Robert and Mary normally had their tax returns prepared by William (Mary's brother). This particular year William became too busy to complete their tax returns and they had to find another preparer. When they called me to see if I was taking on new clients, their first question was "How much do you charge for a simple tax return?" As I normally do before taking on a new client, I set up an appointment to meet with them to go over their previous year's "simple" tax return, ask them a set of questions and explained to them normally I would find at least one missed opportunity during my review of their tax returns. During my review I was able to determine the exemption used for the calculation of alternative minimum tax was incorrect resulting in them overpaying taxes by $9,045 since they were both very high wage earners. (The IRS did not seem to notify them of the error. I wonder why?) In addition I was able to find out they received an IRA distribution of $11,560 from Roberts deceased aunt who was age 66 when she died. Although Robert and Mary properly included the IRA distribution in the federal income tax return, they did not reduce New York State taxable income by claiming a subtraction from state due to the fact their aunt was over age 59 1/2 when she died. (I guess the "computer" assumed since Robert and Mary were under age 59 1/2 that it was taxable. New York State also did not notify them of the overpayment. (I wonder why?) After asking for the prior two years I was able to determine the alternative minimum tax calculation was incorrect in all three years for the same reason (wrong exemption amount used).
End Result: After finding these errors and omissions I was able to go back three years (statute of limitation) and amend and successfully recoup $34,654 of additional income tax refunds. While this very large dollar finding is not a typical, it is my biggest tax savings that I was ever able to obtain. Robert and Mary are now dedicated clients. William is retaking a refresher course but is still part of the family.
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