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Most people nowadays don’t want to accept responsibility so they try and put the blame on someone else.
The key to this problem is to look at a summary of the tax return which shows income, deductions, credits, tax liability, estimated taxes, tax withholding and balance due or refund. If this is your first year with the client always look at the previous return and notice the changes in income, deductions, estimated taxes and withholding taxes.
By doing this comparison, you will soon see what is causing the bleeding and it is usually because of something the client did. For example, the client might have sold some stock for a huge gain, or they adjusted their withholding taxes even when they had the same income and owed tax last year. They could have forgotten to make an estimated payment or they might have withdrawn money from a retirement plan that was subject to the 10% penalty on top of income taxes.
Your mission is to explain why the client owes tax and what they must do to prevent this from happening next year. First, find out why they owe tax and suggest ways to lower next years tax even if it means they have to have more tax withheld from their paycheck which will reduce their standard of living.
Most people nowadays don’t want to accept responsibility so they try and put the blame for underpaying their taxes on someone else. And since you are the tax preparer, guess who gets the blame.
So, be delicate in pointing out where the problem arose and in explaining the corrective course of action. When clients owe tax, try and say something like, "What a great country this is" You won’t get many arguments about that statement.
Can you do all this? Well, if you can, you just might make a good tax preparer.
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