Chowdahead

Have a client who lives in her 3 Family Property. She worked out a loan modificatio with her bank. The bank issued her a 1000-C for a cancelled debt of $144, 094 (Box 2).

Box 7 indicates fair market value of $89,000. The other 2 apartments are rented, she lives in the third.

I have seen a 1099-A issues, but this is the first time I have seen a 1099-C for this much. How would you guys handle this. I assuming this entire amount is not going to go on Line 21 of the 1040. Given the signficant depreciation of the property to $89,000, and the fact that it's 66.6% rental property.

Is the IRS really going after the gazillion homeowners receiving these forms with all the modications being performed?

I have a police officer as a client and he made almost $80K, single, no dependents. Did his return with the usual police deductions on Schedule A.

He then went home and got on HRblock.com and entered his info in there and determined that he could have cliamied more deductions and gotten more money. He also wants to claim the medical expenses of his children who live with his ex-wife and who he cannot claim.

I looked up the medical expenses in the 1040 Express Answers and it appears he can claim medical expensives for the kid. But I told him they need to be over 7 1/2 % of his AGI to even begin helping him. He said he would look into it.

He allowed me to go into hrblock.com and print his "proposed return", and I noticed that on 1040 Line 36m is printed the item "501©(18)..... $4524". This is adjusted right off his income.

I could not find this amount on any of his W-2 or any of the paperwork he gave me. He says it's contributions to his employee pension with the city. It's not in Box 12a of his W-2., or anywhere on the W-2.

This contributed signficantly to the increase in his proposed "refund" on hrblock.com because it signficantly reduces his taxable income. I also find it odd that it's not listed a box on the 1040.. it's simply on the dotted line. I have never seen this in ATX.

Is this a valid deduction?

Have a client whose 4-year-old son attends Pre-K at a Catholic school. She pays over $400 a month for it.

Is Pre-K considered "daycare" and can it be counted as dependent care expenses as long as the school provides their Tax ID number to her? The credit would boost her refund by a few hundred dollars.

On that note, I have been looking at the instructions for the form 2441 and it is very vague on what expenses actually qualify. it basically just says that the parent has to be working or looking for work and the dependent must be under 13. So does this mean that any paid "schooling" under 13 could qualify for "dependent" care?

Had a rollover and the client had a new bank account. I entered the new account number in for the direct deposit, same routing as last year. But I forgot to change Savings to Checking.

Does it matter, as long as the routing and account number are accurate? I seem to recall in the past that it didn't really matter as long as the account info was accurate, but I wanted to be sure.

I have noticed that HR Block has a nice refund/info page that they put on top of their return. It includes both the federal and state refunds, plus a bunch of other information like AGI, tax rate, preparer fees, etc.

In ATX, I have found the Tax Summary page but it isn't very consumer friendly, and must be manually added unless it rolls over. So I generally use the Client Letter feature. But that takes some work because it doesn't update all the time to reflect how the refund will issued, so I have to go into the options for that letter.

The letter is nice because I can set the program to add it to every return. but I would prefer a nice single page summary sheet for everything like Block, and I would like it automatically added to each return.

Has anyone found anything like this in the program?