Question

Which of the following situation should a tax preparer be especially wary

Answer 1

In many cases, tax professionals are also unable to provide appropriate tax planning guidance or unable to assess the tax liability for tax payer by following the principles and tax laws issued by internal revenue service (IRS). In these situations, it is not possible for tax professionals to reduce tax for tax payers and treated as situation for especially wary for tax professionals.

Following are some examples of these situations:

• When tax payer has more than one Forms W-2 for one tax year and in this situation generally there is always no tax planning scope for tax professionals to save tax on minimum exempt amount of more than one Form W-2.
• A handwritten Form W-2 where it is not possible for tax professionals to assess the tax liability accurately.
• Where all income and expenses are reported on Schedule C of individual income tax return of IRS Form 1040. However, only taxable income and deductible expenses are required to be reported by the small tax payer in this schedule.
• When there are many children live in the taxpayer’s household because there is higher tax on the person who many dependents. Even the Tax Cut and Job Acts has also not allowed any relaxation to this type of tax payers.