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If your IRA is left without a designated beneficiary, then it’s paid to your estate. When this happens, IRS rules dictate that the account has to be fully distributed within five years. So, even though your heirs ultimately share in your IRA funds, it’s likely that a good portion of those funds will be eaten up by income taxes. Plus, being distributed within five years significantly limits the life expectancy of your IRA, cutting short its growth – and its benefit to your loved ones.

Formula for Success: 1) Figure that out 2) Do the opposite 3) More often than not, you'll come out ahead.

Don't you just love it when clients try to DIY their financial affairs without asking for your professional advice? Because she has kept control of the money she's put in since he became 18, that could be argued those were not 'completed' gifts, If so, when she transfers it to him it's going to be treated as one gift now of the entire amount, except for the amounts given in the first 17 years into the 'custodial account', and the earning up to then. Since then, earnings would need to be divided, calculated based on 'his' percentage, [the first 18 years] and' her percentage. She was doing it right, but then changed it. Now, remember, I'm not in possession of any of the documents, so I could be wrong, depending on her state law and the actual details of how the account was set up. But I'd advise that you dig a bit, before you advise her. Hopefully, Fidelity set it up right, and she's just using the term 'joint account' in a generic sense. There's a good chance @MsTabbyKats, that it's ok, but we don't know what she told Fidelity, etc. Look at the paperwork, talk to her Fidelity broker, etc, before you make the call.

What's with all this flap on tents?

If you are asking about medicaid qualifications and ramifications of taking her name off of the account or transferring the assets solely into the son's name, then yes, it would be a problem and would be included if the transfer occurred during the lookback period.

According to Rev ruling 69-148, money in the joint account is not a completed gift, Until it is withdrawn. Now, the question is, would yearly withdrawals over $14K require a Gift Tax return? Another issue will arise when a 1099R is issued after the funds are withdrawn. The son will have to prove that the basis was a gift and that means coming up with records going back 30 years. What are the odds on this? I had a case where there were non-taxable IRA contributions going back 12 years made without filing 8606. We tried to get the statements from the broker, but they only went back 10 years. http://www.andrewmitchel.com/charts/rr_69_148.pdf

Absolutely deductible. Just like you taking a class on trusts would be.

One notice I saw is that the estate(executor) can name a beneficiary and thus pass this IRA on as long as done by September of year following the year of death? This would give a longer life span to RMD it out if I read this rule correctly. tax-book pages 13-24 and 13-25. Or am I way off base?

My new one is WWJD. What Would JohnH Do?

Exactly. Yesterday I had a client call, they had been dinking around online trying to find out about contributing to IRAs. She told her husband, "This is stupid. Let's call Rita." Took three minutes and what they really needed to know was that they had until April 15, 2016 to decide, and I would be able to tell them exactly how much it would help them before then. I could hear the relief in her voice. This couple has sent me three other couples over the years. OTOH, there's that guy who stops in and talks for 30 minutes four times a year. Two minutes about business. Ten minutes paraphrasing five times what I said in the two minutes. Eighteen minutes of, "So how ya been?" Gotta build in a fee for that stuff with him or I would be on the six o'clock news someday.

Texting with clients brings up lots of problems. As others have noted, it means they have your cell number and feel free to call you anytime day or night. People also expect instant responses to texts--wait five minutes and you get another one wondering what's taking you so long (even if it's 2AM). And how secure are texts? I know they are often used as evidence in criminal investigations, so they are definitely out there for someone to access. I won't even let clients email SS numbers because no email account is totally secure. We have a few clients who will call and, if they get sent to voicemail, immediately email and then text--all within 3 minutes time. I'm all for "bypassing the way younger clients communicate" if it means letting the "I want what I want when I want it" generation know they aren't your only client and that others might actually have a life that doesn't revolve around them. I really like texting and finds it saves lots of time in my personal life. I'm just afraid that if I let clients do it I won't have a personal life.

LOL. That really doesn't make sense, does it? :-) I think I originally typed "the instructions don't say this". When I changed it, I MEANT to say "I don't think the instructions say this", but I forget to delete the "don't".

Those quote and edit functions are very nice and welcome changes. Once again, thanks for taking good care of us!

Yes, that red line is gone now. When editing your post, quotes can be reliably clicked/dragged to move them around. When you hover over a quote, you'll see a little 4-arrow handle appear in the top-left corner of the quote. The editor has changed quite a bit under the hood; it feels less flaky, and is much faster to load. There used to be a bit of lag when adding a reply while waiting for the editor to load, and now it should be almost instantaneous. The difference is even more noticeable on mobile devices. I really like being able to highlight some text in a post, and quote it directly from there. Member mentions have been added... just type @ and follow with a few characters of a member name. Example: Thank you @JohnH for another donation

Thanks! I, um, happen to be a moderator of that subreddit, under my alter ego, quakerorts.

Eric is always looking for ways to make this a better forum. I saw this as an opportunity to show appreciation by clicking on the "Donations" button during this slow period of the year. Maybe others will take a similar view.

I frequently save texts. The simplest way to do it on an iPhone is to do a screen shot & print out a hard copy or convert to a pdf and save it. Not sure how that is accomplished on "lesser" devices. I'll stand by my assertion that bypassing the way younger clients communicate will adversely affect the potential growth of one's practice. But of course the way this actually plays out depends upon the makeup of the client base. And I definitely agree that we all operate differently. That's why this forum is so informative. BTW, I don't give my cell phone number to EVERY client - some only get the email address. It really is all about making distinctions. Adding names to the contact list makes it easy to refuse unwanted calls to the cell phone. Just look at the caller ID and send it to voice mail. Most of the time they will follow up with a text.

I'm doing more and more of what JohnH does. Used to think I needed the face-to-face interview, but learned that receiving the hard copy and having hard copy of what I told them (well, electronic but printable if needed) is really more important. I build a fee into my tax prep fee to cover those questions throughout the year. I do want them to contact me BEFORE they do something with tax consequences, so I try not to bill extra. I adjust their tax prep fee each year as I get to know their needs better. If I don't feel used, the fee stays the same. If I was feeling put upon during the year, next year's fee goes up. Sometimes I detail the reason, sometimes something vague like Bookkeeping or IRS inquiry or..., sometimes it's just less of a discount or I refer to some tax law change when I talk with them. But, I try to have only one bill per year so they feel like they are receiving service from me during the year as opposed to paying those 15-minute increments like their lawyer charges.

Many thanks KC.

The best defense is a good offense. Deflecting nuisance calls & visits begins with getting them to use email and texting as their primary means of communication. If you don't start the process it usually won't get done. I get the client's email and/or text number (depending upon which they prefer to use), and I find a reason to initiate a communication with them using that method early on. Now they have me in their contact list, so the natural thing to do is send me an email or text when they have a question at some later date. I also tell them that I return phone calls within a day or two, but generally respond to texts & emails immediately. I'll reply to texts and emails after hours and weekends if it's convenient for me, but phone calls are generally during regular work hours only. That sets the expectation that they will get a reply faster, so they tend to migrate toward emails & texts as the primary means of communication. Sometimes my reply is simply "I'll look into that and get back to you", but that generally satisfies them that I'm on it. And if the question is so complex that I actually need to invest billable time in the answer, it's easy enough to tell them that in the reply. Very few questions are actually that complex. Getting clients to email and text also forces them to stick to the point and clarify their question. If not, my responses asking for clarification serve that purpose without my having to listen to them ramble. My philosophy revolves around the idea that I want to keep my clients out of my office and off my telephone so I can get some work done.

I have found the phrase "I'll have to research that one and get back to you plus bill for the time" makes lots of folks demur. But it is always a judgement call. One of my local colleagues starts every tax return with a $150 PITA fee. IF they are not a PITA, and IF they have not pestered her with calls during the year, she discounts the fee. And of course you can start with a smaller fee and discount as much or as little as you want. So then it is built in to the tax return. I have some folks who call with multiple questions every year; when I do their return I keep those calls in mind when deciding how much to discount from my standard per-form fees. YMMV.

I don't think that's aggressive at all. Deduct it.

Glad to see MBjunket took jm's advice and has already received two responses on reddit. Nice response jmdaviscpa.

Too funny!!

You are right. Will work on finding an attorney in the current state who works with trusts. Hmmm... I wonder if the firm that set up the trusts is still around. First place to start looking, I guess.

Good morning MBjunket. This forum is set up for professional tax preparers that use a particular brand of tax program to help help each other, and we don't provide taxpayer assistance to the general public. Your best course of action is to call the main IRS number at 1-800-829-1040 and ask these questions of an IRS representative.

3. Rules If You Do Not Have a Qualifing child.Table of ContentsUse this chapter if you do not have a qualifying child and have met all the rules in chapter 1. This chapter discusses Rules 11 through 14. You must meet all four of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned income credit without a qualifying child. You can file Form 1040, Form 1040A, or Form 1040EZ to claim the EIC without a qualifying child. If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. If you have a qualifying child. If you meet Rule 8, you have a qualifying child. If you meet Rule 8 and do not claim the EIC with a qualifying child, you cannot claim the EIC without a qualifying child.Rule 11—You Must Be at Least Age 25 but Under Age 65You must be at least age 25 but under age 65 at the end of 2014. If you are married filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of 2014. It does not matter which spouse meets the age test, as long as one of the spouses does. You meet the age test if you were born after December 31, 1949, and before January 2, 1990. If you are married filing a joint return, you meet the age test if either you or your spouse was born after December 31, 1949, and before January 2, 1990. If neither you nor your spouse meets the age test, you cannot claim the EIC. Put “No” next to line 66a (Form 1040), line 42a (Form 1040A), or line 8a (Form 1040EZ) https://www.irs.gov/publications/p596/ch03.html

I agree, Easy and KC, and I didn't read far enough into the form's instructions that were expanded by another 4 pages or so over last year's instructions. I hope it's wrong too, but looking at the form's codes, now I don't think so.