We had some new clients this week who defected from Block when the price of what should have been a two W2, Sch A return approached $500. What I saw on last year's return was scary to me and horrified them. 2010 Charitable deductions were TEN times what they were reporting this year. There were enormous employee business expenses, even though both have gov't jobs and don't spend a dime of their own money. The preparer put mileage for one on a 2106 and the other as an entry on Sch A. If the expenses were for real, two 2106s would be in order, so don't know what the reasoning was. Guess those phantom auto expenses and related worksheets boosted the price. Pre-tax medical insurance was listed as medical expenses. Even last year's tax prep fees were much more than they paid, and the return was done by the same preparer at Block.
We see some of these ridiculous returns done by independents, the type the IRS is always shutting down. These people have an incentive to prepare fraudulent returns--when the word gets out that people who go to them get much larger refunds than their coworkers and friends, business rolls in the door. But a Block preparer doesn't gain financially whether the client gets back $10,000 or owes $1,000. In this case, the clients were really upset. I guess the preparer never went over the return with them, and they never reviewed it themselves. They just trusted, but trust is the main reason why people return to the same preparer year after year. They're going to bring in a couple more years of returns, and I'll let them decide if they want to amend.
When I worked at Block, we were never, ever encouraged to make up expenses. The lessons we got were the same as those advertised to the public--we prepare accurate tax returns. Sure, that didn't always happen because some pros made mistakes or didn't know the rules. And Block never fired those who didn't know what they were doing. Yet making things up on a client's return was not part of the training.
This was obviously a rogue preparer. I just don't understand why someone like this would ignore the training, violate the tax code, and give unsuspecting clients tax breaks they don't deserve and didn't want. Everyone I worked with, and the hundreds of employees I went to classes with over the years, were all oriented to doing the job right.
For 2011 at least, books (that don't have to be purchased through the school as a condition of enrollment)and course-related equipment like laptops and tablets can be claimed for the AOC. So even if the kid had a full scholarship, there may be some eligible expenses. Since the AOC can only be taken four times, I wouldn't waste it on minimal expenditures though. See if he gets the same scholarship next year. If not, you might still get four years of a larger AOC.
I empathize with the poster who was lost with 529 distributions. It gets pretty complicated to see what you can claim for education credits, 529 plan earnings, and savings bond exemptions without using the same expenses for any of them. I start with $4k for AOC. Room and board counts for 529 distributions, and those aren't on the 1098T. It does require a lot of digging. And those "smart" students never think to document how much their books actually cost.
"I just don't understand why someone like this would ignore the training, violate the tax code, and give unsuspecting clients tax breaks they don't deserve and didn't want. Everyone I worked with, and the hundreds of employees I went to classes with over the years, were all oriented to doing the job right."
Think about why you left Block, wishful, then you'll understand what's going on with preparers at Block. How do you justify a $500 fee for a 1040, basic Sch A, and two W2's?
1098T qualify for education credit?? I took the HRB Basic Tax Class and two years of IRS VITA training and not a word about requiring receipts for a Education credit if the expense is represented sufficiently on the 1098T.
Also no training on 1099Q forms for 529 plans. I had one this year and was lost. I made the TP another appointment and studied up on 529 plans.
I used to work for Block. Most of the preparers did a good job and did not make up numbers. A few preparers should never have been hired in the first place. Not because of any dishonesty, but because they simply did not understand how to prepare tax returns, did not review their work, and guessed when they should have asked.
This seems to be a very rare event at Block. I see from time to time a return prepared by a "local" that is loaded with miles to get a refund and the people did not know it.
Miles are the biggest fraud in the business. I see Turbotax returns all the time with miles the person did not drive, personal property tax on cars thst is registrtion fees only (not tax), but the worst on Turbo tax (and probably other self file systems) is claiming education expenses to get the rufundable credit and they never spent one day in a class (they just claim it because they can). I am sick of the online fraud. The IRS should shut down self filed electronic returns. AND they should begin to letter audit every claim for mileage on every return. And only give education credits with a 1099T. What a country we have become when "everyone" cheats is the motto.
Like you said rougue employee. It has no bearing at all on Block as a company. You could replace Block with Liberty, Jackson Hewitt, Instant Tax, etc. I'm sure it happens at all of them in certain occurences. It has no bearing whatsoever on Block as a company. They prepare millions of returns.