Leaderboard

This is a copy of the official IRS news release explaining the change dated February 8, 2017: "A new revision of the Instructions for Form 7004, updated in the last few days and available at IRS.gov/LatestForms, correctly reflects that calendar year C corporations are eligible for an automatic 6-month extension. Although Internal Revenue Code section 6081(b) provides a 5-month automatic extension period for calendar year C Corporations, the IRS is granting a 6-month automatic extension under section 6081(a) instead. This change is reflected in the new revision of the Instructions for Form 7004. We have posted this article because the IRS wants to reassure the tax professional community that the information is correct in the Form 7004 instructions regarding the automatic 6-month extension and explain that the reason it's correct is section 6081(a). Information regarding Form 7004 and its instructions is always available at IRS.gov/form7004."

Lion, you are right--a freeze did no good because the hackers went in behind the scenes and accessed our data. Only legitimate inquirers like mortgage lenders and insurance companies were frozen out. To FDNY, that data is of immense value even with a credit freeze. Criminals can file tax returns for you, get a job under your SS#, get medical care under your name, open bank accounts with your data and launder money in them, etc. From what I've read, the Equifax website is not yet functional enough to let people know if they were victims. Most people are getting an offer of free credit monitoring. It's still unclear if the mandatory arbitration clause applies to Equifax or just to the credit monitoring company (which Equifax owns). I had credit monitoring a few years ago after another breach and did receive a call when I opened a new credit card. I confirmed that I opened it, but at that point it was already open and if thieves had done it they could have charged a lot before I got the call. I think monitoring offers a false sense of security. I was really upset that that it took less than 24 hours after the announcement for Lion's husband to get a scam email that undoubtedly would require him to enter personal info. I read a warning that people should beware phone scams supposedly from Equifax. I feel that we are all under attack. Now my rant: The credit reporting agencies collect all kinds of data on us, without our consent, and make money selling it to whomever pays for it. Those supposed breaches at the IRS IP PIN, transcript, and FAFSA apps were not breaches at all but thieves who had purchased credit reports and had enough info about the victim's prior addresses, loans, etc. (with additional personal info freely available on the internet and social media) to pass as the real person. If I don't want my credit history shared I have to PAY them to freeze it (and unfreeze it if I want to shop my auto insurance or refi). I am helpless to keep my financial info out of Equifax's database, have no control over whom they sell it to, and now it's gotten into the hands of criminals. This breach affected over half of the US adult population, so if you are a couple chances are at least one of you is involved. Thanks to Equifax, we will all have to looking over our shoulders for the rest of our lives. I will not join a class action but may sue them for $10m or more. GRRRRRRRR.

Good question. Something tells me Rita is very comfortable in the bucket seat of a backhoe.

Rita, what's your preferred brand for the task at hand? Case, Caterpillar, something else?

I thought that too at first, but Rita would never, ever drive a Daewoo.

Translated: we got caught covering our own hindquarters and are back-pedaling as fast as we can! Just don't take away our insider trading dumped stock gains - those are for campaign contributions (to *all* the legis-vermin)!

About the arbitration clause, there was quite an uproar about it, and they have since come out saying that it doesn't apply to this security breach. This update was added today on https://www.equifaxsecurity2017.com/

Depends on how good the "freeze" is. Several years ago, my husband and I both had freezes on our accounts (prior data breach). We forgot, and refinanced our house. No trouble. Four or five months AFTER the refi closed, one and *only* one of us got a notice that new credit had been applied for in our names. I set my calendar to check one of the credit companies every four months. They each give you one free report a year; this gives me a 3 times a year check. @Abby Normal you may not be a litigious person - neither am I. However, it is a step one should KNOW that one is waiving. And the notice is buried in disclaimers and fine print.

The breach started at least as early as mid MAY. The discovery date is said to be July 29. A few days later, a few employees sold at least part of their stock (terrible timing at best). Public found out in early September. Some delay is normal, to give folks a change to investigate, but waiting an entire month seems excessive. It will be interesting to see how this washes out. With the information they have custody of, and the common sense (not that it exists often) knowledge of their being a prime target, one would think there would be constant checking, so there would be zero cases of more than 2 months of an open door to data. The real lesson is still to remember nothing is perfect, so anticipate, plan for, and insure for failure.

Education credits / deductions are the WOAT. (Worst of all time.) Hang in there! (Well, WOAT until ACA.)

Tom wins the internet! His post was one where I couldn't decide on the best emoticon: trophy (for thanks), a laugh or the heart.

But we love him anyway, because he's Jack. And he knows jack...

I called all my FL clients this morning (about a dozen) and to my amazement they are all staying put except one cruising in the Gulf (hopefully not under threat of a tsunami). One client is 98 y/o in Pembroke Pines (I think Red Buttons' Century Village) with his 90 y/o wife and a large group of grey and blue hairs, asking Irma to "bring it on." I told him to keep away from the patio door, he thought that was a good idea and will tell his friends, they won't even go to the local shelter. Most clients feared getting stuck on the highways which are jam packed all day and night. Tough situation, I hope everyone stays safe, is prepared, and don't take chances. If this is as bad as they say it could be, the aftermath is going to be a challenge with so many people staying in their homes. Think positive thoughts that this monster weakens, or, takes a hard right, although that would be an act of God for that to happen.

I was just told 1120 new due date isn't effective until 2025, is this correct? I thought it was effective this year and extension allowed to be filed until 10-15-17.

The big problem here is that there is absolutely NO way to opt OUT of having your information sold. Grrr.

According to the Equifax website, neither my wife or I had our information exposed. Yea ! On the other hand, I just downloaded my free credit report from Trans Union and I noticed that in the last eight months at least 8 different financial institutions that I have never heard of have requested credit information about me. So now I get it, if you are a supposedly legitimate financial institution, you can just buy someone's personal credit info from one of the big 3 credit reporting services who are more than happy to sell it to them, since they are very profitable businesses. This is the dark side of free enterprise. Everything is for sale ! #*#*#*

This is a copy of a AICPA chart footnote: "Law provided for a Sept. 15 due date. But, according to the new Form 7004 instructions and IRS website, the IRS has used its authority to permit an automatic six-month extension to Oct. 15." Yeah, this is confusing, supposedly the IRS announced this change in February. I was planning based on an OSCPA Tax Update Class that I took in January, so I now have an extra 30 days to finish my one C Corporation return that is still on extension.

Oh yeah, no disagreement here, but It's hard to feel outraged every single time some stinking rich a-holes do something like this without consequence. It's just the world we live in.

But Christian, so the entire distribution was used to pay for tuition. If you took an education credit, you have to deduct that $4k from the tuition paid for by the 529. So if tuition was $22k and $4k was used for the credit, you better have at least $18k to account for the distribution. You can use the remaining tuition, room and board and books for the 529 amount. Cancelled checks are useless. They could have been paid to the university for health insurance, gym fees, dorm damage, and other things not allowed for either tax break. You have to have to financial statement from the school and break out the allowable expenses. When the due diligence requirements for the credit took effect this past tax season, we have required these statements from every client. It's amazing how many we discovered weren't eligible for the full credit and/or tax-free treatment of 529 distributions. No wonder the IRS is cracking down.

If anyone wants to read a real screed on this topic, I recommend Karl Denninger's article from today. "Where are the damned handcuffs?"

I can't breathe.

When you use 529 funds to claim an education credit, a prorated amount of the earnings can be taxable. But in my experience, the room and board costs are usually more than enough to make the earnings not taxable.

and AMEN!

I agree with Sara. She said it all, but since I've been working on this forever, I'm posting it anyway. If you're going to exclude the earnings in the 529 distribution from income, you have to use the entire distribution toward this purpose. Let's say your earnings are 20% of the account and you withdraw $5,000. To exclude the $1,000 of earnings from income, you have to apply $5,000 of your education expenses to the $5,000 distribution. You can't withdraw $5,000 from the 529, exclude the $1,000 of earnings from income, and use the $4,000 of basis to pay expenses for AOC purposes. You'd need $9,000 of expenses to both exclude the $1,000 of earnings in the distribution AND get the maximum AOC in this scenario. Whew, I hope that makes sense to somebody besides me. My head hurts.

Jack, the freeze on Equifax did us no good, because someone who isn't us was able to access our information anyway.

Chad, Welcome to the board and don't take it personal. Jack hates everyone and lets them know right away. Tom Newark, CA (Until tomorrow)