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I would give the client a few W-9s and tell him it needs to be filled out BEFORE he pays a subcontractor. The one that is done and gone is done and gone. There is no requirement that a 1099 be issued to take a deduction. But your client better have some other means by which to justify the expense should the IRS come knocking.

But I am *sure* they asked the barber's brother in law! He said it was fine, and he knows WAY more than any of us do... doesn't he?

B: That is different discussion... And one we have had around here before. If you are getting you butt kicked with the hours you work and you are not making money, you need to raise your rates. If your neighborhood, or your community only supports what we can charge, then that is an appropriate rate. Mine go up some every year, and some years, I raise stuff across the board, and some get the PITA surcharge. I have a lot less of those now. I am good with where my rates are. Rich

Great and profound thoughts. I needed this for the partnership returns I'm doing now. In my opinion, they are more challenging that the 1120 S returns I've done in the past. No more Ms. Nice Woman! Charge what I'm worth. Client doesn't like, client goes elsewhere.

You guys are seriously undercharging for 1120S. I can whip one out in an hour if the info is good from the client. But, it took me YEARS to be able to do that. No Turbox program is out there for these returns. No franchise tax company is going to charge less than $1200. It's not like the competition costs less, and over time these returns are easy for us, but it was LONG HARD WORK for us to get to the point where it became easy.

Hi Rich, you are absolutely right that fees depend on many things. I'm just saying that some mighty good tax preparers may not be giving themselves enough credit for their work and their knowledge and experience. The OP seemed stunned at the fee he was thinking of charging. I think it's very reasonable for the work described in the post. That said, I still think it's difficult to learn how to prepare business returns and fees should include the recoupment of all that previous time and effort we've spent.

I disagree (respectfully). If you check Pub 541, Guaranteed Payments are a business expense. Often people working in a partnership (vs simply investors) receive guaranteed payments instead of W2 income because as partners, they should receive W2s. Also, because guaranteed payments are payments for services performed, they are subject to self-employment tax. (Just like if you hired an outside property management.) I'm not sure whether there is away around the latter for a partner in a rental real estate business. I'm eager to hear other thoughts (and I hope I haven't been doing this incorrectly for years). Always learning on this board! Guaranteed Payments Guaranteed payments are those made by a partnership to a partner that are determined without regard to the partnership's income. A partnership treats guaranteed payments for services, or for the use of capital, as if they were made to a person who is not a partner. This treatment is for purposes of determining gross income and deductible business expenses only. For other tax purposes, guaranteed payments are treated as a partner's distributive share of ordinary income. Guaranteed payments are not subject to income tax withholding. The partnership generally deducts guaranteed payments on line 10 of Form 1065 as a business expense. They are also listed on Schedules K and K-1 of the partnership return. The individual partner reports guaranteed payments on Schedule E (Form 1040) as ordinary income, along with his or her distributive share of the partnership's other ordinary income. Question: Are partners considered employees of a partnership or are they considered self-employed? Answer: Partners in a partnership (including certain members of a limited liability company (LLC)) are considered to be self-employed, not employees, when performing services for the partnership. If you're a general partner of a partnership (or treated as a general partner in an LLC) that carries on a trade or business, your net earnings from self-employment include your distributive share of the income or loss from that trade or business. General partners must also include guaranteed payments as net earnings from self-employment. If you're a limited partner of a partnership (or treated as a limited partner in an LLC) that carries on a trade or business, only guaranteed payments for services you rendered to, or on behalf of, the partnership are net earnings from self-employment. Limited partners don't pay self-employment tax on their distributive share of partnership income, but do pay self-employment tax on guaranteed payments.

And insurance companies are in business to make money, so that tells you there are not many claims.

Don't mean to be insensitive but another case of folks making decisions and acting on them without consulting their tax advisor or accountant.

Progressive lenses are really important to get right in the frames. If the place where the change starts is even the tiniest bit non-level from one side to the other, or the tiniest bit tipped in one lens, you will never get used to them. However - if they are the right prescription and made right, they are wonderful. I have two sets of progressives; one for real life and an completely separate set called "computer glasses" where the top is the right prescription for me to see the computer screen directly, straight, and in-focus, and the lower portion so I can see papers on the desktop properly. I brought measured distances from my monitors and desktop with me to the eye doctor; "averages" from most people mostly don't work when one is only 5' tall. Oh, and a set with sunglasses for the car. Love 'em. If it takes more than a week to get used to them, there might be something wrong. If it feels like your eye is getting pulled up or sideways, there is *definitely* something wrong with the lenses.

My PSYCHIC POWERS have activated!!!! The dead horse SPEAKS!!! "Chaaaaarge", he says. "Charge as much as they will paaaaaay!!". He's fading....."If their AGI is into six figure.....chaaaaaarge.....chaaaaaarge......"

My piece of "ugly" work this week was been a b!tch of E&P calculations that I had to reconstruct years worth. I made a theoretical error early on in it that is compounding the ugliness, and I knew something was wrong and was too tired to grasp what it was. When I woke up this morning it hit me exactly what the problem was, so I've spent a good portion of the afternoon reworking that portion to correct the errors I made and the mess it created.

There is a difference between what I said and your circumstance. In the earlier post, I said if you have provided labor to a company and they pay you for that labor, you have entered a trade or profession, and when the company sends you a 1099 Misc, regardless of which box it is in, you are SE all the way. See my post below I agree with your situation. There is no labor or services being provided by your client, not subject to SE. I did one the other day where a client rents land to a farmer to grow crops on. The 1099 MISC was coded to box 7. Wrong, it is rents and goes to the Sch. E and I did it that way. Tom Newark, CA

I've told clients to send out W-9 requests and keep the envelope with the yellow USPS sticker re the address being no longer good. Done same with recipient 1099-MISC with Refused in the SSN box, keeping the returned envelope. And/or the return receipt requested route, and keep the documentation. Can also request tracking and emailed progress, so client can print out results from email or USPS online. That only shows you tried, and tried after the fact. I've sent the government copy in with Refused, but long ago. Client never got the $50 penalty I warned him about. Probably different now. If the client convinces me he paid and it was for business, I explain the risks and include the deduction if client chooses. The mood of the auditor will be the ultimate judge!

Don't mean to be insensitive either, but kids and other relatives don't consult us about money that belongs to someone else. Looks like daughter made provisions for a $60,000 cushion for taxes.

That fee I quoted does not include the S-Corp. Only the 1040. Another $600-750 for the Scorp if it was straight. Rich

Partners receive guaranteed payments instead of a payroll check, so I'll vote to treat the payments as ordinary expense.

Oh, I missed the 1120-S, just saw the K-1 from an 1120-S. (I really do need some sleep.) My $800 or more was for the personal returns. Another $750 minimum for an S-corp, which might come out to $850 or more in my system and then receive a discount for the multiple returns, again IF I like the client. But, I usually discount heavily when I have multiple returns from organized tax payers, especially when I can export/import.

I would have charged a minimum of $800 for 1120S including the state return. I would have charged a minimum of $850 for the 1040 and the state returns.

I've been reading all day with my head tilted back about this BIG thing and have concluded that the drop in FMV doesn't make any difference. They still had the same amount of gain. Figured that out after taking a little walk. When I looked down, the glasses made the ground seem farther away so I felt really tall

There is a check mark in letter option to include sentence for IRA contribution in ATX letter.

And, is CA's $800?!

Yes, of course if you owe you're required to file. Has nothing to do with whether he is required to file a federal return. Or whether he does file a federal return. Do taxes. Make money. I stole that saying, but it's a nice saying.

We need to get Betty Sue and Jerome back on the board. They are real smart and could give us the answer lickity split. Tom Newark, CA

Don't Virginia's reciprocal agreements only apply to compensation? I'm pretty sure if this were income from a Sub-S or partnership, reciprocity would not apply. I don't know about gambling income.

I don't agree. Client received a check this year for $9k and will receive one every year for 10 years on land she inherited in North Dakota for the right to drill for oil on her land sometime over those 10 years. With oil where it is, they aren't drilling yet. I'd never seen it before so I called the IRS and they declared box 3 or box 7 and line 21 were all correct. The company which fills out the 1099 does NOT determine how the income is taxed. (I think they said box 3 - maybe it was something else as an option) I've seen multiple instances where box 3 was the correct check but the producer of the form delivered it incorrectly with box 7.

Guarantee payments in a partnership is not a partnership expense deduction. It is not payroll. It is just an amount that is deducted from the computation of profit to be allocated according to ownership ratio. It is taxed to the partner the same as his share of profit.

Hi Rich- I'm totally undercharging this guy. The mess he's in now came from his getting scammed into one of those donor advised things back in the 90s. I guess I feel sorry for him, but my sympathy is wearing thin.

I agree with Terry D. It goes to 1065, then K1 and then to the partners 1040 by using K1 input. If it is SE taxable, then you enter the amount on line 12 or 14 ( don't remember) and the K1 will force Sch SE to come on board, It will not go on schedule C at all.

Original OP stated this is a 3 member LLC. All income/loss pass thru to each partner from form 1065. Schedule C and SE are the wrong forms. This is rental activities that are not subject to SE tax unless they are real estate professionals. If there is a partnership agreement that specifically states the partner's guaranteed payments then no 8825.

Partnership guaranteed payments are the partner's distributive share of income/loss. cbslee is correct to include the guaranteed payments on the 1065 line 10. My question is, does the deduction of the guaranteed payments result in a loss to the partnership. If so, I believe it would be an ordinary business loss. Here is an excerpt from Pub 541 Payments resulting in loss. If guaranteed payments to a partner result in a partnership loss in which the partner shares, the partner must report the full amount of the guaranteed payments as ordinary income. The partner separately takes into account his or her distributive share of the partnership loss, to the extent of the adjusted basis of the partner's partnership interest. Guaranteed payments do not go on the 8825 they must be included as ordinary income to the partner receiving the payments regardless if the payments result in a loss.

There was no 1120S. Client is a shareholder and gets a K-1, but I charge their mother for the S-Corp return. Tom Newark, CA

I don't pay a lot of attention to the time I put in on a return. That is why I charge by the form. Life & tax prep are just averages. That being said, I think they dropped off their stuff about 3 weeks ago minus the Sch C info and the S-corp K-1. I had some down time that afternoon and I did the data entry in about 1 hour or maybe a bit more. I put the file away until I got the Sch C info last week. About 20 minutes to enter. Finished the S-corp on Sat and imported into the clients return. Did about a 20 minute review (mostly on the 6198, 8582 & the NR return. Spent about 45 minutes with the client reviewing the return and catching up with them. What is that...about 2.5 hours including chit chat time in the office and tax planning for next year. Tom Newark, CA

ILLMAS he's way, way over the 400%. Even a max SEP contribution won't bring it down enough.

Lion is correct, hope the statement below helps. When the rental property with passive loss carryovers is converted to a principal residence, the carryover losses can only be deducted to the extent of other passive income, or in the year the property is sold. The $25K loss exception will no longer apply to the carryover losses in future years if the property is taken out of rental service.(Sec 469(i)(1). There can be no current year active participation in a rental activity in a year when the property is not used as a rental.

It's been a while since I've done a CA return with all those schedules. I'd guess about $800 if only one non-resident state and really organized bookkeeping and no calls/emails/etc. asking if I'm done yet. I think my forms-based invoice would come out closer to $1,000 and I'd give a Loyal Client Discount of $200, if I liked the client.

I've had progressives with 2 prescriptions for years now, and I had trouble with my latest pair, now about 4 years old. I'm a little afraid to get new ones after all the troubles with these. When I went for that eye exam the doctor said I needed a change and ordered the glasses. There was something "off" with them right from the start, and I noticed that I felt like my left eye was being pulled in a little while wearing them. That problem was the focal point in the lens wasn't aligned with the center of my eye. I also had trouble reading the computer screen. I'm nearsighted so the top part was adjusted for distance, but I also need some help with reading and the doctor thought that the computer screen would be close enough to use the bottom reading part of the prescription like most people do. Wrong, because they assumed a certain distance to the computer screen for that. Turns out that my screen is about twice the distance at the back of the hutch and adding in room for the part where the papers are, the pull-out keyboard drawer, and me sitting in the chair. They kept asking me to read something like would be on my screen and when I set it off to the distance where my screen would be they finally figured out what was going on. The solution was to have a 3rd prescription for that intermediate distance to the screen built in to that progressive lens. It also solved some of the problem those have with bifocals that cause wearers to have to tip their heads back while working on a computer.

The ugly: This past January I attended a tax seminar and the instructor said he was able to get his client income under the 400% by having his client and wife put money in an IRA account. He gave us a couple of examples in our material, you might want to play around the IRA numbers and see if it goes down and if it does charge them double.

Bill.....Hears a hat for Ya...

Yeah, but some of us die hard runners just can't help ourselves. As I am self employed in my home office, I really appreciate that I can just go run in the middle of the day if I choose and I can do my long runs (up to 17 miles this week) Saturday morning and be done with it. I've run 6 or 7 spring marathons during tax season and prefer it over training in the summer heat. I do dive trips in the fall. I agree it's exhausting but, for me, a nice release and I 'have' to get out for some movement and fresh air and a bit of sanity appreciating nature. JB, where are you running? Try the Cincinnati Flying Pig if you haven't done it yet. Great race!

Bulldog, I'm curious, how much time did you put into the personal return? I have a couple similar returns with multiple out of states, they usually slow me down because each year it's like I'm doing them for the first time. Well organized clients. Usually billed around $600 (personal return only). Their excellent bookkeeping helps me to finish the return with a minimum of follow up, so I get thru the return in half a day (4-5hrs) start to finish. I do think I'm too cheap, but long time clients. Although sometimes I would bill for how much my head hurts after I'm done, you know, that invisible tight band around your head feeling a little snugger than normal.

You are brilliant! That makes so much more sense, and I did just find the back up. I really appreciate it. It just wasn't passing the smell test.

This is from my sleep-deprived brain, but I think the holding period includes his prior ownership also, so long-term if the two periods add to more than a year. Try your tax research, such as IntelliConnect.

Waste has nothing to do with taxes. If no one has the right claim the exemption, no one does regardless of waste. If the father lived with the mother the whole year and provided more than 50% of his girlfriend support in 2016, then he can claim her. If not he can claim his daughter only.

Does SS have copies of the W-2"s? This may be another place to look.

It provides an additional layer of protection in terms of personal liability, but it is not an absolute. The corporate veil can be pierced, and if you are personally negligent, you will still be liable. It is a bit more of a hassle for the other side to pierce the veil and actually attach you individually, but it definitely can happen. The best money spent is on good liability insurance.

If you request a wage and income transcript it includes the details of the information returns, and that should give you the employers' names. You son will then have the list of employers he worked for and can contact each of them for a copy of his W-2s.

Do you put the State cover sheet in front of the state return or do you just use a cover sheet for the 1040? It would be nice if ATX put the State cover sheet in the State Forms section so it will go in front of the state tax return when printing.

I actually do not think you are in the minority here.