7 Things Tax Preparers Miss (With Examples)

Most preparers do solid work under time pressure. The gaps below show up often not because of bad intent, but because clients do not hand over broker supplements, equity statements, or state-specific forms. Your defense is a second pass that verifies every big number against a source PDF.

TL;DR

ESPP and RSU sales need basis tied to W-2 ordinary income, not just the 1099-B.
HSA distributions for non-medical expenses are taxable; Form 1099-SA must match the story.
State conformity differs from federal (SALT cap, bonus depreciation, Section 179).
Crypto transfers are not taxable events, but sales are; missing 1099-MISC/B is common.

1. ESPP basis (bargain element already in wages)

Symptom: Schedule D shows $0 or low basis on employer stock sales.

Fix: Pull the stock plan statement showing bargain element included in W-2. Adjust 8949 with the correct code and explanation.

2. RSU double-count risk

Symptom: Tax on vest income plus capital gain on sale looks like “paying twice.”

Fix: You are not taxed twice on the same dollars if basis includes amount already taxed as wages. See also our RSU article.

3. 1099-B wash sale totals

Symptom: Taxpayer’s 8949 does not match broker year-end wash sale adjustments.

Fix: Reconcile short-term and long-term totals to the realized gain/loss report, not just individual trades.

4. HSA distributions

Symptom: HSA used for non-qualified expenses shows up as other income on 1040 but client did not report 1099-SA.

Fix: Match Box 1 distribution to Form 8889 and medical receipts if audited.

5. State estimated payments vs. federal

Symptom: State refund from prior year wrongly treated as taxable on federal (or vice versa) under TCJA rules.

Fix: Use the state refund worksheet and last year’s Schedule A facts.

6. Missing 1099-NEC / gig income

Symptom: Client “forgot” Stripe or Uber income; IRS matches 1099-K and 1099-NEC.

Fix: Aggregate all payer forms before signing the return.

7. K-1 timing

Symptom: Return filed before final K-1 arrives.

Fix: Extend or amend; do not guess Box 1 income.

Document proof callout

For any item above, the winning habit is: PDF + box + line. Example: “W-2 Box 1 includes $45,000 RSU income per Morgan Stanley Equity Summary p. 3.”

FAQ

Should I fire my preparer if they miss one item?
Not necessarily. You sign the return under penalties of perjury. Use software or verify to double-check high-risk areas.

Does software replace humans?
Software flags inconsistencies; it still needs correct inputs.

How to act on this today

Run a post-preparer verification in BasilTax on your PDFs, or register to combine extraction + computation in one place.

Educational content only—not individualized tax advice.