Last year, I had two new clients come with copies of their past three years of tax returns. (It is my practice to review the prior three years to ensure that I am consistent with the previous years.)

This is part two of two – How ignoring the information available from the CRA  can result in an incorrect return!

For this case, I was specifically asked to check out two years of returns filed by the previous person. I cross-checked the returns against the partner’s information as well as against the CRA’s records.

During this process, it was clear that the person who prepared the returns disconnected the two returns and only accessed the information provided by the taxpayers. This resulted in:

1. About 16 tax slips not being declared on the tax returns,
2. About $10,000 of deductions being ignored on tax returns,
3. About $10,0000 of expenses that were not reported on the matching returns, and
4. An invalid claim for Tuition Credits transferred from a minor child.

The client has been charged about $15,000 more taxes and penalties than was necessary. Her correct return would have had a balance due that is less than $100.

We are still working with the CRA to fix these errors.

Lessons Learned:

• In my previous lesson, I talked about duplicating downloaded information. In this case, no download was performed and she had to pay amounts which were completely unnecessary.
• It is vital that you cross-check information from one part to another.