processing and to look out for his best interests. He was greatly irritated because his single-person CPA office was often not available when he tried to reach her. Sometimes her outgoing message to clients explained that she was on vacation and wouldn’t be returning for a month! When his CPA wasn’t readily available to him, it made him feel at risk.
KFS Solution: Dr. H decided to work with KFS. He liked our full staff available during regular business hours, our technology systems that provide easy, real-time confirmations and our successful 20-year track record. Now every time he calls KFS he gets a live person on the phone that can help him. If one KFS person isn’t available, another KFS crossed-trained team member can handle most of his needs immediately.
Dr. H’s Results: Dr. H has greatly reduced his worry and his time required to confirm and verify the cash flow in his business. He can now be more focused on his other work or maybe even get more time for some R&R.