daisy

Thanks for the info. I'm taking that under advisement, and looking over the situation again.

Client didn't file last yer's state return yet, he forgot it, he will be getting a small refund, about $100. We have it done, and he will be mailing it in tomorrow, so he didn't receive it yet, I would guess that he shouldn't claim it (he itemizes every year) as income on his return last year, but he should claim it next year. The line for this income specifically says state refund for last year. Should he just include both state refunds on next years return (2006 and 2007), even though it will only ask for 2007? Or should he claim it on this year's even though he hasn't received it?\ I'm really leaning towards claiming both years on next year's return, but I want o make sure I'm doing it correctly. Thank you!

Is there a way to have different sections for the different states? Some state are difficult to search for, for instance if you only use the state abbreviation in a post, it won't come up on a search because you can't search for 2 characters. Or maybe even just new sections for the states with the most posts, and then a misc state section? Or just create the sections as the posts for each state gets posted? Or make a rule where you have to type in the entire state name at least once? Anyone have an idea?

OK, brain fart time... It seems not many of my questions here are difficult, it's always the simple ones that confuse me! He lives in WA state, wife lives with daughter in ID. MFJ. State of residency is WA, but since he uses a PO Box, because his residence is in an rv that moves around alot, we use her ID address for the mailing address. That works, doesn't it? State of residency and mailing address state being different? This is how I've done it in past years, now for some reason, I'm questioning it. Thanks!

I have a client who I've been very close to for years, good friends. Against my advice he 'invested' in what turned out to be a Ponzi scheme. The money was invested in 2006, the scam was exposed in 2006, the guy was arrested in 2006, and has since been sentenced to 10 years in prison. The judge decided against the longer sentence so he can get out and start paying these people back. My client is in a bad spot financially right now, not from the scam, but due to leaving his job to explore other opportunities. So, I told him we should amend his return and file the $15,000 as a theft, get a small, but substantial to him now, amount back and then if/when he gets paid back, we'd just claim the income. They recovered $1 million from selling this guys stuff, but he owes $4 million, in that $4million is my client's $15,000. He was told to expect a small amount at first, then when the guy gets out of prision, in 10 years, he's ordered to pay everyone back, the 'investors' were told, to expect very small amounts at a time, since the after prison payments will probably be coming from a paycheck garnishment, and that paycheck garnishment will be split up among all the victims. I explained to client, that he may never get all of his money back, chances are good that he won't, he said the list of people this money is getting split up between is 5 pages long and many of them invested more than he did, so they will get a higher percentage of available funds. Today he told me he doesn't want to file form 4684, because he feels that this is not legal to do, since a Federal court ruled that this guy must pay back all the money, he also feels that since a Federal court ruled that this money has to be paid back, that it *will* get paid back, he's not listening to me telling him it's likely he won't get all his money back. he feels filing 4684 "screams AUDIT!" his words, in an e-mail to me. I wrote him back, explaining the time limit on refunds and he may lose out on this and this is not illegal, and won't *flag* an audit. Does anyone have experience with these schemes and taking it as a theft? I just know this money would help him out so much right now, but I can't force him to claim the theft. the small amounts of money he's going to be getting each year, he won't even notice the tax difference adding it to his income as he gets reimbursed, because when he works he makes a really really good living. He just really feels this is illegal and doesn't want to get audited. I guess there's nothing I can do, I just felt like getting this out. Am I correct, in saying a 4684 is the way to go? Thanks.

I agree with what you are saying, but he is so close to the standard deduction, so close that H&R, who did this return before me, had him itemizing, by fudging a few numbers. I'm redoing their work, but correctly this time. He walked out of their office before paying because the preparer there, was asking him (the taxpayer) if certain items are deductible. He called me from the H&R desk to ask me, because neither of them were sure, and I told him to grab his stuff and leave, the tp shouldn't have to call another preparer, to answer questions for the current preparer. i've worked at H&R, but couldn't stand the prices I was charging the customers and the lack of knowledge in my office, but one thing we did have is plenty of research material and the things he was asking could've been found in their books. So, he left and surprisingly, the preparer at H&R, not only gave him his paperwork back, but also printed up a "Not for Filing" copy of the return for him, that's how I caught their errors. He makes an ok living, but he has to support 2 households, because he can't get a job in his field where his house is and his wife and daughter live, in Idaho, so he works in Washington, and travels back to Idaho most weekends to spend with his family. I tell him (we are good friends) to tell his wife to move to WA, but she won't. So, while being honest, I am trying to do the best I can for him, and get him the most back. As I said before though, even if he did itemize, he still can't take this deduction because of the 2%. About the standard vs itemized thing, I try to explain to clients and they still get frustrated when they can't itemize. I will say, you only had $2,000 in deductions so we are taking the standard. They will reply, 'but that's not fair, can't we find more things so I can itemize?' I say, 'no, we can only take what is allowable, and even if we did 'find' more, what's the difference, if we beat the standard by $100 and you can itemize, other than if you get audited, it may be more stuff you will need to prove and more work for me' they say 'but don't you get more money back by itemizing? why should people with big mortgages be allowed to itemize, and not me?' i say, 'in reality, you are getting more for not itemizing, they are only getting a deduction for exactly what they paid, you are getting a deduction for more than what you've paid out, you are the winner in this situation' They still don't find this answer satisfactory and insist it's much better for them to itemize. daisy

I didn't describe how I was going to take it, because I have no idea. I will be doing more research on it now. I had found this earlier: Workers who are laid off often become entitled to taxable supplemental unemployment compensation benefits. Subsequently, they may receive trade readjustment assistance, which generally is non-taxable except to the extent otherwise provided in Code Section 85. When this occurs, those workers may be required to repay previously received supplemental unemployment benefits. If the repayment is required because of the receipt of trade adjustment allowances under Sections 231 and 232 of the Trade Act of 1974, the taxpayer is entitled to deduct these repayments in computing AGI. Qualifying repayments are those made to trusts exempt from taxation under Code Section 501©(17) or to voluntary employees' beneficiary associations exempt from taxation under Code Section 501©(9). [26] in Kleinrock Federal TaxExpert, but planned on looking into it further, because I don't think this covers my situation as far as it being 'supplemental' unemployment, or the reason for repayment is due to 'trade adjustment allowances'. This, so far, was the only item I found on the subject. So, I planned on starting here, taking what you all say and trying to find more information. I wouldn't do anything obviously improper, nor do I do anything on a return if I'm not sure if it's correct. Especially with this one, because he had gone to H&R for many years, this year he came to me, and I found obvious errors on his return from last year. Nothing that will change his tax all that much, $100 or less errors, so H&R didn't do it to get him more money, they just did the return incorrectly. Who knows what is on all his other returns that I haven't seen yet. So, I will still be researching more tonight, but what are your thoughts on this, He is paying ~$975/year for 3 years, and he's not itemizing and even if he was, he couldn't take this because of the 2%. The tax that he paid when it was withheld from his unemployment is now lost? There's no way for him to reclaim that? I'm going to be calling him in about an hour to get more info, but I believe the unemployment had something to do with him being in the Army Reserves and being called to duty in Mississippi for hurricane Katrina clean-up. I don't mind thoughts, it was just the tone I read it in. I am professional student, I love going to college, so I'm always going for something, and now I'm enrolled in my classes on-line, as much as I hate using them, our school recommends we use the emoticons, so there isn't much room for misunderstanding each other. It's funny, there's a guy in my class, so far we've been in two together, and I can't stand him, haven't ever met him, but the tone I receive from his posts and he doesn't use the emoticons, he comes across as a suck up and know it all. Since I don't like wasting time trying to decide what all the emoticons mean, I just use this one all the time, well, one very similar to it. Though I do like this one, they don't give it to use as an option, but I may try using it there. daisy

I found your response to be rude, if I was planning on doing "obviously improper work" I wouldn't be doing the research, nor would I have asked you guys what you think, I would've just done it. Is this not the place to come, when we aren't sure about something?

I have a client who was paid unemployment in 2005, and had withholding on it. 2006, he was told he has to repay it, it was given to him in error. He paid 1/3 of it in 2006, will pay back another 1/3 this year and the rest in 2008. I believe the payment amount gets deducted from the AGI, so on the 2006, 2007, and 2008 returns, I will deduct the 1/3 payment he made. Also, nothing changes on the 2005 return. I'm looking into this now, but if anyone here has any insight, or thoughts on this, I'd appreciate it. Daisy

Unfortunately, I don't know what entity it is, that's one of the questions I asked him the other day, when I left him a message. I told him that would make a difference in how it can be handled. Jainen, I watch out for party freeloaders, by not giving answers at parties, I always say, send me your stuff and I'll look into it and let you know if I will do it. He's a good client's brother. I'll come back with more info when I get it, I expect by next week sometime. Thanks everyone! daisy

I know I need more information, but I'm going to start by asking this, until I receive the rest of the info. I met someone at a party and he wants me to do his return for 2006. he said his company received a 1099 Misc for some work he did, but he said the 1099 Misc shouldn't have been assigned to his company, it should be for him personally, for some reason that i cannot remember, at the moment, there is no way he can get them to issue a new 1099 Misc in his name, so he wants to know how to move this 1099 misc from his company's name to his so he can put it on his personal return. I guess his "company" has had no business or expenses for a couple of years and he's just getting rid of it. It's a computer consultant business. Does what he's asking make sense? Does anyone know what he should do? He should be sending me his stuff soon and i'll more info then. Daisy

I have one, at least I know her, she asked me in Jan. if I'd do her return for 2005 and 2006, she received a 1099 misc in 05 and didn't know how to do it, so she just didn't. She's been thinking that she probably should get it done. That was in Jan., each month she calls me and says she can't find any of her paperwork for either year, but don't worry, it's already late, when she finds it she will give me a call. Daisy

Thanks guys! I did know that, I don't know why I couldn't think it through correctly. Very rarely is there a gain on a sale/trade-in of a car. I guess my brain is just fried! Daisy

This is something I've never heard talked about and never ran into it before. A client called me tonight to tell me he's selling his gas guzzling car for something that uses less gas. He asked about the money he makes from the sale of the first car, is it taxable? I said yes, because it's income and wouldn't see any reason why it shouldn't be. Then he asked if he traded it in at a dealership, rather than selling it himself, if he would have to claim that as income also, my answer was, I wouldn't see why not, even though he's not getting cash in his pocket, it would still be income. Am I correct? Daisy

Had a friend/new client ask me last month if I'd do his return, he lives on the other side of the country. I've called him a few times up til yesterday, letting him know he needs to get his stuff to me. Left me a vm tonight (4/18) at 10 pm, saying 'I was waiting til the season was over to call you, now that it is, can I send you my stuff so you can do my return?' Huh? I sent him a message saying yes, and I'd call him tomorrow. So, I have 2 on extension, 1 on it's way, but I'm not touching any of them til next week or the week after. Daisy