Sometimes we only catch mistakes when we’re knee-deep in tax work. QBI deduction missed in prior year!!!
Here’s a cool story that happened yesterday:
New client. Owns a bunch of real estate rentals.
They’re real estate professionals, so they qualify for the Qualified Business Income (QBI) deduction.
I worked on all the partnership and S-Corp returns and then started preparing the individual tax return.
Income for 2024 looked similar to 2023, and they’re well over the QBI limit, meaning we needed to test W-2 wages or UBIA assets for the deduction.
🚨 Red flag: Why was the 2023 QBI deduction only $40K, but in 2024 it jumped to $140K?
That didn’t feel right.
So, I did some digging. I reviewed both my work and the prior CPA’s work (from a 250-person firm, mind you).
Boom! Out of the six properties, three were missing UBIA asset information
—so the QBI deduction was zero.
This little oversight cost the taxpayer $10K in extra taxes. 😱
Lesson learned:
Always review your work!
Compare it to prior years!
And now… I’m terrified to look at 2022 and 2021. 😬 (I haven’t yet, but you can bet I will.) If I find the same mistake, this client’s about to get rich from amended refunds.
Rant over.
Moral of the story:
Hire good pros to work on your tax stuff.
Bigger firms don’t always have better quality control, and even the best CPAs can make mistakes.