don’t have one? ask another firm for a demo.
by ed mendlowitz
how to review tax returns: the field-tested update
for those who haven’t tried them yet, smart scanners are a fabulous tool, which, if used correctly can save time and cost. the one thing they don’t do is check their work.
more: three ways to improve tax returns | tax follow-up worksheets can mean more revenue | stop tax return review shortcuts | routine is key to reviewing tax returns | seven types of tax return reviews
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however, smart scanners do not need lunch or dinner brought into the office, don’t take coffee or smoke breaks and you don’t have to listen to how their weekend was. but they do organize the digital work papers on your internal filing system. nothing is perfect but many things are good enough and you just need to determine your tradeoffs.
10 typical smart scanner errors to watch out for:
- previous year information picked up on the current year return because of a wrong 1099 or w-2 that was sent
- a prior year 1099 that was included with this year’s data
- k-1s being picked up on wrong lines, or not enough information picked up; this is a typical error with smart scanners and needs to be reviewed carefully
- information tucked into page 14 of a 30-page hedge fund or ptp k-1
- failure to pick up foreign tax credit amounts properly
- data was missing that was reported on the previous year return and accounts weren’t closed.
- carry-forwards information not reflected properly
- name spelling lists of dependents and social security numbers should always be checked.
- boxes that were checked in prior year are not checked in current year such as presidential campaign fund and foreign bank accounts.
- actually, the reviewers’ checklist covers the most prevalent errors – have the preparer use that checklist before they submit the return for review.
a suggestion for those not using smart scanners is to start. what you should do is call your tax preparation software vendor and ask them what product they recommend and if they could provide two accounting firms in your area that use it. call one of them and ask if they could give you a short demonstration and then decide. if your vendor cannot recommend anyone, then reach out to your state society members to find someone who would help you.