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Next up in the junk mail, you must purchase new employment law posters from us or you are not in compliance and will be subject to penalties!!!!!!!

We generally invoice by the form and make adjustments if the form is more complex than "the usual." It's sometimes a judgment call, but I try to be fair. Occasionally, I will add an hourly charge and describe to the client why the fee is above normal rates--especially when there is a bookkeeping step, or stock basis calculation or special research time or other unique situation. Our clients usually know when they bring us something that takes extra time, and appreciate the explanation. It's frustrating to see a completed return and it all looks so simple when it's done--after many hours of extra work! As for the Schedule A, when the figures come close to the standard deduction, and we have entered all the details, I do charge for the effort, and then printout the two-year comparison so they can see how close they came to the standard. As for those clients who are dragging us down, they know what they are doing. I wonder what effort they would make if we needed a "big favor" from them. Why do we do it? Especially when we complain and dread doing their returns. There is no joy and little satisfaction in trudging through returns that we don't charge enough for--year after year. This is what I tell myself when we slip into the same type of situations. Gently dump the client; charge the right amount OR gift your time with grace. Remember, the time you give away to an ungrateful client could be spent with your spouse, children, friends, cleaning house, sleeping, etc. or taking care of the good clients! Your choice.

That's the most amazing thing, we all have generally the same experiences with life, have fallen and made mistakes, but some people never learn and continue to repeat the same behavior. Someone should write a book, "How to Succeed and Learn About Life from Your Tax Preparer, Just Follow the Instructions."

Had a brainstorm and made better use of the checkboxes for question 19 about what to do with a refund.

I made a rule for myself this year, if I cannot get out of work on time to spend time with my family, then I cannot take on more work or work for free. It's funny how clients understand once I tell them.

Your subject's funnier than mine (by the way, I like your Dr. Seuss quote very much), but regarding estimated tax I once inherited a new bank president as a client. I'd done his predecessor(a smart, reasonable man)'s return and he recommended me. The first year everything went swimmingly 'cause even though he made scads of dough he paid heavy estimates. Second year, same income, but, he had decided to forego the estimates (told me this a month before the deadline) and just go with the bank's withholdings. Highly P.O.ed at me and my projected high tax due, he asked "Why?" Told him "Well, see; if you make so much money then you're gonna have to pay so much tax and you did and you did not pay your estimates like you did last year. You still have all that paid-for rent property." He said "Well, so what? I've got banker friends who make the same as I do and they pay nothing; why should I?" I reply "Each case is different - your friends may or may not have things you do or do not have which can either help or hurt you." To no avail; he -- the town's leading financial wizard, advisor, analyst -- decamped and went off to, supposedly, greener and tax-free pastures. It's an odd thing; I've noticed over the years that the more money people make (usually starting around $100K) and the ego expands, the less tax they expect to pay -- as if success will or should provide an escape unavailable to mere mortals.

And Kiplinger is cutting you off!!!!!!! After 48 more last issues.

You would think the more successful, the smarter people would be and understand this basic tax tenet of the more you make the more you pay. My particular client is quite ignorant of this fact. She's a real estate agent with good income, paid off rentals, a pension, and husband with 2 pensions, and she runs all over town getting the best deals on 100K CDs. I admire her fortitude when I see her 1099INTs. But no tax withheld on anything other than $300 on one of the pensions. Total income 165K. So I explain every year and it never sinks in. I know her over 25 years. Calls me about every new crazy investment scam she hears about. So I've given up other than to just tell her the tax bill and listen to her rant and rave. Just so you know the outspoken person she is, when she met my wife for the first time she said to her "I don't see him with a blonde." I won't tell you my wife's answer. She called again yesterday answering my question about a missing bank interest that she didn't give me this year. She said the bank told her the interest was under $600 so it's not taxable. Whatever, I have no time for this, I'm just adding it in, one less phone call for me when she gets the deficiency notice. But she also laughed and said to me, "you know, I like your thinking on the implants, I might go for them this year". Her husband has one foot out the door so I don't doubt she'll go ahead and try to deduct it for this year. I'm bracing for a rough 2018 for me. I should tell her to read some of Dr. Seuss' quotes.

If so, he is not worth hugging. Hugging is too good for him...

We've always taken losses on houses in estates. Usually, just for the amount of the expenses of sale, because if it sells within a year or so, the best proof of value is the sales price, assuming arms-length deal.

That was beautiful.

Some people never figure life out.

Earlier, I asked about the use of signature pads for electronic signatures. Well, I did purchase one and have it installed and up and running. I am now scanning all client docs used to prepare the return and have the 8879 electronically signed which automatically goes to the DM in Drake. All I can say is, my gosh what an excellent feature!!! All client docs, signature forms and whatever other document I need or use all electronically in one place. Good bye filing cabinet!!!

There is no age test for a permanently disabled child. If the other tests are met, the child will be a QC.

Oh, that too!! A Rita Hug may be in order....

The FDIC does audit banks, but I've never heard of it auditing account holders. I'm wondering if this is a new scam to get to the taxpayer's information. How was your client contacted about this? Perhaps the client should call his or her bank or lender.

Client's mother died in February 2016. Her house was sold in November at a loss of $23,800 (the house was out-of-state and they wanted a quick sale). Estate had no other income/expense/gain/loss. It did receive a refund of overpaid real estate taxes but I believe that is immaterial. I'm not real strong on trusts--okay, truth is I'm a complete bonehead on trusts!--so I need someone to see if I did my research correctly. A loss on the sale of a personal residence is not deductible but when the house went into the estate it became investment property. Therefore, the loss passes through to the two beneficiaries on Schedule K-1 and they are able to deduct it on their personal returns. Is that accurate? Also, anyone know if I need to file a copy with NJ (where the estate is domiciled)?

From IRS publication 559, p. 17: Sale of decedent's residence. If the estate is the legal owner of a decedent's residence and the personal representative sells it in the course of administration, the tax treatment of gain or loss depends on how the estate holds or uses the former residence. For example, if,as the personal representative, you intend to realize the value of the house through sale, the residence is a capital asset held for investment and gain or loss is capital gain or loss (which may be deductible). This is the case even though it was the decedent's personal residence and even if you did not rent it out. If, however, the house is not held for business or investment use (for example, if you intend to permit a beneficiary to live in the residence rent-free and then distribute it to the beneficiary to live in), and you later decide to sell the residence without first converting it to business or investment use, any gain is capital gain, but a loss is not deductible.

Forget the qualifying relative test for now. I think you need to go back and look at the qualifying child rules for the daughter for 2016. If you look at the 7 tests for QC, they are: Must not be able to be claimed by anyone else, including self Joint return test Citizen or resident test Relationship test Member of household for > 1/2 the year Age test: - must be under 19 and younger than taxpayer claiming - under 24 & a student at least 5 mos of year and younger than TP claiming - any age and permanently and totally disabled. Means can't engage in gainful activity because of physical or mental condition AND doctor has determined that the condition will last continuously for at least a year or will lead to person's death. This is pretty much a given if the person is already getting SSI. Support test - dependent must not provide over 1/2 of own support For those that are permanently and totally disabled, Sec 152(c)(3)(B ) covers the age requirement, basically saying that age is not a factor for meeting the requirements of the age test in determining if one is a qualifying child if permanently and totally disabled. It does not matter when she became disabled; she will meet the age test. Notice that income isn't directly one of the QC tests but support is. If the daughter is truly disabled, then the income test (like is used in determining QRs) doesn't matter, but what does matter is how much support she provided for herself vs how much the mom provided. If you look at the support worksheet, line 1 is "funds available at the beginning plus taxable and nontaxable income, plus amounts borrowed, plus amounts in savings. You'll include the $5600 of CD as savings because its really just cash, but don't include its redemption as income or you'll be counting it twice. Add in the SSI and anything else daughter has as the starting point. You just have to work through the numbers and find out how much of that daughter spent on herself vs how much mom provided. If daughter banked all resources and didn't spend one penny on herself and mom provided all, or more than 1/2, then mom can claim her as a qualifying child.

If it's the final return, final K-1s, then loss passes through to beneficiaries. I would take a loss if the executor has documentation: DOD valuation, comps at time of sale, not to a related party, and it seemed reasonable. If it was a $2.38 mil house that sold for a loss of $23,800 so out of state benes don't have to travel to look after it, sure. If it was a $100,000 house, no. That said, you'll have to find your own comfort level inside that range! And, if I'm taking the loss (even if I'm not taking the loss) I'd have to look into handling the RE tax refund. Seems like if it was an estate deduction, it would now be estate income. Or, netted if same year. Or, was it deducted while owner was still alive and refunded after death? As I get older and all my clients getting older, I need to learn about estates. But, not today while I'm in a panic over partnerships and S-corporations! And, clients are wanting their returns TODAY before the blizzard.

Dealers and salesmen are such a great source of tax advice.

I like the "tenth of an hour" idea. Reminds me of the lawyer who would come in to the office after spending most of the day on the golf course and return a few five-minute phone calls, logging 15 minutes of minimum billing for each call. So in the last hour of the day he would bill a total of 3 hours to 12 different clients. When he died, he was standing at the "pearly gates" and St Peter said, "Nice to meet you. We don't get many lawyers up here. I see that you lived 87 years." The lawyer replied "There must be some mistake. I died in an auto accident at 35 years of age." St Peter replied "Oh sorry, my mistake! I was looking at your time sheets."

Hate to ask in front of you all, God, the world, and everybody else but apparently I need to know - what's FMLA? A 4-page pamphlet just arrived in the mail from NST(?). They want me to send $249 ($499/super-duper edition) to get me in-the-loop on it. They say recent changes "have left organizations scrambling to make sure they're in compliance with the law" and that I need to "learn about the latest changes to FMLA and where the future stands." Gosh, I haven't even scrambled yet -- much less figured out where the future's goin'. I voted last time, but after that it's up to you-know-who and Kiplinger to fill me in, isn't it? Do you reckon it's an offshoot of the 4-H Club? All tipsters will remain anonymous (for those of you also not-in-the-know).

I laugh every time I get my last issue of that rag. Tom Newark, CA

On another post, someone said that non taxable doesn't count. I don't know if it does. If your child is permanently disable, you can claim them regardless of how much they make as long as they don't provide more than 50% towards their own support.

I don't even want to find out, I will find out this evening when I called them, but you are right, I am hoping this is not a ploy get their return done sooner.

Family Medical Leave Act. Are you involved with Human Resources somehow?

Client is an engineer - Strike one. Client is a millennial - OK, whatever. Client set up his own LLC online - strike two. Tells me about it at the end of doing his 1040 return. No activity, just set it up and did not do anything with it. So I do the CA 568. We are reviewing and I show him where it is a disregarded entity and I used his social for the TIN. "Oh, what about my EIN". He did that too, and told the IRS he was a partnership. Life is too short to deal with smart people who think they know everything and need to just click some buttons online. Tom Newark, CA

Year Up is a 1 year program ( Modern version of Job Corp ) that provides disadvantaged youth with 6 months of classroom training followed by a 6 months internship with a local business with the possibility of being hired as a regular employee at the end of the 12 months. They receive a monthly stipend of $600 to $ 1,000 plus various incidental expenses like transit fees etc. So it's probably all taxable.

Ha! This place can be satire, vaudeville, slapstick, schtick, and hilarity all rolled into one. Not to mention the therapy value that comes along with it.

Yesterday PIA client who calls me all year as if I were her brother has a 35K tax bill because she refuses to pay estimated tax reasoning that "something might change this year." No itemized deductions, but she asks me if her $30K implants she is getting this year will be deductible. I said no, unless maybe if you were an exotic dancer, it's really cosmetic. She argued with me back and forth for a few minutes until she said, "but I need them to eat." Then I realized she was talking about her teeth. At least we both had a good laugh.

I agree Tom. I like to think that my clients are (well most of them are) smart enough to know and care about there taxes. At least, that is how I understand my job - to be the facilitator to their understanding. I will occasionally print a Schedule A where it is not required, but only for teaching purposes. And since I do not do form billing, it does not cost the client a penny more for me to that.

I just can't go there. It is too much like stealing to me. I will patiently explain that the standard deduction is better for you. Tom Newark, CA

Yeah, my girl here that's so smart she apparently just hires me to save time made a big production of telling me she didn’t bother with adding medical and donations or bringing 1098 for mortgage interest because she has done the math and doesn’t have enough to itemize, yet she highlights husband’s union dues for me. And tells me what it is because apparently I can't read or see yellow. Oh, yeah, I'm doing the 2106 and Sch A. Don't be telling me about yer taxes.

I made a little boy CPA cry the other day. He is the brand new CFO for one of my business clients. I prepare reviewed financial statements for them. He's been awfully patronizing and arrogant. I found a major, major error and gently let him know that it needed to be corrected. Had to do with the book depreciation. He cried that it would be a lot of work. I empathized (on the outside) but felt just a little glee on the inside.

And all I heard, Tom, in your post was "ching ching"! And that did not even include the PIA surcharge!

But did everyone in the family have some sort of coverage, either through the Marketplace or covered by Medicaid? Most Medicaid does qualify as MEC under the ACA, and if that is the case, why would you not check the box? The 1095A is to reconcile the APTC received to the final amount that this family was eligible for. A 1095B might be received showing the medicaid coverage, and I think the due date of these forms was March 2nd, so it is possible that they may still receive the form...I think.

Guess I am 'old school' but it seems to me that the home is the place to learn basic cooking skills and the other things you list here. Schools and teachers are charged with an overwhelming range of tasks to teach already. I had Home Economics way back when for a few weeks but already knew much more than taught in that class. Parents and other adults around maybe could assume 'Life Skills" teaching. I could understand maybe an elective in high school but a short time but these things I learned at home. Yes, back in the 50's and 60's with non-college educated parents who both worked full time.