I'm a CPA and can confirm this is absolutely NOT an IRS requirement. Your tax preparer is either misinformed or implementing their own excessive policy. The IRS does require preparers to exercise "due diligence" when claiming certain credits like EITC or Child Tax Credit, but this means completing Form 8867 and asking specific questions - not collecting and storing your personal documents. What's actually required: Preparers should verify the accuracy of information you provide (like SSNs, names, ages) and document their verification process. This typically involves seeing documents to confirm details, not keeping copies. Red flags in your situation: - Birth certificates aren't required for standard dependent claims - Report cards have no relevance to tax filing - Utility bills for "proof of residence" isn't a standard requirement - No legitimate preparer should be hoarding copies of SSN cards I'd strongly recommend asking your preparer to cite the specific IRS regulation requiring this. When they can't produce it (because it doesn't exist), you'll know you need a new preparer. After 8 years of working together, he should be able to explain this policy change with actual documentation, not vague references to "new IRS rules." Trust your instincts - this is definitely not normal or required.

This is definitely a red flag and you're absolutely right to question it. I've been doing my own taxes for years using TurboTax and similar software, and I've never been asked to provide copies of birth certificates, utility bills, or report cards - not even when claiming dependents or various tax credits. The fact that your preparer can't point to a specific IRS publication or regulation requiring this should tell you everything you need know. If this were a legitimate new requirement, the IRS would have published clear guidance about it, and every tax preparation software would be asking for the same documentation. What's particularly concerning is that he's asking to KEEP copies rather than just verify the information. Even if there were some verification requirement, keeping physical copies of such sensitive documents is a huge security liability. One data breach or break-in at his office and your entire family's identity could be compromised. I'd give him one more chance to produce the actual IRS regulation he's citing. If he can't or won't, I'd seriously consider doing your taxes yourself with software or finding a more reputable preparer. After 8 years of working together, he should be able to give you a straight answer about why he suddenly needs all this documentation.

As someone who's dealt with several S-Corp accounting method changes, I want to emphasize that the Form 3115 is absolutely critical here. Don't skip it even if you think it might not be required - it's your protection against future IRS questions. For your specific Schedule M-2 balancing issue, here's what I typically do: 1. Start with beginning retained earnings exactly as reported on last year's return 2. Calculate the cumulative Section 481(a) adjustment (difference between tax basis and GAAP accumulated depreciation/other timing differences) 3. Report this adjustment on Schedule M-2 as "Other increases" or "Other decreases" with clear labeling 4. Make corresponding entries on Schedule M-1 for current year impact The key is that your Schedule M-2 Line 6 should reflect the ending retained earnings per books (GAAP basis), not tax basis. The Section 481(a) adjustment bridges that gap. Also, prepare a detailed statement explaining the change and attach it to the return. Include calculations showing how you determined the adjustment amount. This documentation is crucial if the IRS ever questions the return. Don't try to "fix" the beginning Schedule L balances - that's not the proper approach and could create bigger problems later.

Great question about the accumulated depreciation calculation! For the Section 481(a) adjustment, you typically need to go back to the beginning of each asset's life to calculate the cumulative difference between tax and GAAP depreciation methods. This can be quite a bit of work, but it's necessary to get the adjustment right. Here's how I approach it: 1. Create a spreadsheet listing all depreciable assets 2. For each asset, calculate what depreciation would have been under GAAP from the beginning 3. Compare that to what was actually taken for tax purposes 4. The cumulative difference for all assets becomes your Section 481(a) adjustment If you have assets that were acquired many years ago, this can involve going back quite far. However, you only need to include assets that are still on the books - disposed assets generally don't affect the current adjustment. One practical tip: if your client has been using tax depreciation for book purposes in prior years, the adjustment will typically be the difference between GAAP straight-line and accelerated tax depreciation methods like MACRS. The Form 3115 instructions actually provide worksheets to help calculate these adjustments, and they're worth using to ensure you're capturing everything correctly. Don't forget to also consider any bonus depreciation or Section 179 elections that created timing differences. @Jessica, I hope this helps clarify the calculation process! The research can be time-consuming, but getting it right prevents major headaches down the road.

I went through almost the exact same situation when I sold my primary residence after moving out years earlier! The lack of receipts felt overwhelming at first, but I was able to piece together enough documentation to claim substantial basis adjustments. Here's what worked for me beyond what others have mentioned: Check if your county assessor's office has online records showing property characteristics over time. Many counties now digitize old assessment cards that might note "new kitchen," "updated bath," or "addition" from specific years. These are official government records the IRS readily accepts. Also, don't forget about warranty cards and product registrations. When we installed new appliances, windows, or major systems, we often registered warranties online or mailed in cards. Companies like Whirlpool, Pella, or Carrier sometimes keep these records for decades. Even if it doesn't show installation costs, it proves when major components were purchased. One strategy that really helped: I created a detailed timeline with supporting evidence for each improvement, then researched what similar work cost during those specific years using sources like RSMeans construction cost data or HomeAdvisor's historical pricing. The IRS accepts reasonable estimates when supported by this type of research. Remember, you don't need receipts for 100% of your improvements to make a significant difference in your capital gains. Even documenting half of what you did could save you thousands in taxes. The key is being thorough, reasonable, and well-documented with whatever evidence you can gather.

I work as a tax preparer and see this situation frequently! You're actually in a better position than you might think. The IRS Publication 523 specifically addresses situations where taxpayers don't have receipts for home improvements, and there are several accepted methods for reconstructing your basis. Here's my recommended approach: Start by creating a comprehensive inventory of all improvements with estimated completion dates. Then gather ANY supporting documentation you can find - even partial evidence helps. This includes old photos (check your phone's photo stream going back years), social media posts, emails mentioning the work, bank/credit card statements showing purchases at home improvement stores, and any checks written to contractors. For cost estimates, use reliable sources like Remodeling Magazine's annual Cost vs. Value reports from the specific years you did the work. The IRS generally accepts reasonable estimates based on market research when contemporary records aren't available. Pro tip: Focus on the improvements that added the most value - kitchen, bathrooms, roof, HVAC systems. Even if you can only document 60-70% of your actual improvements with solid evidence, that could still significantly reduce your capital gains tax. Most importantly, organize everything chronologically with a clear narrative of what was done when. The IRS appreciates taxpayers who make good faith efforts to reconstruct records systematically rather than just throwing out random numbers. Consider working with a tax professional who has experience with capital gains situations - the potential tax savings usually justify the cost of professional help.

The 941 Schedule B has caused me so many headaches! One thing I learned the hard way is that if you're a semi-weekly depositor and file Schedule B incorrectly, the IRS doesn't just send a nice reminder - they hit you with failure-to-deposit penalties. For the original question - the date that matters for Schedule B is 100% when employees have access to their funds (payday). I use ADP for payroll and they helped explain that I should list the payday date on Schedule B, not when I process payroll or when I make the deposit. Another tip - if you use the Electronic Federal Tax Payment System (EFTPS), it shows your tax payment history with "settlement dates." Don't use those dates on Schedule B either. Those are when the money moved, not when the liability was incurred.

I'm glad this thread cleared up the Schedule B confusion! As someone who handles payroll for multiple small businesses, I've seen this exact issue come up repeatedly. One additional point that might help others - make sure your payroll software is configured to report the correct payday dates, not processing dates, especially if you're generating any automated reports for tax purposes. I've found it helpful to create a simple spreadsheet tracking our actual paydays alongside deposit dates and due dates. This makes it much easier when completing Schedule B and helps avoid the confusion between these different dates. The key takeaway from everyone's responses is crystal clear: use the date employees actually receive their wages, period. Thanks to everyone who shared their expertise, especially the former IRS agent - that perspective was invaluable!

I've been running payroll for small businesses for about 8 years now, and I'd definitely echo what others are saying about the payroll advance being your safest bet. One thing to add though - make sure you check your state's labor laws first. Some states have specific requirements about payroll advances, like maximum amounts or documentation you need to keep. Also, since you mentioned using ADP, they actually have tools that can help you process advances properly. You might want to give them a call - their support team is pretty good at walking you through these one-off situations. They can make sure the advance gets coded correctly in their system so your year-end reporting stays clean. For what it's worth, I've seen the "temporary exempt" thing blow up in people's faces when tax season comes around. Even if it's just one paycheck, if your employee ends up owing more than $1,000 at filing time, the IRS can hit them with an underpayment penalty. Better to help him find the cash flow he needs without creating a potential tax headache down the road.

I've been in a similar situation as an employee before and wanted to share what I learned. When I had a financial emergency, I discovered that there are actually several legitimate ways to get more cash from your paycheck without the risks that come with claiming exempt status. First, your employee could adjust their W-4 to claim additional allowances or use the "extra amount to withhold" line in reverse (putting a negative number to reduce withholding). This isn't the same as going fully exempt and is much safer legally. Second, and this might be the most helpful - many employees don't realize they can request their employer change their pay frequency temporarily. If you normally pay bi-weekly, you could potentially do a one-time weekly payment to get him his money faster without any tax complications. The payroll advance route others mentioned is definitely solid too. Just make sure you document everything properly and check if your business insurance covers employee advances (some policies have specific clauses about this). One last thing - if your employee is in a real financial bind, remind him that he might qualify for an emergency hardship withdrawal from his 401k if he has one, or there might be local emergency assistance programs available. Sometimes there are options beyond just adjusting payroll.