Question

You have clients, Brian and Jessica, both 37 years old. Each year they bring you their tax documents and you prepare their tax returns. They always file Married – Filing Jointly because it is most beneficial. This year, they call to make an appointment and when they call they say to you “We were thinking of getting re-married. How will that affect our returns?” Come to find out, Brian and Jessica divorced two years ago. They remained living in the same home together for the benefit of their young son, William (age 10). They never told you they divorced. So for the last two years, you prepared their returns as if they were married. Brian earns $75,000 per year, and Jessica earns $25,000. They will be coming into your office next week. Identify the issues and how would you advise them?

Answer 1

This is a major issue since for the last two years they have been filing returns which are legally not correct. Also since they have been taking my help, so even I have liability on that account. I will advise them to do the following:-

1) Revise their previous two year's return immediately.

2) File the revised returns with IRS and pay necessary fines with immediate effect

Also to remove any possibility of implicating me, I would demand them to provide me with an affidavit saying that true status of Thier relationship was hidden from me and that on knowing the correct status, I immediately advised them to revise their returns to avoid tax fraud