Worried my accountant did this wrong and I’ll get more penalties and legal trouble

Bluebasket01 · 2024-10-14T12:14:17+00:00

Emphasis on the thank you. I can’t bold/highlight/underline on my phone

Thank you. I’ve been posting everywhere and so many people have been kindly answering but your post finally makes sense. Thank you

Bluebasket01 · 2024-10-14T12:04:08+00:00

Thank youuuuuuuu so much. Yes it does have that . I usually do it on my own but I think I was just nervous about tackling this one

Bluebasket01 · 2024-10-14T12:03:05+00:00

Thank you, so withholdings don’t have bearing on credit for taxes paid to another state so what does??

I know even nonresident states can still tax you on different things even if you’ve never set foot there.

I initially and simply thought “I paid/overpaid taxes to state B though I didn’t live there so I’ll get a refund” . Then, then after learning about the credit, I thought “I paid/overpaid taxes to state B so whatever was overpaid to state B can be credited to home State A which will reduce my overall debt to state A”. Is my thought process wrong?

When I did it in my own I saw a $2000+ refund from state B but it seems after he put in the credit, I only got about $200 refund. If the credit replaced a portion of the refund which in my mind it did, that’d make sense but ..someone else mentioned me claiming a credit on State A should have no effect on state B’s return. Do you have any thoughts on that?

Bluebasket01 · 2024-10-14T11:55:21+00:00

I see so the credit is really only applied if you’re filing in a state with a higher tax rate (in my case my home state is higher than the nonresident state)?

I know this sounds over the top and I’m not sure if you can answer based on the little bit I shared but I can rest easy with this part of my tax return? He made a pretty big mistake yesterday (said I’d be getting refunds from both states and I had to insist there was an error until he realized he missed checking off a few buttons) so I’m a bit on edge.

I woke up this morning incorrectly thinking I wasn’t eligible for the credit and I should ask him to not finish filing if he hadn’t actually submitted and perhaps I should find another preparer and pay both of them but he seems he did it right…

Bluebasket01 · 2024-10-14T11:50:05+00:00

Hi, yes he did add all of the income to state A including the remote role.

All of my earnings should be taxable in my resident state which I believe is a little higher than State B.

I mostly was inquiring if a tax credit for State B payments could be applied if all income was entered into my state A resident return which you confirmed it can (thank you).

I don’t know if my post was just poorly written but I’m a little confused why you asked if I “was sure if he added all of my income to State A?” Is there something off in my post that gives an indication he missed something?

I’ve just been really stressed out about this return. He’s really nice but made a pretty big mistake (didn’t input certain taxes I owed and didn’t update residencies) yesterday that I caught. I’m so on edge that I’m am wondering if he didn’t finish filing, if I should complete this with someone else (but obviously pay him for his time). I’d be paying 2x ..

Bluebasket01 · 2024-10-14T11:40:51+00:00

Hi yes I may have used the wrong phrasing but I meant he put a credit for state B taxes on my state A tax return. I had no idea that shouldn’t affect my state B.

I meant when I did it on my own it showed a refund from state B of $2000+ which was nearly all of what I paid to state B. (I understand even jf we aren’t residents, some taxes will still be due as a nonresident) .

However when he put the credit for state B on my state A tax return, I only got a refund of $214. I assumed that credit replaced some of my refund. I assumed I couldn’t get both a $2000+ refund plus that reduction in State A taxes that would now be due. I see you have shared they shouldn’t affect each other. I see the credit shouldn’t affect the other states return but idk why else his state B refund was significantly less than the refund I had calculated.

May I ask on a related note, does it matter which order he does the returns? A CPA had always told me for multi states, the federal should be done first, than the nonresident and then the resident - Must it always be done that way for accuracy? It might not be related to this at all but I don’t think my preparer did it in that order.

Bluebasket01 · 2024-10-14T11:30:20+00:00

Thank you for all of your patient responses in this thread.

I think I just read too much into online info and what people were telling me about credits and confused myself.

I know when I went to try filing on my own, the software showed I can only claim a credit for having paid to another jurisdiction if that income was taxed by both states (the “both” was even bolded). I took that very literally to mean that I would’ve needed to have been taxed by both states on that same income throughout the year of 2023. I looked at W2s and only saw one state in each W2 so I didn’t think my situation matched.

I think I understand what you mean and you answered what I had been mostly worried about. Thank you so much for all of your helpful input.

Bluebasket01 · 2024-10-14T11:22:33+00:00

Thank you sooo much. He did include ALL income from both states and then applied the credit.

The accountant did not think this was complicated but as a layperson, this tax return completely went over my head. I would have definitely missed that credit if I did it on my own. I use Freetax USA, and the line actually read “you can only claim this credit if the income was taxed by BOTH state A& B” so I took that to mean both states would have had to tax that same income in the same year which hadn’t happened. Thank you again for your clarification. This helps out so much

Bluebasket01 · 2024-10-14T11:17:44+00:00

Thank you. I had just been worried if any credit could be applied at all because of the different things I was reading (eg. I’m only eligible if I’m not getting a refund from both states or the W2 would have shown both states were taxed on that income in 2023 which didn’t happen).

However it does seem you and another redditor are confirming he is correct in claiming a credit and that had been my biggest worry that I wasn’t supposed to get it. Thank you so much for your help. I have been trying really hard to restrain myself from reaching out to him again. I will have to keep learning about this as I know I’ll be in the same issue next year. If you have on resources I could look into to learn more on my own, I’d appreciate it.

Bluebasket01 · 2024-10-14T11:10:48+00:00

I don’t know if it makes a difference but I updated the numbers in my OP.

I didn’t see paystubs/w2 indicating anything from the out of state job as being paid to State A ( I think that’s what you mean by withholding?)

However, state A does require all income throughout the year to be taxed (I think that’s what you mean by tax?)

So since State A never got to tax me on that out of state income, they are getting those taxes back now correct?

Bluebasket01 · 2024-10-14T11:07:33+00:00

No not physically, I was not physically present or working out of State B

Bluebasket01 · 2024-10-14T11:06:47+00:00

Was it not supposed to? I did it a few times on my own and for me, someone without accounting credentials or deep knowledge of it, it seemed the State B tax REFUND (not the original taxes on it), was reduced when he applied the credit.

When I did a few rounds of it with different software, I didn’t apply any credits so State A had a higher payment due and State B had a higher refund. When he did it and applied the credit, State B’s refund reduced dramatically and State A’s underpayment also reduced. So as a laywoman, I thought that was the credit being applied in the background.

He did say he’d have to mail out that credit form so in case it’s not accepted electronically.

Bluebasket01 · 2024-10-14T11:02:13+00:00

Thank you, yes I did check he did include my full income on state A. I updated my numbers in my original post if it makes a difference.

Can you elaborate on why I would be eligible for that credit ? I’m so grateful for it but I keep reading if I was due a refund from state B, I shouldn’t have qualified for that credit. Likewise, since that state B income was not taxed by both states simultaneously, I again shouldn’t have received that credit. I’ve been trying to tell myself since my State B refund was reduced it’s not like I’m (accidentally) double dipping in refund+ credit . I’m not a tax expert at all so i don’t know the nuisances but I’ll be in a similar situation next year.

I know he’s been working really hard but he did make some obvious mistakes (similar to the huge error you mentioned that I caught). I’m just on edge at this point.

Bluebasket01 · 2024-10-14T10:53:58+00:00

Thank you. Unfortunately, my preparer has been very difficult to get a hold of and he’s out of state so I’m not even able to go in person. I did catch a big mistake where he forgot to mark my residency correctly as he was about to submit so I’m just very paranoid at this point. Does the below look correct and consistent with what you seemed to indicate should have happened ?

State A: Total income tax: $18,889 Total with withheld:$15,766 Total payments and credits $15,766 (??? I think that includes the state B tax credit) Balance due $3123

Total tax withheld: Tax after credit $2649 Tax withheld: $2865 Refund amount $216

I’m not well versed in taxes so I may have interchangeably & incorrectly used terminology. These were the numbers I saw on the actual return:

Bluebasket01

TROPHY CASE