Paige Mason recently became your client, and she would like you to prepare her tax return for the current year. While reviewing the previous three years returns, you notice that her income does not include any income earned for services performed for her employer as wages. While discussing this with Paige, she mentions that she just returned from working oversees and just started working in the U.S. in October. Paige indicated that she did not report her wages of $200,000 in each of the previous years because she filed a tax return and paid tax to the foreign country that she earned the income in. What is the correct response to Paige and how do you correct the error?
In addition to the chapter content, see Statements on Standards for Tax Services at https://future.
aicpa.org/resources/toolkit/statements-on-standards-for-tax-services, Circular 230 at www.irs.gov/tax-
professionals/circular-230-tax-professionals, and Chapter 3, LO4, Tax Professional Responsibilities.