One of the services I provide at DKTaxServices is a FREE! tax review of your past tax return. I’ll tell you exactly why I do it – I’m looking to see if there is a way that we can save you a bunch of money. That’s because I know if I can tell you that you’ll save $10,000, $20,000 or even more, you’re going to want to be a client.
It’s also a great exercise for me because I see the mistakes that tax preparers or self-preparers are making. Most of them seem to be centered around real estate investments. For example, one of the things that I talk about in the IRS Survival Guide for Real Estate Professionals with Real Estate Investors is the need to make sure you’re taking into account BOTH the real estate professional status and the material participation rules. There are a lot of people who get this wrong. And it’ll be deadly in an IRS audit.
I just reviewed a couple of self-prepared returns where either the tax program didn’t work properly or the preparer overrode some phase-out rules. Those will get kicked for a correction for sure. And everytime there is a correction there is a much higher probably of an IRS audit.
And then I see the rules that are just flat ignored: Section 179 restrictions, home office loss rules, suspended real estate losses, AMT restrictions and passive activity aggregation rules. Everyone one of them is bound to get picked up when the IRS computer checks the math and runs the matching program.