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Client received letter from USPS that his payment envelope was mangled by machine. Check was returned to him. No date on letter, and original envelope not returned. He doesn't like electronic payment, so please skip the lectures about that. Any other ideas than to mail check back along with letter from PO and a note asking to abate penalties?

When we do an amended in ATX, we open the original return and click "Returns" then scroll down to amend return. This creates a new return as originally filed. Close the original return. Make the changes in the Amended Return and all should flow correctly. By copying and adding the 1040x, the flow gets broken.

I suppose they blow it off as immaterial when their balance sheet doesn't add up by $2045. But when I try to use it it kinda messes up my spreadsheet. Does my little heart good to show my client that they were way over-paying for inaccurate financials.

Client neglected to tell me about volunteer miles in 2023 so preparing amended Federal and State returns. Nominal impact resulting in small refunds. I made a copy of the original return and added the 1040-X to the copy. Column A shows original amounts and in Column C the new Itemized Deduction amount and from there the adjusted Total Income, Tax, etc. Seems pretty straightforward but when I do an error check I get a message " Taxable income must equal the amount on Form 1040". When I click on the error it jumps to Column C which is the corrected amount. I get three more similar error messages all linked to Column C. Not sure what I am doing wrong but would appreciate any help you might be able to offer. Thank you.

I should've put that phrase in quotes! I meant to say that if he insists upon filing that form, it has to be filed and paid on pay.gov anyway, so he may as well do it himself, because none of us see a reason for him to file it. It would be nice if he tells you which criteria he meets for filing. Or, if he gives you a cite from his "tax-savvy" advisors.

For the 2022 tax year, checking in October 2023, I found a 1099-NEC where my client's SSN was being used in California. I also found a very large 1099-K for a client where her organization had mistakenly given her SSN to Square instead of the organization's EIN. Lastly, I found a 5498 for a 74 year old client who had never taken money out of a Traditional IRA. None of these clients had heard from the IRS.

@BrewOne, I'm curious about how often you find issues by going through this exercise? I have only one client where I feel this may be useful but have never done anything like this and haven't personally known any preparer that does. Maybe this is will be year I get this client a POA.

It's in the 1040 instructions, pub 501, the interactive tax assistant on the IRS site, tax research books such as The Tax Book, Master Tax Guide, should easily be found using a search engine such as google, etc ....

Bingo Kathy the very number I was looking for. Please advise where you got that $ 4,700 income limit from. That was the number I recalled but was unable to pinpoint where I got it from. Which , of course, means he cannot be shown as a dependent. I am going to ask his parents to get a statement from his school clarifying whether or not he is considered by them to have been a full time student in 2023 as each institution can advise on that. If they certify he was then case closed.

If 1099LTC is only for reimbursed expenses, you don't file 8853.

He is not a qualifying child as he was not under age 19 or a full time student 5 months of the year. He is also not an other dependent as his income is above the 4,700 income limit for 2023.

I would check the number of units completed and the school's full time units number. Earning 7k, or even zero, could be covering support with loans, grants, etc.

I think he has lost the student exemption by not meeting the requirements for being a full time student. His sole income is some $7,000 or so earned at Walmart in 2023. Since he cannot possibly cover half his support with that I will simply show him as an other dependent.

Well let me phrase it this way. Laying aside the student exemption. At what income level does a child 19 years of age and older living at home loose his or her dependent status for their parents ?

Gross income test applies to qualified relative but not to qualified child, so it depends.

Silence is golden

Sounds to me like they only think there is a form to complete.

A moot point now, but instead of filing PF for two years they could have filed form 8940 to receive retro recognition as a Public Charity. Sounds like they need some sound advice on the difference between a Public Charity and a PF. For a PF they need to be aware of the minimum distribution requirement, self-dealing rules, serving a charitable purpose among other concerns. Maybe a reason why they are changing tax preparers? By their choice or were they fired?

I was under the impression if they earned an amount greater than the exemption they could not be claimed. A client has a daughter living at home making $19,500 a year and taking courses at the local community college and is a part time student. She takes her classes by computer at home. I dropped her as a dependent for the last two years but she gets the Lifetime Learning Credit. That is not a large amount of money but would likely be greater than 1/2 of her expenses.

Full time is just a unit number. Has nothing to do with the student actually getting the units for a sheepskin. For instance, one of ours stayed at out local community college to get all the essentially free units he could, even though it was way more than his AS required. So he had 3 full time years at the CC and just two full time for his BS. Age 25 is a good thing for a student (or married) as it makes them independent for finances. Meaning likely more loans and maybe grants, and easier to get free medical, EBT, utility discounts, etc.

Whether he is a dependent or not isn't based on how much money he makes, it depends on who is providing support. For example if his parents are supporting him and he invests or saves a chunk of his wages he is still a dependent. I had a similar situation last month where the student put a large amount of her wages in a savings account with the parents providing support.

So, this fall (from the Transcript Delivery System), I'll request the 2023 "Record of Account" and "Wage and Income"--looking for zeroes on the Record of Account (negatives are good, that's money owed the taxpayer), and I'll note when the refund was funded or tax paid date. Wage and Income: I don't try to go through all the stock transactions, but make sure that other forms match up. If a 5498 is present, I'll look at the client's age and whether RMD's were present or if they soon will be required. Obviously, I don't do these all at once. takes me awhile--after October 15 is a good time to start.

In reading the regs my understanding is to claim a student as a dependent he must be a full time student. In reading your reply I gather that this terminates the year the student becomes 24. The son earns too much money to be claimed as a dependent other than being a student so what we are looking at going forward is next year when he turns 23 will be the last one he can be claimed as a dependent unless his income should drop below a level at which he could be claimed on that basis ?

Brew One, How do you go through and check them?

Under the age of 24. When the son no longer qualifies as a Qualifying Child, then look to the requirements to be a Qualifying Relative. The IRS has a lot of material regarding dependents and even an Interactive Tax Assistant (ITA) dependency wizard: https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent https://apps.irs.gov/app/vita/content/globalmedia/4491_dependency_exemptions.pdf