First Lessons Learned as a Volunteer Tax Preparer

February 9, 2009 by  
Filed under Money and Behavior, Taxes

A few weeks ago I wrote about my decision to obtain IRS certification as a volunteer tax preparer for the VITA and TCE/AARP Tax-Aide programs.  Last week was my first opportunity to meet with four people who had made appointments to receive help with their returns.  

The volunteer office is at one of the government funded senior citizen centers because those that use our services (which are 100% free) are supposed to be older folks and other taxpayers with incomes under $42,000.  However, they do not screen people to make sure they meet these guidelines.  Anyone who comes in gets help, as long as their returns do not involve issues that we are not permitted to handle.

My first impressions of the clientele were mixed.  The first appointment was with a single older woman who was living on Social Security, supplemented with a little income from Walmart.  She was very sweet and appreciative of our services.  It turns out that she had not paid any income taxes and did not have enough income to require her to file a return so I sent her on her way.  I was impressed that she was diligent enough to even inquire about her filing obligation since she had not paid taxes anyway.

The second appointment was a different story.  She also was a senior citizen, very energetic and quite well dressed under the circumstances.  She plopped a big stack of papers on my desk and said that her accountant had sent them to her.  That made me a little curious as to why she was seeking the help of a volunteer when she had an accountant.  Before I could ask her that, she made it very clear that she was not interested in paying the accountant several hundred dollars to prepare her return as she had in the past.  So I dove into her papers – I had signed up for this mission and I was going to complete it.  I quickly discovered that she owned a condominium that she had bought several years ago to be a rental unit.  Clearly, she was doing quite well financially but I still thought about my mission.  However,  I had to explain to her that we were not permitted to prepare returns that included depreciation schedules because our insurance would not cover it.  That bothered her and she repeated her complaint about having to pay an accountant.  She asked me to prepare the return without depreciating the property.  I said that would be a mistake because she would likely pay more taxes that way and perhaps raise a red flag about her past returns.  So she left, muttering about that accountant again.

The third appointment was with yet another retired single women, also with a part-time job.  She also was easy to work with and grateful for someone to help her.  I could not complete her return because she was missing some paperwork so she will come back this week.

The final appointment was different, and not in a good way.  This was a young single man who apparently lived with his girlfriend and her daughter.  He told me upfront that his girlfriend had encouraged him to file with head of household status.  When I asked him if he provided support to his girlfriend or her child, he quickly said no.  That made sense because with the income he reported (which included some tip income), he probably should have been homeless.  I asked him if he was sure that this was his only income.  He replied yes, he was just a simple man, living a simple life.   I finished his return and told him that not only was he getting all of his tax refunded, he was receiving an additional earned income credit.  He acted surprised but I think it was phony surprise.  I asked him if he wanted his refund and credit mailed to him or direct deposited into his bank account.  He said direct deposit and presented me with a check so that I could get the routing and account numbers.  The check had a business name on it.  He hadn’t reported any income from that business.  But I had no choice but to finish the return.  We are not supposed to cross-examine those who use our services.  I had already asked him twice about all of his income.  Sigh……

So what are my first lessons learned as a volunteer tax preparer?  When it comes to money and taxes, anything goes, including at the volunteer preparer’s office.  The hard truth is everywhere.  Stay tuned.  This could get interesting.


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6 Responses to “First Lessons Learned as a Volunteer Tax Preparer”
  1. mike says:

    As a tax preparer its always fun to hear other people’s war stories in the field. Client #2 should be upset with the IRS and government, not with you or even her other accountant. Its really not our fault that the govt requires you to take depreciation whether you want to or not. Issue number two is that is she was better organized and added up her income and expenses herself then presented it summarized format to her accountant the additional cost would be almost negligible. Judging by the fact you said she showed up at your office with a huge stack of paper she said “her accountant sent to her” meant she likely showed up to her accountants office with them they probably told her that she would be charged more because of the accounting involved, and left in a huff to take advantage of your free service. I personally feel bad for the firm that serviced her before, it’s pretty obvious she has no respect for the work they do so I wouldn’t be surprised if she had no respect for the work you do (much less the fact you’re volunteering).

    Client #4 sounds like the typical shyster who wants to get the most from the system. Why even try to claim HoH when you’re barely making any money to pay taxes on as it is, much less support a child with? Having the direct deposit go into a business account is okay with me, because if even one person 1099’d him and he didn’t report the income it will trigger an audit. In fact schedule C filer’s almost have triple the audit rate as other because they tend to make the most “mistakes.”

    I wish you the best of luck this tax season!

  2. PW says:

    I deal with “imagination truths” all day long. I am in insurance, not a day passes when an angry client complains that the insurance company is not paying their medical bills. When I delve into the paperwork pile, it ends up that what is due is their portion of the bill–a $500 deductible and maybe a $20 copay. I always get “I cannot afford that” while I know that they just returned from a 3 week trip from China and will leave in another week for a month in Africa. The truths is a moving target. (sigh)

  3. Mr. TML, I was a VITA tax preparer for 2 years. You will encounter some interesting cases. Most of them are hardworking honest people who are trying to get by.

    -Nate

  4. kitty says:

    “That bothered her and she repeated her complaint about having to pay an accountant. ”
    Weren’t you a little bit tempted to tell her that an obvious solution to not having to pay an accountant is to do it herself? She has time, she could have read the relevant publications – especially the one about residential rental property makes for an amazingly good bedtime reading, I can attest to it. I did it myself when I rented out. At the time I still used a calculator, it’s only when I sold the property with a large gain that I started using Turbo Tax – too many worksheets. If anything, trying to do it herself would’ve given her more appreciation for what you do, especially for free.

    As far as I remember the depreciation part was fairly easy to figure out. It’s amazing, by the way, that there are actually people who don’t take it off; it was the best thing about renting. When I did the sale form, it clearly stated that you have to recapture depreciation you were supposed to have claimed regardless if you claimed it or not, but if you failed to claim it, you are welcome to amend past returns. Must be a nasty surprise for some of those who failed to claim depreciation, especially those who sold without a large enough loss that recapture isn’t an issue.

    Regarding the 4th client – whenever I hear the statistics about how so many people don’t owe any taxes I wonder which percentage of them is really poor and which are like your client #4.

    Isn’t there an income limit on who can use a volunteer service? It seems like there should be.

  5. It seems that anywhere there is a service offered for free…there are going to be freeloaders with no reason to be there. Too bad there isn’t requirements that could be reviewed before offering your hard earned time and effort. Good Luck!

  6. HomeFree says:

    Your 4th client only reinforces the reality that there is a huge underground economy that is untaxed. Eliminate the income tax and institute a consumption tax and a lot of those who evade the system now contribute to the system from which they have been mooching. There is no perfect system but a national sales or consumption tax would fund the government, reward the savers, and capture revenue from the underground economy as well.

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