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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

A client has a 22 year old son in college who is not graduating this year. When I asked when he was likely to graduate I was told it might be a few years ! What is the age limit to carry a supposed full time college student as a dependent or is there one. If not a parent could hold on to junior for an eternity. He has not yet got the BA he is studying for.

right. I was hopeful that TAS might have a memo on the notices, but it appears that their website is only providing generic info. But I'll use this as another opportunity to beat the drum to go ahead and procure 8821's from your clients before an apparent need arises. I have them on about 75% of my clients and I know of at least one preparer who requires an 8821 from all his clients. I go through and check all of mine in October to see if there are any surprises waiting for my clients. There are also companies who will monitor all this for you (if you've checked the 3rd party box on the 8821). Roger Nemeth (Bill's son) in Havana, FL has such a business.

My understanding is that the the TAS doesn't involve themselves in this kind of situation.

Unfortunately, the original notices were suspended during COVID. The IRS restarted sending out notices in February which is why clients are receiving these balance due notices now. You will need to have your clients request a "Record of Account Transcript" which will show everything.

you can input the notice number at the Taxpayer's Advocate office, might give you some info if this is a widespread issue. https://www.taxpayeradvocate.irs.gov/notices-from-the-irs/ I thought the resumption of past due notices was for 2022, not 2021.

I do the same thing. Being 100% responsible for my own paycheck, I was always worried I'd get sick / injured / stock market would crash and wouldn't have excess cash in September or January. When I had the funds in April, I just paid everything for the year and eliminated that risk. I never had a car loan or credit card debt either because I wanted to keep my cash needs low just in case. Also in January I made my retirement account contribution for the next year so it was invested early.

Several clients are getting past due notices on their accounts for 2021. Notices have no explanation and clients are frustrated not knowing what the penalty is for. Anyway to find out except getting an 8821 and calling in and sitting on hold?

Because he has to complete the form and pay on pay.gov anyway, tell him to do that himself now. Give him the instructions.

You would have to do interest tracing.

They are under the impression that they cannot accept larger donations until they are "activated." As far as I know, that was the Nov 2022 determination letter! I had been wondering if the guy was told "de-activation" and heard it wrong. But since this is not an area of expertise, I also figured there was a chance I was the one misunderstanding it all, too. It's a new entity, and has not yet even begun to serve it's purpose (because he's been holding off for this $%^&* form issue); it's not being disbanded, that's for sure!

Reseller programs can be a savings, but there is a reason. The support may be offloaded to the reseller, or some fee per use from the developer (assuming the reseller pays the developer and reports your sale to the developer). At one point in the 90's, our product was available from a reseller or two. One sold many licenses, but never paid us, or reported the customer information. As inevitable, the customer contacted us (at the time, via phone) for help, and we were in a Catch-22. Help them for free, supporting the thief/reseller, or explain the theft which made us look like the bad guy. So for us, it quickly became a lose-lose and was ended shortly after starting. Unfortunately, back then, the reseller was able to keep going the about a year, as it was just a matter of copying the software onto another floppy to sell. IIRC, either the same or a different reseller was supposed to handle their own support, but they did not, or when the customer found out how to reach us, they did, making the agreement a money loser in that manner. The reseller, once we went to a different license method, resold their own license over and over too. We eventually noticed (for the same reason, via support inquires) and came up with a way to prevent that type of theft too. We still get issues when someone orders for another, sometimes collecting more from the customer, then the customer complains to us. Happened last week. For me, I avoid resellers for anything major. My current computer is a new model, in short supply. Resellers had some inventory, but I figured out when the manufacturer updated inventory, and was able to order in the few minutes/seconds when they had stock. Why? The return policy was cleaner, and they give a longer warranty option (which for a new device, for me, is important).

Well that's very user friendly

https://www.irs.gov/charities-non-profits/form-8940-for-miscellaneous-determination-requests Are they dissolving the PF; or do they need an advance approval for a new activity, such as voter registration? Why does your client think they need to file Form 8940? I agree with you that that form says nothing about "activation." Maybe their "advisor" said de-activation, and your client heard activation.

The price of $999 is thru Sigma Tax Pro who is a reseller of several software providers including Drake. This price is for a single user as I have no employees. I got a "demo" of their " DR" software desk top version (Drake) from them and it is exactly the same as my regular version of Drake and appears to work the same. I was able to register with them for the 2024 tax software for $49.99 payment now and will not have to pay the balance until the software is released late in Nov. This will be my 1st year with them so I will update my post as next season progresses.

I can't think of any reason unless they plan to pay scholarships.

It could be deducted on a Sch C as ordinary and necessary, since they're essentially borrowing the money from the IRS to fund their business. If line of credit interest is deductible on Sch C then this is just a substitute. Facts and circumstances apply.

Private foundation needs help with its 990-PF, but also says they were told they need to file Form 8940 "to allow us to become 'active' as a foundation" and there is nothing I can find in the Form 8940 instructions that has anything to do with being "active." They got their 501c3 determination letter in November 2022, and did file a 990-PF for 2022 (no activity, so late in the year). I've done PF's before and this one isn't hard (only two donations totaling less than $5k, a couple of office expenses, and a prepackaged web site; all expenses are maybe $1k). The stumbling point is this insistence that they "need" this form filed to "activate" the foundation. Every other bit of advice they got from whoever was talking to them about taxes seems to be highly suspect, and I'm thinking this is again the case with this form. But I'm somewhat out of my league here in PF startups. The one other PF I dealt with had their own issues (meant to set up a charity & did the paperwork wrong; had to file PF for two years while that mess was being fixed) but there was nothing about some form for "activation." Instructions for the 8940 have nothing that sound like it applies. Other readings online ditto. However, I could well be missing something. Anyone here have any clues, pointers, reference sites? TIA.

I had an elderly client, gone these many years now. He had interest from a dozen or more different banks every year, chasing interest on 1-year CDs. His great joy and glee in life was calculating (by hand on paper!), and paying, his estimated taxes such that he owed less than $25 in April, each to the state and the IRS. But always he wanted to owe and never overpay into refund. I got a real kick out of him and he (and his wife) were lovely to work with.

Where is IRS interest deductible? It is not an "ordinary and necessary" business expense, and for an individual taxpayer it's personal like with a credit card.

Several points. The IRS interest is deductible but the penalties are not, and IRS interest rates are now higher than banks are paying, especially after paying taxes on the interest income. If he borrowed on a line of credit, all the interest should be deductible and the interest rate should be about the same as what the IRS is charging. And if cash flow is good, you can even put expenditures on a credit card and pay it in full every month, for a short-term interest free loan. Bottom line is, you need to crunch the numbers to see what is best.