My wife is disabled. She receives long term disability insurance checks every month. Last year, when we started using an accountant, he stated that insurance checks aren’t taxed. Enter today, we go in for him to figure out our taxes, and low and behold, what he said isn’t quiet true. You don’t owe taxes if you spend for medical expenses the amount of money you receive. So, because of a lot of things too complicated to get into here, we got more money than we spent and now owe $4,000.
$4,000 is a lot of money to us. We’ll have to take the next couple of insurance checks and set them aside instead of paying for a new care taker for my wife (our current one is recouping from a broken leg).
My mother has been helping for free for two or three hours a day while I’m at work, and I’m going to have to see if her generosity will extend another month and a half. Also, we’re going to have to get records of all of our prescriptions and doctors visits which will lower the amount of taxes we owe.
Yeah, in the end we’ll be all right, but we shouldn’t have had this surprise thrust on us at the last minute by a guy who went over how great an accountant he is, and how he’s been doing this a long time. I had lots of plans for our refund and was looking forward to today. Talk about dashing your hopes.
Anyway, typing this out makes me feel a little better and I know we will get over it. But still, 4,000 fucking dollars. Damn!
How much are you paying for the accountant? Maybe you could help recoup your losses by firing him.
Dang. Is the accountant at least copping to the screwup? Or is he denying that he gave you that bit of (mis)information in the first place?
Well, from the sound of things he didn’t give them mis-information if his assumption was that they were using the disability checks for medically related expenses. If the medical disability checks are more than the cost of medical treatment, and checks are being spent on non-medical items, it’s not entirely his fault things have some to this pass.
He’s a freakin’ idiot if he assumed that disability payments are being used for nothing but medical expenses. Disability is what you live on.
Is it kosher for a professional to be makng assumptions rather than requesting relevant information from the client?
The accountant we had cost us about $7,000 for similar bad advice plus basic incompetence in filling out our forms. (He used the wrong year for one set of 940s, for example.) Our new accountant is advising that we sue — which really impressed me because typically, peers don’t rat each other out. She says that she’s mortified that he’s a CPA. She took it upon herself to report him to whatever board it is that CPAs get reported to. Anyway, the reason I bring all this up is that she wrote letters on our behalf to the IRS, and as a result, recouped for us a substantial portion of the money. Maybe you could do something similar.
For some time at work I was involved in recovery action, chasing taxpayers for outstanding debts. In order to be allowed to pay off long standing debts the companies had to satisfy me that they couldn’t afford to pay the arrears immediately. Often I would look at the company’s books and it would be obvious to me that the company was in debt because they were losing money hand-over-fist. It used to infuriate me that these people were paying accountants (who often came to our meetings - and charged the client no doubt) and these dopey bastards were sitting around doing the books without mentioning that the client was going broke. Unfortunately in most cases I was unable to warn people of their impending fate and have them listen.
In one instance I had a taxpayer try to pay part of his company’s tax liability by signing over his retirement benefits to the government. Luckily I couldn’t accept the cheque. When he had discussed this plan with his accountant his adviser had not bothered telling him that he and his company were different legal entities and that he had lots of protections under liquidation law. The irony was that the accountant had suggested the additional cost of a company structure, that required his services, rather than allowing the guy to continue as a sole trader.
Talking to taxpayers and trying to give them hints - “Have you asked your accountant if…”, “Has anyone ever mentioned…”, “I wonder why your accountant set things up like this…”, I must admit I developed a pretty jaundiced view of accountants and no accountant since has caused me to lose it. Several friends have lost money due to poor advice and in every instance the accountant offers his “expertise” and then just sits back. They seem to be the least proactive professionals I know.
A professional’s errors and omissions insurance is your friend.
This is different. It sounds to me like they really owe the money but they didn’t budget for it due to bad advice from the CPA.
I have a great CPA and I am thankful.
Haj
I had no idea you were Kat’s husband.
Your accountant is a dick.
No, what he assumed was that my wife was getting reimbursement checks, she isn’t, she’s getting a per diem. And you know what they say about making assumptions.
Right now I think it’s best to file the return with him, and then yeah, after that I’d love to fire him.
And the two things that really counted against us were, when my wife got her first payment, it was retroactive, to when she applied, I think it was, and that was more than our medical expenses. Then, when her care taker got his leg broke about three months ago, and we weren’t spending the checks paying him, our medical expenses were considerably less than the checks, so that counted against us. If we knew it would count against us, we would have hired a replacement right away. As for the retroactive pay, there’s really nothing we could have done about that.
Well, not really. I (her husband) have a job, and she gets Social Security Disability. We use, or were using the disability checks to pay for a care taker for my wife while I’m at work. Now, we’ll have to set aside about two checks which will mean it will be a couple of months until we can hire someone new. But once we get all that out of the way, we’ll be OK.
Exactly. He assumed.
I told my mother, who said we should sue. A little drastic, although if it could be done, I’d at least love the satisfaction of threatening him with it.
As tempting as suing is, he’s only responsible for part of our problems. From the time we hire him, until now, I hold him personally responsible. However, it wasn’t his fault my wife got retroactive pay, and even if he gave us good advice, it still wouldn’t have done us any good in that instance. Well, we probably would have had plenty of time to work out some sort of solution, but still, my wife getting retroactive pay causing her income to exceed her medical expenses isn’t his fault.
Yes, I am Gr8Kat’s husband. 
And, out of curiosity, where did you get that quote from 
? I’m a little confused because it’s not from this thread. Thanks.
Basically, that’s it. I was SO looking forward to doing our taxes. After they were done, we could hire a new care taker, pay off a credit card or two, and even, finally, after months of waiting, get DSL (Yeah, not important, unless you’re an Internet addict like me and don’t want to have to split your computer time between your wife and yourself :D)
Anyway, the closer the time comes, the happier I get, and then, WHAM! Brick wall. Even though it’s not entirely his fault, it’s still infuriating to be blind sided with something like this.
Yesterday when I posted, I was mostly going on emotion. I’ve had some time to cool off, and thankfully, it looks like our medical expenses will take a huge chunk out of what we owe.
But still, even though we might come out OK, I pit our accountant for two reasons.
- Since we’re paying him, the least he could have done was giving us the proper information, which would have helped prevent part of our debt.
- Even though giving us the proper information wouldn’t have helped with the other part of our debt, at least we wouldn’t have been completely blind sided.
That’s why we do our own taxes. Every time we hire someone to do it they make errors. We have to pretty much figure out how to do them anyway just to double check the “professionals” work.