Tax Issue/Ethics letter

timer Asked: Mar 28th, 2016

Question description

Case 2. Your sister Crystal called; she lives in Maryland. She said she went to a paid tax preparer that has a booth in their Walmart store. The preparer displayed a document showing she was a Registered Tax Return Preparer in good standing who had passed an IRS exam. Normally Crystal files single with a standard deduction. The preparer, Sue, asked her if she received any income other than the $46,200 she earned at a local publishing house. Crystal told her she received about $5,200 total in several cash payments from people she knew who were writing books and wanted her to edit them. Sue told her that since Crystal was not receiving a form 1099 for the cash payments, she would not need to report that amount. She also told Crystal that there were "standard amounts" that would be accepted by IRS for itemized deductions even if Crystal did not have receipts. Sue estimated that Crystal could take the "standard ' amounts totaling $7,150 in itemized deductions. Consequently, Crystal was going to get a much bigger refund that she expected but she really needs the money because she has some elective medical procedures that she will pay for. She wants to know what she should do in this situation?

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