Self vs "a guy" taxes and varying refund amounts

masraum · 03-05-2018, 12:14 PM

Over the years, I've heard people mention things like "I did my taxes and I was going to have to pay X or only get back Y, but then I heard about this guy, and I went to him and now I'm getting back $$$$. You should use my guy he could get you a bunch back too."

I have a friend who recently heard this story. A friend of a friend was supposed to be getting back, or maybe paying a little bit this year (per one of the big tax programs), but then "this guy" did his taxes and said "You're going to get a $5000 refund."

I have to think that if TaxCut or TurboTax or XXXX thought that you're at X, but then a guy can put you someplace that far different, then he must be doing a lot of fudging of numbers. I've always assumed that sort of guy does a lot of "you can claim X, because it's low enough that you won't get audited whether it's true or not.

Personally, I would have a problem with that. If it's not true, I don't want to put it on my taxes even if "everybody does it" or "you won't get caught".

Is there really anyway that "a guy" can make that big a legitimate difference on your taxes and it's completely legitimate? What sort of price are you going to pay down the line if you do get audited and that sort of thing pops up? "No, I don't have receipts, but you should trust me."

I'm assuming that if you managed to fib your way to an extra $2k of refund, and the taxman eventually found it, that you'd end up having to pay $2500-3k to fix it.

What's the opinion of the brain trust?

legion · 03-05-2018, 12:18 PM

It's amazing what people consider a home office for business purposes and how their fishing boat is an "entertainment expense".

dafischer · 03-05-2018, 12:24 PM

It also makes a difference if the tax pro knows all of the legitimate deductions, and how to use them (lawfully) to maximize a potential refund.

sammyg2 · 03-05-2018, 12:38 PM

Turbo tax et al is designed to be generic, apply to everyone.
That means it has to be conservative and err on the side of caution.

I think it would be safe to say they leave plenty of meat on the bone.

Bob Kontak · Bob Kontak's Garage

Quote:

Originally Posted by legion

It's amazing what people consider a home office for business purposes and how their fishing boat is an "entertainment expense".

Being aggressive is not against the law.

We all know there's some lying but what I don't know is the cut off where fraud becomes an issue. I think it's a percentage of AGI/gross income but it's been a while.

masraum · 03-05-2018, 12:41 PM

I'm assuming that if you only have a handful of investments, no home, minimal medical bills, and a single W2, then there's probably not a lot of wiggle room.

KFC911 · 03-05-2018, 01:33 PM

Quote:

Originally Posted by Bob Kontak

....
We all know there's some lying but what I don't know is the cut off where fraud becomes an issue. I think it's a percentage of AGI/gross income but it's been a while.

I never have. But I used to work with folks who used their "side business" as a means to lie on their returns. I think by far the biggest area is folks working off the books, or simply not reporting income, sales, etc. Everytime someone gives me a "deal" for paying cash...I'm a bit suspicious...jmo.

rwest · rwest's Garage

Quote:

Originally Posted by masraum

I'm assuming that if you only have a handful of investments, no home, minimal medical bills, and a single W2, then there's probably not a lot of wiggle room.

There was a local guy here in the Twin Cities several years back doing taxes for low income people and he was claiming something like a farm fuel exemption for them which gave them good refunds- well until the feds figured it out; poor people were left on the hook to pay it back.

Doesn’t matter who makes the error or outright fraud, you’re responsible in the end.

Bob Kontak · Bob Kontak's Garage

Quote:

Originally Posted by KC911

I think by far the biggest area is folks working off the books, or simply not reporting income, sales, etc.

Yes, Sir.

A guy painting your garage for $300 cash may be tax fraud but it's peanuts to the gub-ment. Not even on the radar screen unless somebody squeals. Then the IRS has to choose if it's worth pursuing.

Probably the biggest tax rape is larger magnitude dope sales/stolen goods/etc. Tax evasion is only the tip of the criminal iceberg though, in these cases. However, easier to make stick.

wdfifteen · wdfifteen's Garage

Quote:

Originally Posted by masraum

Is there really anyway that "a guy" can make that big a legitimate difference on your taxes and it's completely legitimate?

It depends on how complicated your IRS related life is. In 2017 I had 4 different types of income from my C-Corp and three LLCs, plus foreign and domestic income from mutual funds. No way I would trust Turbo Tax to figure that out.

masraum · 05:46 PM

Quote:

Originally Posted by wdfifteen

It depends on how complicated your IRS related life is. In 2017 I had 4 different types of income from my C-Corp and three LLCs, plus foreign and domestic income from mutual funds. No way I would trust Turbo Tax to figure that out.

More complicated than when I was 25, but still super simple in the grand scheme of things. 1x W2 and a little extra income and some investments that just sit there. No Sched C, no LLC, no business of my own.

DanielDudley · 03-06-2018, 01:07 AM

I am self employed, and yes, a tax guy set me up for a better outcome. He is a very cautious guy, and avoids things that would raise a red flag.

flyenby · 03-06-2018, 05:24 PM

As my Attorney once said "You can do anything you want, as long as you don't get caught "

cockerpunk · 03-08-2018, 10:42 AM

Quote:

Originally Posted by wdfifteen

It depends on how complicated your IRS related life is. In 2017 I had 4 different types of income from my C-Corp and three LLCs, plus foreign and domestic income from mutual funds. No way I would trust Turbo Tax to figure that out.

turbo tax just does math, its a pretty front end for a spreadsheet.

its not that turbo tax leaves meat on the bone, its that people don't know how to use it.

that being said, unless you have some strange income and donations etc, a guy isn't going to net you much i think.

Tidybuoy · 03-08-2018, 12:35 PM

I do taxes for people at work, usually simple returns.

Besides deductions, you return is also dependant on what you had deducted during the year but I constantly hear people complain as to why someone got more back.

My explanation:
You and me go to McDonalds. We both get a Big Mac, Fries, and a med Coke. Both our bills are for $6.49. You pay with a $20 and I pay with a $10. When we get our change, I complain that you got more back than me......sometimes they get it.

id10t · 03-08-2018, 03:19 PM

No real difference in my filing (simple - file jointly, minimal investments with one co. that imports to TT, only occasionally itemize for medical/dental, no state taxes) between the Turbo Tax premier (needed for investment) and having A Guy do it, other than cost and speed, both in TT's favor.

Did note that I went from a 3k refund last year down to $418 this year... only difference was a $3k increase in taxable income

wayner · 03-08-2018, 03:33 PM

My “guy” saves me money by

1) suggesting I save receipts for things I never thought of he knows what legitimate defections are available )
2) saves me time by doing it for me while I go earn money

If there are savings it usually in future years by being informed and setting up your affairs accordingly

Norm K · 03-08-2018, 03:38 PM

I'm cool with getting whatever refund you can, providing you're following the rules. One of the things I really hate, though, are the radio (and probably TV, I suppose) commercials by companies offering customer testimonials about how they actually owed taxes - large amounts in the ads - but had them negotiated down to virtually nothing. If you owe taxes, pay `em.

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