Author Topic: CPA / tax issues - I need to fire my CPA  (Read 1837 times)

bradleylsmith

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CPA / tax issues - I need to fire my CPA
« on: January 30, 2016, 11:30:20 AM »
Background:

 back in 2012 when I was self employed full time and hired my first full-time employee underneath me I figured it would be a good idea to get an accountant. He gave me what I consider good advice back then - walked me through how to setup payroll and pay my employee's taxes (a huge amount of work). He switched my LLC to an S Corp (which I believe was supposed to save me on self employment taxes albeit at the cost of a home office deduction and way harder taxes to file) and did 2012, 2013 taxes along with a 2014 adjustment because my son's SSN was entered incorrectly.

Since then I've moved to Silicon Valley and got a job as an engineer out here. I no longer have an employee and the company that used to provide all our finances is only doing about 15,000 a year now.

I wanted to use my CPA for 2014 taxes because that year would be tough. I made the big switch in April 2014 and that changed everything. I sold a house and made $24,500 gains on the sale. It was my first house and I don't believe I owe taxes on that amount but just in case (we almost hit the 2 year mark not quite). I had health care through subsidy at healthcare.gov that I no longer applied for - it was fully covered but with the drastic income increase it now should be owed around $5500. I also had taxes taken out of my paycheck at a much higher rate than I should have as it was assumed I had the same salary for the whole year but I didn't.

 Here's the thing - the CPA said he filed them but I never got word of any of the above issues. No refund and no taxes owed. He only said he did them after I asked if he did AFTER the deadline in october (he needed to file an extension). I highly doubt they were done perfectly. We also messed up my son's SSN in 2013 taxes (the notice was sent Dec 2014 and I know my limitation is coming up on that to refile). My CPA also said he took care of this. Then I had him recheck and he said the IRS never got it for some reason. He would redo it. That was a long time ago - still no update. I'm getting rid of my CPA because of how hard it's been to recently get him to do anything. Even when he says he does something I can't trust it. But I'm stuck carrying the baggage of 2014 taxes and 2013 refiling.

Questions:

How would I find out if 2013 refile has been done or not?
How would I find out if 2014 taxes has been done or not?
Should I go back to LLC? - I could deduct a huge portion of our $3000 / mo rent payment and I know how to file a schedule C (S Corp taxes are beyond me).
I gave him power of attorney - I probably need to revoke this?
Is there anything else I need to do?

Thanks for any help in advance you guys are awesome!

dleavitt

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Re: CPA / tax issues - I need to fire my CPA
« Reply #1 on: January 30, 2016, 11:42:59 AM »
I'd agree that something sounds off about 2014 and 2014 filings.  Are you saying that 2013 has not been filed yet?  If you had a bad SSN, the return would have been rejected by efiling, but once the correct number was entered that should have been cleared up.  If you need to do any amendment on 2013 for any reason, the statute of limitations is 3 years from the original due date of the return so you have until April of 2017 to get it figured out and get any refunds due to you.

Going back to a sole proprietorship could be an option, but you would need to revoke your S-Election and file a new 8832 to elect to be treated as a disregarded entity.  You would need to do this before March 15th of this year for it to be effective for 2016.  You will still be an S-Corp for 2015.

POA, at least for the IRS, is only for specific forms and specific years.  I personally wouldn't worry about revoking it, but that is your call.  Why was POA given in the first place?

bradleylsmith

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Re: CPA / tax issues - I need to fire my CPA
« Reply #2 on: January 30, 2016, 12:19:57 PM »
@dleavitt

thanks for your response,

2013 has been filed but the SSN was wrong so I am missing about $2500 from the refund. I mailed in my taxes that year - they were done late so that may have something to do with why (don't remember all the details but my CPA walked me through it) Good news on the timing of this so I have a while to figure that one out.

POA was given for changing corporation status from LLC to S Corp on my behalf. I'm not sure if it's even a good idea to switch back it's possible the benefits of S Corp outweigh the benefits of an LLC - I may want to talk to another CPA about that. Sounds like I'll need to do that soon.

Thanks


dleavitt

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Re: CPA / tax issues - I need to fire my CPA
« Reply #3 on: January 30, 2016, 12:52:03 PM »
@dleavitt

thanks for your response,

2013 has been filed but the SSN was wrong so I am missing about $2500 from the refund. I mailed in my taxes that year - they were done late so that may have something to do with why (don't remember all the details but my CPA walked me through it) Good news on the timing of this so I have a while to figure that one out.

POA was given for changing corporation status from LLC to S Corp on my behalf. I'm not sure if it's even a good idea to switch back it's possible the benefits of S Corp outweigh the benefits of an LLC - I may want to talk to another CPA about that. Sounds like I'll need to do that soon.

Thanks

Sounds like you will need to file an amended return for 2013.

The primary benefit of the S-Corp is the ability to control the amount of SS and Medicare taxes you pay.  If you are not anticipating this business to become your primary income source again, it might make sense to go back to filing on Schedule C, just because of the additional tax compliance costs associated with a Corporation.

I'd talk to a few different CPAs about your situation and get an estimate of the costs.