3 Errors Ernst & Young Made on Our Income Taxes
We are finally getting ready to file our 2007 income taxes. Its been a long time in the making, but we finally got an initial cut at our tax return a couple weeks ago from Ernst & Young. EY was hired by my employer to handle our taxes as part of our international assignment package.
Once I got the returns I almost decided to just print them off and mail them in since we are running around trying to get settled into our new home. Reviewing tax returns didn't seem like something I wanted to put at the top of my todo list. However, I decided 1 night to pursue through them and identified a couple issues already with the returns:
- My wife's $250 in educator expenses were treated as a misc deduction rather than deduct on line 23 of 1040.
- My SEP contributions were incorrectly totaled because E&Y was suppose to provide me with the maximum contribution I could make. Well I didn't receive that max contribution so I had to estimate it myself. Needless to say the 2 numbers didn't match.
- We had an asset placed into service as part of one of our business in 2007. The asset was setup with a 5yr deperciation schedule by E&Y even though it qualified for Section 179 expensing to fully depreciate it in 2007.
- I also learned that my employer won't reimburse me (ie make my tax liability equivalent) for passive losses I can't write off in 2007 due to the additional expenses they paid for my assignment that are treated as income. These lossess can be carried forward to future years so I understand the logic, but don't agree with it. My understanding was my tax burden would be made equivalent to my hypothecial tax burden had I not done the assignment. This caught me offguard because I was never notified that I would have to absorb this. Guess this isn't a mistake, but certainly a communication gap and will likely affect our tax situation in 2008 as well.
I don't even understand a good part of the international taxes paperwork that goes along with it, so the number of issues concerns me about what else was missed in the parts that I don't really understand. Oh well - I'm crossing my fingers the rest was accurate.
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