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  1. 8 points
    Outside of us dinosaurs, I wonder who still knows (or gets taught) that if the out-of-balance amount is divisible by 9 that somewhere two numbers are transposed in the different columns?
  2. 7 points
    I swear, if that outfit calls me one more time I'm gonna, gonna, ....hmmm.... uh... answer it I guess. They've lightened up lately - no more than three calls daily instead of the previously normal six. Since they already own everything in internet-land (and probably a telephone company or two to boot), I don't suppose there's any chance of them runnin' out of cash any time in the next century or so. At first they were calling on the up-and-up (ID said "out of region"); that didn't work so they bought up all our local three-digit prefix numbers so I'd think it might be a legit local customer, but the salesman's spiel gave that away pretty quick and we hung up immediately. They quit that and started using strange out-of-the-way towns for caller ID (lucky for me that Horseshoe Bend, AR isn't strange 'cause I've already been to Possum Grape and Oil Trough). The latest gimmick is they're using random names: now I've got to figure out who the heck is R. Hicks (no address listed). Sure wish I had my party line back - two long rings followed by three short. 'Course I guess faxin' would be a little more complicated and then there's those dadgum confidentiality rules to rassle with. P. S. Ran into a (socially-distanced) old friend the other day and right in the middle of my complaints she said "Bart - Prozac is not the answer!
  3. 7 points
    And just think, they won't have to shred the tax documents.
  4. 6 points
    Why not kill (no pun intended) two birds with one stone Is this our friend Rita’s business?
  5. 6 points
    I get plenty of those, too. It is almost always a robocall, but sometime it is a potential new client that I wouldn't want to miss. So, instead of answering, "Hello", or "Yes", which the robot recognizes, I say, "Good morning. How can I help you". If it is a live person needing tax services, they will ask an appropriate question. If it is a robot, it will wait for 3 seconds and disconnect. Then I block that number. Of course that doesn't always work as the robocallers will switch to another number, but at least it stops the less sophisticated ones, like those asking for a donation or to answer a survey.
  6. 6 points
    You should share stories here on a regular basis. I would so look forward to reading them!
  7. 5 points
    I started with Parsons too ! And I also have been fairly happy with it. Too late now to start thinking of changing. I hoping for only 5 more years and then I can retire.
  8. 5 points
  9. 5 points
    I do think you need to give him a complete copy of the 2018 joint return. You can mask the SSN's. He was a client in 2018. Not her W-2's. IRS doesn't care about state court papers. BUT if she doesn't follow the state court doc's she could be trouble with the state court. You need to talk to her and get a copy of the state court papers, he may be not telling the entire truth, she should know. You can't take him on as a client for 2019 unless they file a joint return, conflict of interest. I would not even talk to him again. talk to the wife
  10. 5 points
    It seems a good percentage of people didn't watch the news or forgot when their preparer told them "your tax situation from 2017 to 2018 will be different and you are slowing getting your refund in your payroll etc...") Now as for technology, as we get older we will continue to keep the clients that are not computer savvy, but I can picture the young whipper snappers doing their own returns using their smartphones.
  11. 5 points
    I tell them I don't aspire to be the cheapest, I aspire to be the BEST. I also don't sell tax returns like tax-in-a-box. I sell service.
  12. 4 points
    It is treated as investment property and covered by a sect 266 election. Since the returns for those years have never been filed, you might be in luck. Reg 1-266-1(c) states that the election has to be made with an original tax return, there is no reference that the return must be timely filed. Pub 535 also state the election must be made with an original return or if an original return has been filed, the election can be made with an amended return filed within 6 months of the due date without regards to extensions. So it appears that since your client's partnership has never filed any tax returns, those years are all open and original returns can be filed to make the election. However, you need to consider the effect of TCJA for years beginning after 2017. An election for sect 266 only covers otherwise deductible expenses. That limits the election to $10,000 of property taxes for years after 2017; and also eliminates the election for carry charges subject to the suspension of misc itemized deductions. Unless I am overlooking something, it looks like you can file a 1065 to make the 266 election for each open year and increase the basis (subject to TCJA for 2018 and 2019). $100,000 increase in basis should be well worth your fee for some basic returns to make the election per the reg and IRS pub. In situations where the election was omitted on original returns, PLRs have ruled favorably for taxpayers that were not advised of the 266 election, but that does not appear to be the case here.
  13. 4 points
    I do a min. charge of 250. and then depending on how many assets go up from there. This form takes time. I have only done a handful in the last 35 years.
  14. 4 points
    Update, I was able to get the penalty removed for reasonable cause.
  15. 4 points
    Good grief, Illigitimas, you've got Rita figgured out!!
  16. 4 points
    I agree Yardley, but I still remember the 2012 year and it is not a fond memory.
  17. 4 points
    I have a shortcut to Alice Cooper's Hey Stoopid on my desktop and I hold the receiver up to my speakers and crank up the volume.
  18. 4 points
    Dear Abby (and friends), I appreciate your comment and would indeed write more (I do enjoy it very much), but it seems to me that a steady diet of crackerbarrel humor and southern cornbread tends to become a tad overdone and stale PDQ (as you know, some tax pros want non-tax posts eliminated entirely). I'll continue to contribute occasionally though. We certainly could USE some humor nowadays, couldn't we? Saw that divorces are up sharply among newlyweds (must not have suffered from as many slings and arrows of past events as this old bunch - I'm trudging through a fifty-something anniversary). Some good news: supposed to have a vaccine in a few months which is cheering. Wonder of wonders - saw Lysol spray for sale on Amazon (if you want to pay $64.99 for three cans); the stuff's made in India. While my Prozac-popping pal looked a little bleary-eyed the other day, at least she's still with us, so that's encouraging. Also recently saw two movies on Netflix that weren't completly crazy. Hooray! Best regards, BB
  19. 4 points
  20. 4 points
    Before spreadsheet software, we would 'foot and cross-foot' to ensure our totals were correct. Now, we add a cross-foot formula to double check our totals. My choice is to have to formula display zero if it's in balance or the amount by which it is out of balance.
  21. 4 points
    The term I was taught many years ago was "ticked and tied" - as in you ticked off all the numbers you added on the 10-Key tape, and tied the totals to the GL. Damn, I must be gettting old. Tom Modesto, CA
  22. 4 points
    Happy to see ATX had a decent showing. I've been using the program for many years, back to the days of Parsons Technology, and it has treated me well. That's not to say there isn't the occasional hiccup, but overall I'm very pleased with the product.
  23. 4 points
    If we get a call from an unrecognized number (or just a town name), instead of saying anything, I start humming into the phone. Scotland the Brave is a good one, but you could use the Eggplant That Ate Chicago, or Clementine, or Hallelujah Chorus, or whatever. If it's a person, they'll SAY something. If it's a robo-call, it clicks off. SO much easier on the throat than growling, and makes the others in the office laugh instead of grumble.
  24. 4 points
    ^^^ Yes! Exactly! grandmabee has it exactly correct. Tom Modesto, CA
  25. 4 points
    If you don't need your 2020 RMD, or don't need all of it to live on, letting it remain in your IRA lets it grow tax deferred longer. Markets took a hit during this pandemic, so you stand a better chance of recovering if more cash remains invested longer this year. Also, as you say, if your IRS withdrawals make more of your SS taxable or put some income in a higher tax bracket, you might want to control how much, if any, you withdraw. Depending on your investments, this might not be a good time to sell to take withdrawals. If this is a low income year for you, and you don't need your full RMD for living expenses, it might be a good time to convert some of your Traditional IRA to a Roth IRA. If you expect to be in a higher bracket or expect to need less to live on in 2021 compared to 2020, then you might want to take your RMD, or a larger portion of it, this year. As with anything tax, the answer is It Depends!
  26. 4 points
    I started my own part time practice in 1997 using Intuit Pro Series; I hated it. Then out of the blue in fall of 2000 an ATX demo show up in the mail! I have been using it ever since. I can't remember the last time I had to call support.
  27. 4 points
    And tax pros can expect millions of phone calls about this. https://www.irs.gov/newsroom/13-point-9-million-americans-to-receive-irs-tax-refund-interest-taxable-payments-to-average-18-dollars
  28. 4 points
    If Yale gives (even partial) credit for the Dartmouth course, wouldn't it still be part of a degree program?
  29. 4 points
    I am glad this turned out as well as it did. I have always had my share of mistakes, but it seems like it is getting harder for me to accept that. And I don't want to stay in this business past the time that I can keep up with the changes. As fast as they are coming these days, I don't know how much longer that will be.
  30. 3 points
    Yes, I agree with Dan that if the client still has the same route with a reduction of several customers, then I'd say company bought back those several customers for the $30K. My answer would be different if this was not substantially the same route though. I'd prorate the cost, amortization, and remaining basis saying that what was bought back was 30/130 or ~23.08% of the route and report that against the $30K proceeds so that the client would report ~ $21, 460 of gain (30K - 8540 of basis). What I wouldn't do is frontload an entire $30K of basis against this sale and report -0- gain.
  31. 3 points
    Dan, I was thinking the same thing. File the returns to make the election. I'd also put a statement on the return that indicates the partnership had no activity that actually required a return be filed so that the IRS doesn't try to assess late filing penalties. ILLMAS, if you, or anyone else, would like a more complete reading of this under sec 266, this article from The Tax Advisor is a pretty good one. It also reminds us that with more people claiming the higher standard deduction, this election should be considered because the taxpayer can still benefit by adding real estate taxes and interest to basis that would otherwise be lost.
  32. 3 points
    Charge by the hour, but if you are working in an area that you are have limited experience, or maybe a little rusty in, then you need to make an adjustment for the amount of extra time it took.
  33. 3 points
    Copied from the AICPA: "5 reasons borrowers shouldn’t rush their PPP forgiveness applications Posted by AICPA Communications on Jul 14, 2020 This blog post explains why borrowers shouldn’t rush their PPP loan forgiveness applications. Please share with clients who participated in the program. Borrowers who received Paycheck Protection Program (PPP) loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act are asking their CPAs if and how they will qualify for PPP loan forgiveness. There is uncertainty over some of the program details. Organizations — especially small businesses — worry about meeting the maximizing loan forgiveness requirements. While you may be anxious to apply for forgiveness, here are five factors affecting the forgiveness application process. Most lenders are not ready to process forgiveness applications. Many are developing technology tools such as “forgiveness portals” or will leverage other automation options for a more efficient process. Until the U.S. Small Business Administration (SBA) and the U.S. Treasury Department issue final guidance, those technology tools can’t be finalized. The timing on when that guidance will be available is uncertain. Bank of America, as one example, is telling PPP loan holders it expects to begin opening its online loan forgiveness application process in early August and will email instructions to borrowers when it’s ready. Organizations have 24 weeks to use their PPP money, leaving them more time to take steps that will help them qualify for full loan forgiveness. Borrowers who received their loans before June 5, 2020, can choose either eight weeks or 24 weeks for their covered period. That increased flexibility in the time to use PPP funds can be important in maximizing loan forgiveness. "Payroll costs are a significant component of PPP forgiveness. Many payroll providers are developing custom reports specifically to comply with PPP guidance. However, like lenders, they are waiting on final SBA and Treasury guidance so they can prepare the PPP-compliant reports borrowers will need. Borrowers aren’t required to make any loan payments before they apply for forgiveness or until 10 months after their covered loan period ends. Since payments aren’t due yet, there is less urgency to apply for forgiveness. Applying for forgiveness may be easier than clients expect. Borrowers can use a simplified process through SBA Form 3508EZ if they meet at least one of these requirements: They are self-employed individuals, independent contractors or sole proprietors who had no employees when they applied for their PPP loan and who didn’t include any employee salaries in calculating their average payroll amount in their application. They didn’t reduce salaries or hourly wages for certain employees by more than 25% during the loan period and — except for specified exceptions — didn’t reduce the number of employees or the average paid hours for employees between Jan. 1, 2020, and the end of their covered loan period. They didn’t reduce salaries or hourly wages for certain employees by more than 25% during the loan period and were unable to operate at the same business activity level during the loan period because of federal safety requirements or guidance related to the pandemic. CPAs expect SBA guidance to help determine how broadly this safe harbor can be used. Be prepared While waiting for final program guidance, borrowers can take steps to prepare for the forgiveness application process by documenting how the loan proceeds are used. Gather documentation needed to support non-payroll costs for expenses such as mortgage interest, rent or lease payments and utilities, including account statements and other proof of payments. Lenders may not request supporting documentation for all disbursements as part of the forgiveness application; however, increased scrutiny is guaranteed for loans of $2,000,000 or more. Be patient PPP loans have gone to 4.8 million organizations through June 30, 2020. Recent legislation extended the opportunity for organizations to apply for loans until Aug. 8. While questions remain about some forgiveness process details, CPAs are following developments. It can be difficult to be patient when your organization is affected by the ongoing uncertainty COVID-19 created. But that may be the best approach until the SBA and your lender establish a forgiveness application process. Count on your CPA to continue to be your trusted adviser throughout the process. The AICPA has several Paycheck Protection Program resources available to the public during this challenging time. You’ll find an overview of the PPP loan forgiveness process, answers to frequently asked questions and more. Lisa Simpson, CPA, CGMA, Director — Firm Services, Association of International Certified Professional Accountants" Based on what I learned from my 4th online CPE course about this process, I completely agree.
  34. 3 points
    I suggest you consider charging your highest hourly rate x the amount of time it takes you to prepare the form.
  35. 3 points
    The new charitable deduction for nonitemizers By John McKinley, CPA, CGMA, J.D., LL.M.; Luke Richardson, CPA; and Jonas Lee September 1, 2020 Residents of the United States are frequently ranked as among the most generous in the world (Charities Aid Foundation World Giving Index, October 2019). Charitable contributions flowing from these taxpayers enable many churches, youth sports charities, and other not-for-profits to fulfill their charitable missions. However, many of these organizations are now experiencing a decline in giving as the United States finds itself grappling with a public health crisis. In response, Congress included a provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, intended to provide some relief for charitable organizations. Section 2204 of the CARES Act permits eligible individuals who do not itemize deductions to deduct $300 of qualified charitable contributions as an "above-the-line" deduction, i.e., as an adjustment in determining adjusted gross income (AGI), for tax years beginning in 2020. Allowing nonitemizers to deduct charitable contributions is not a new concept. The Economic Recovery Tax Act of 1981, P.L. 97-34, allowed a charitable contribution deduction from AGI for nonitemizing taxpayers (Sec. 170(i), before deletion by the Omnibus Budget Reconciliation Act of 1990, P.L. 101-508). Although the amount of the deduction was generally limited to 25% of up to $100 in contributions (i.e., $25) for tax years 1982 and 1983, it climbed to 100% of up to $300 for 1986, after which it sunset. Since then, Congress has introduced bills on multiple occasions to reestablish a charitable contribution deduction for nonitemizers or provide a larger one than the CARES Act's. These include the currently pending Universal Giving Pandemic Response Act, S. 4032, and a companion bill, the Universal Charitable Giving Act of 2019, H.R. 5293, both of which would provide a deduction of up to one-third the amount of the taxpayer's standard deduction (i.e., for tax year 2020, $4,133 for single individuals and $8,267 for married individuals filing jointly). S. 4032 would also allow contributions made under this provision after Dec. 31, 2019, and before July 15, 2020, to be treated as made in calendar year 2019. QUALIFYING FOR THE DEDUCTION Under new Sec. 62(a)(22), for tax years beginning in 2020, eligible individuals may deduct up to $300 in qualified charitable contributions made to qualified charitable organizations. Any amount that exceeds the $300 limit may not be carried forward to future tax years or claimed as an itemized deduction (Sec. 62(f)(2)(C)). Moreover, charitable contribution itemized deduction carryforwards arising in tax years beginning before 2020 may not be claimed as an above-the-line deduction. The Joint Committee on Taxation (JCT) estimates the government's revenue loss for the new deduction at $310 million and $1.241 billion in fiscal years 2020 and 2021, respectively (Description of the Tax Provisions of Public Law 116-136, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act (JCX-12R-20) (April 23, 2020), p. 107). This projected revenue effect is considerably lower than the estimated $96.75 billion revenue reduction from itemized charitable contribution deductions in fiscal years 2020—2021 (Tax Expenditures, U.S. Department of the Treasury, Office of Tax Analysts, Feb. 26, 2020) or the $180.5 billion in cash charitable contribution deductions by individuals for tax year 2017 (IRS Tax Statistics, Individual Income Tax Returns, Table 2.1). ELIGIBLE INDIVIDUAL An individual eligible to claim the deduction is any individual who does not elect to itemize deductions for 2020 (Sec. 62(f)(1)). The $300 limit per filing unit applies regardless of filing status. QUALIFIED CHARITABLE CONTRIBUTION A qualified charitable contribution for purposes of Sec. 62(a)(22) is a charitable contribution as defined in Sec. 170(c) (Sec. 62(f)(2)). Such contributions must be made in cash, not taking into account the revised percentage limitations of Sec. 170(b). (The CARES Act also effectively suspended the ceiling for qualified charitable contributions made in 2020 by limiting the deduction to 100% of the taxpayer's contribution base (CARES Act §2205).) Therefore, contributions of noncash property are not allowed as an above-the-line deduction. However, these contributions are still available for individuals who itemize their deductions. Cash contributions are any contributions paid with "cash, check, electronic fund transfer, payroll deduction, etc." (IRS Publication 526, Charitable Contributions). No part of a gift that a donor makes in consideration for goods or services received is a contribution for this purpose (Regs. Sec. 1.170A-1(h)). Sec. 170(f)(8) requires that for any cash contribution over $250 the taxpayer must keep a "contemporaneous written acknowledgment" of the donation. The substantiation requirement applies on a gift-by-gift basis (IRS Publication 526). Because the $300 charitable contribution deduction qualifies as a deduction under Sec. 170(c), one can reasonably infer that the substantiation requirement applies to it in the same way as to an itemized charitable contribution deduction. QUALIFIED CHARITABLE ORGANIZATION A qualified charitable organization is any organization that qualifies as a public charity under Sec. 170(b)(1)(A) (Sec. 62(f)(2)(C)(i)). The contribution cannot be made to a supporting organization described in Sec. 509(a)(3) or to a donor-advised fund. In general, a contribution to a charitable remainder trust does not qualify as a charitable contribution. But if the charitable remainder interest is paid in cash to a qualified charity during the applicable time period, then the amount may still qualify as a contribution under Sec. 62(f)(2) (JCT, Description of the Tax Provisions of Public Law 116-136, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act (JCX-12R-20) (April 23, 2020), pp. 22—23, 26). OTHER CONSIDERATIONS However, a couple of issues might arise for taxpayers claiming the $300 above-the-line deduction. First, low-income taxpayers whose AGI does not exceed the standard deduction will largely fail to realize the deduction's intended benefit. Even if these individuals do have any taxable income before credits, nonrefundable credits (e.g., the child tax credit, child and dependent care credit, etc.) may reduce their taxable income — and, in turn, their tax liability — to zero. The second issue might arise when a married individual filing a separate return whose spouse itemizes deductions is not eligible for the standard deduction (or has a zero standard deduction), raising the question of whether such an individual may claim the above-the-line charitable deduction(Sec. 63(c)(6)(A)). Assuming such an individual does not also itemize deductions, an above-the-line charitable deduction would seem to be available, since ineligibility for a full standard deduction is not, per se, an election to itemize (Sec. 63(e)(1)). But some IRS guidance on this point would be welcome. Practitioners with clients who do not regularly itemize post-TCJA should consider alerting these taxpayers to the above-the-line charitable contribution deduction. The amount may be relatively small, but in the throes of a health care crisis, every bit can make a difference — in this case, for both the donor and the donee. John McKinley, CPA, CGMA, J.D., LL.M., is a professor of the practice of accounting and taxation at Cornell University in Ithaca, N.Y.; Luke Richardson, CPA, M.Acc., is an instructor in accounting and taxation at the University of South Florida in Tampa, Fla.; and Jonas Lee, MPS, is a recent graduate in accounting from Cornell University. To comment on this article or to suggest an idea for another article, contact Paul Bonner, a JofA senior editor, at Paul.Bonner@aicpa-cima.com. https://www.journalofaccountancy.com/issues/2020/sep/cares-act-charitable-deduction-for-nonitemizers.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=07Sep2020
  36. 3 points
    What both @Lion EA and @BulldogTom are missing is that their versions of cross and check, or ticked and tied, are all procedures that take place after other actions, and only with thought and understanding. However, in the mortgage (and other) businesses today, the ticking and checking are a substitute for thought. They hire people who do not (or just barely) understand basic math and reading, give them a list full of check-boxes, and turn them loose. If all boxes are checked the underwriters will be happy; that's all they know, and they keep hounding until all boxes are checked. Asking them to think is far above their capabilities - and probably also not allowed by their companies!
  37. 3 points
    Yes. The term used in auditing is 'ticking and checking'. Most of our society is just painting by numbers.
  38. 3 points
    If you filed a joint return for 2018, you are on the hook to provide to either spouse. You can charge for preparing a copy, which will probably enrage this guy. But you can do it. You have absolutely no obligation to discuss 2019 with him. A state court order to file jointly means nothing to the IRS. If Wisconsin decrees this as a domestic solution, make them go through the misery of going through the legal channels to do so. Even if this happens, you have no obligation to discuss anything with him. If these two finally divorce, you absolutely cannot file jointly. That is Federal and Wisconsin can't do anything about it. If a Wisconsin return has to be filed, I can't speak to that.
  39. 3 points
    Earned income includes SE income reduced by the deduction for 1/2 of SE tax. The gain or loss from sale of business assets does not factor in.
  40. 3 points
    I did not suggest that there would be. The S corp shareholder's basis in his shares starts with his or her initial investment, and each year it will change for the items on the K-1. It increases because of the income that flows to the shareholder, and it decreases for things like nondeductible expenses and distributions. There is a specific order that is followed for each year's increases and decreases. Below is a pdf worksheet for calculating a shareholder's S corp basis. It is somewhat general, so please keep in mind that the gains reported on the K-1 will go on this worksheet on one of the blank lines for other income. There is also a line for the distributions lower down in the bottom section. Most tax programs will automatically create this basis worksheet for us if we ask it to. It's too bad that the preparer of the S corp return didn't provide this to your client. In your case, the first year would start with -0- basis from the previous year and then add the $94K contributed, then the items from each line of the K-1. You will need to complete a basis worksheet for each year the shareholder was in the S corp, starting with the first year, and the ending basis of each year carries over to become the starting point for each subsequent year's calculation. Also below is an article from the Journal of Accountancy that discusses the basics of calculating basis in an S corp. It's from 2012 but the concepts remain the same. S_Corporation_Shareholders_Adjusted_Basis_Worksheet.pdf https://www.journalofaccountancy.com/issues/2012/jan/20114319.html
  41. 3 points
    Illmas, you are not delaying your RMD, you don't have to take it all. Theoretically, that allows the money in the account to continue to grow tax free. Of course, it can also lose, and with this frothy market that isn't trading on fundamentals, who knows? I agree with Lion that if you don't need the money, this is a good year to convert what would have been your RMD to a Roth. Then you won't have to guess about what future tax rates will be and can take the money out when you need it, not because it's required.
  42. 3 points
    It may be because a scammer attempted to use the taxpayer's SSN to file a fraudulent return to claim a refund.
  43. 3 points
    I have a ScanSnap that is very quick and scans both sides for documents client provide, and my fax machine is actually another computer on a separate line that receives faxes which I save to the appropriate client file on the main computer. And any documents now received in my Verifyle portal go to the client file as appropriate. I can actually find just about anything pretty quickly.
  44. 3 points
    Likewise. I've looked at document management software for decades and could never see how it was better than self management.
  45. 3 points
    Most clients do not want to get a letter from the IRS. It creates anxiety in them even before they open it. Even if you tell them ahead of time and that you will handle the matter if it arises, they will find a way to blame you as the return preparer. Also, knowing that they may not get a letter for more than a year could create long term anxiety to such a degree that the client will call you and ask if the return can be changed so as not to claim the credit.
  46. 3 points
    The instructions to form 8863 cover certain circumstances when the college or university doesn't have to issue a 1098-T and says that it is possible to use those expenses for the education credits, and it lists what other documentation would be required. Expect the IRS to question the credit without a 1098-T from the second school. cbslee is correct - no AOC for non-degree programs As for your questions - #1 - yes, sometimes it works like this. If the 529 is in the son's name, he reports the distribution on his return, and whoever claims the dependent with the education expenses claims the credit. In this case, it would be the lifetime learning credit. No double dip on this - the same qualified education expenses can't be used for the credit and to offset the 529 distribution. The education credit on mom's return probably gives a bigger tax benefit that the offset to the 529, so apply the expenses toward the credit on mom's return first before using any against the 529 on the son's return. The last one I had like this, the parents income was so high that all education credit would have phased out so all of it went toward reducing the 529 on the child's return. #2 - see my answer at the start of this post.
  47. 3 points
    You know sometimes these colleges get on my last nerve. The 1098-T is an important form. While I always recommend seeing receipts and statements from the bursar's office the 1098-T is important. If the son has not claimed himself and has no education credits on his return, mom should be able to claim the AOC because the son has not completed the first four years of school according to your post. If the son is over 24 and mom and he still qualifies as a dependent on mom's return then you should be able to claim the LLC. I am saying this without knowing all of the detail so I could be incorrect based on the circumstances.
  48. 3 points
    Let them go. If the only thing they are looking at, is your fees, they will find someone cheaper next year. 21 years in this business, and I have a long file drawer full of "looking for cheap" folders. "If you are looking for the cheapest, I am not the person to talk to. If you want the best in the area (Mention any credentials) then we can talk. When a person asks "What do you charge?", I ask them to send me a complete copy of their previous return, then I can give them a more accurate quote. (subject to change, if situations arise). Also, if people start complaining about my price, next season there will be an increase. I find out, if they come to me for my professionalism, or just a price.
  49. 3 points
    These are the penalties that can be abated- Penalties eligible for penalty relief include: Failing to file a tax return (this is the late filing penalty) Failing to pay on time Failing to deposit certain taxes as required Other penalties as applicable. I've had to do this 3 times and the best and fastest way is to call PPL and they will check the taxpayers record looking back 3 years. If there are no penalties from those years, it will normally be granted, but even a small late payment penalty could sink it. If it is denied, it can be appealed. You will get a letter of denial and where to send the appeal. The reasonable clause standard is pretty hard to meet. Unless, one of the spouses died or became incapacitated, their house burned down, or the records got swept away in tornado, there is little chance. There is a fourth standard, but it only applies to businesses and it is one of those nebulous things that could be hard to prove. BTW, you don't need to file form 4868 to get an extension - IF the client makes an Electronic estimated tax payment in time for the extension. It's right in the instructions in the 1st paragraph on the upper right. https://www.irs.gov/pub/irs-pdf/f4868.pdf
  50. 3 points
    Well, God is really looking out for me. If only I would trust more and be less fearful. My client never received his initial refund (grace) because the IRS was missing those forms. After splitting the PTC with the daughter, they went from a refund of about $4k to owing $155. My client extended every grace and thanked me for getting him through this practically unscathed. I'm still pulling back on my business. My ration of errors to home runs is small, but it still makes my stomach hurt when they surface. I love y'all. Honestly, I do.
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