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If your gut says "no" then the answer is NO and that's it. Second-guessing yourself if you did the right thing will only distress you. Let me simply say that I have never, EVER, regretted turning down a client whose situation did not "feel right" (for whatever reason). But I surely have regretted ignoring that feeling, more than once! Some of those losers took a couple of years to really get rid of. Generally, my big question to myself with this type of client is why I agonized over firing them for as long as I did. Usually with a stern self-admonition to listen to my gut the next time!

Does he want the paper return NOW for his loan. And, will he tell you he made a mistake when it's time to e-file? Or, if he's not a client from last year anyway, will you even see him again after handing him a paper return for his mortgage? I'm busy enough that I'd have sent him on his way, too. Follow your gut.

I got this first thing this morning. "I've been using your payroll program for about 5 years now and I am getting complaints from my clients about the taxes taken out for their employees checks. The employees are saying that the taxes are too low. I do all the updates when needed and I am not sure why it's not taking out the correct taxes. Please help. My clients are angry." This person is doing payroll for others and not aware of withholding being "Trumped". I know many do not keep current, so I have sent several messages during the year linking to the IRS calculators, and just a few days ago, to the new publication employers can hand out!. Then, when I proved our calculations are perfect, they got miffed that I called them on their statement, and claimed they said no such thing (see bold italic item in the above quote), and were actually complimenting me! The net result is they are now an ex customer, and are likely scrambling to locate and setup something before their next client payroll. (Life is too short...)

Yesterday I contacted my long established client to advise he could not claim his girlfriend's children as stepchildren since they are not married but said he may review the matter next year if they have lived with him for twelve months or if he marries her ( I did not advise on this). He seemed satisfied with this and hung up. About ten minutes later he called back and said to hold up on everything he would be coming by to collect his information. He offered payment for what I had done but wanted a second opinion (likely from his young girlfriend) who among her talents has birthed three children with three different fathers. It will be interesting to hear how this one plays out as I can well imagine one of those daddies claiming his kid on his return. If the Service takes a close look it could really be fun. What do y'all think?

I've told clients that I love them but will not go to jail for them. If in person, a hug or arm around their shoulders as you walk them to the door helps, too.

Well I hate to see him go as we have been friends since he was a kid. What he wanted me to do is a felony since basically he and his lady friend will steal in excess of six thousand dollars from the federal government. I am certainly going to be no party to that.

And so it starts...

With code 1 it seems your client may have simply asked for a distribution. He should have asked for a return of excess contribution and any earnings, and that transaction should be reported with code 8 if handled properly. Distributions coded "8" will not flow to the Form 5329, but may still be taxable if the withdrawal wasn't taken before 4/15. If the IRA was not deducted AND it and the earnings were withdrawn before 4/15, then the distribution isn't taxable in the year withdrawn. I'd get all the documentation from the client that you can NOW because I'd expect a notice from AUR to be generated.

the $6,500 is a return of excess contribution. It is not taxed because it was not deducted from income. the earnings should have also been returned. the earnings would be taxable and subject to the 10% penalty

I know this was a topic in the past, but i cannot find it to refer to: FIRST you have to have your picture saved on your computer. Mine is a scanned pdf go to customize master forms select 1040 (and then other forms you want to place your signature) select: edit then insert picture click in the signature box where you want the signature find your signature where you have saved it in your files it will now be on your page you will want to resize it so that it fits in the box. If you don't like the way it looks, you can go back and resize it later save master then close master not all forms will allow you to insert the picture so you will want to keep the box checked as described above. Your pic will be over the printed signature placed in the program.

Well, you certainly deserve an answer, but the only thing I know about gas & oil is it's cheapest at the Shell station here. For your purposes, and this is gonna sound kind of corny, but some of the most clearly and plainly stated answers to your kind of questions are posted on TurboTax (they aren't hiring EAs and CPAs for nothing). I just typed this into Bing and Google ("TurboTax - How do you report the sale of mineral rights on your income tax?") and they say it's section 1231 capital gains property plus various other tidbits about valuation. Granted, these are not IRC case cites, but sometimes they can put you on the right path (I tried the U.S. Master Tax Guide that ATX sent me and couldn't find a thing). Good luck.

Yippee! It worked! Thanks Abby. Now I just get to re-enter bunches of data but better than having to re-enter bunches of assets!

tells me trying to buy a house needs tax return for mortgage company says w-2 shows 21,000 for job as pizza delivery says he made 14,000 on top of that in tips told him about tip reporting.. he told me it was done wanted me to pick up 14,000 unreported tip income, i suppose to qualify for loan did not feel comfortable about this. suggested he talk to employer about tip reporting and i passed is how i handed it reasonable

It is pretty clear this guy wants to pay to avail loan & inclusion of tips as income would make him eligible for loan. Had the loan issue not there I don't think he would have paid taxes. Just ask him from how many past years had he making tip money which was ever reported.

Pacun, I read those statistics differently. Returns filed by paid preparers have stayed at around 60% for years. Long ago when I was at HRB they said it was about 64 or 65%, so not that much has been lost as TT and similar DIY software have grown. Those who turned to software were mainly former paper filers who did their own returns by hand, not people leaving their preparers to do it themselves. Now there are phone apps for tax prep, which might attract more younger people. That seems worse than sitting behind a shower curtain at Walmart. Do the apps come with "fat finger" warnings? Or warnings that Facebook and other media may be snooping on your phone?

Virginia does not require you to piggy back. I am trying to stall people on picking up their returns period until Virginia gets their act together. Even if I filed it, Virginia has said they will accept them but not process them until the General Assembly decides on what it is going to do. We have been late before, but this is the latest I can remember

My clients won't DIY or go to HRB or look for someone cheaper -- usually. I do lose one every once in a while who wants their return faster when I already have a backlog. But, I keep getting referrals. Non-itemizers are not a threat. DIY is not a threat. Find a niche, such as small businesses or trusts or investors or multi-state returns or...and work as much and as long as you want.

The calculation of NC franchise tax for S corporations has changed, effective for 2018 returns paying 2019 franchise tax. (North Carolina franchise tax is always prospective.) The former law applied a rate of $1.50 for every $1,000 of taxable value. The change is to have a $200 franchise tax for taxable value up to $1 million, and $1.50 for each $1,000 over $1 million. The ATX returns are not applying the new rates, so if you want to file an S corporation return, you need to compute and override the franchise tax in box 5 on page 1 of Form CD-401S. I have contacted ATX support and asked them to pass the information to the developers.

I think his odds are about 50-50 of getting away with it since the baby daddies may not claim the children. But I also agree with Abby - good riddance.

OK, I will take a shot at this, but just as a mental exercise. First, I don't think you have a clear picture from your client on what is going on. What exactly did grandpappy invest in (partnership, LLC, JV?) because he only got a piece of it, and someone is doing the accounting for that entity that is sending your client the 1099. Second, I think the 1099 may be correct, because you say the TP kept getting royalty checks. If the TP owned the rights in 2018, and the entity rented out the land for exploration of the minerals/oil, it is possible that the TP has in fact received the pro-rata portion of the rents. That would go on Schedule E as royalties. Third, you need to find the date of the sale of the interest in the rights. The TP has a basis in the interest, and it is the FMV on the date of death. So when you figure out what the investment is, and what type of entity is holding the actual property, you should be able to contact them and get a valuation for the portion of the interest your client holds. Then you should be able to see what your client sold it for, and put that transaction on the 4797. Just my quick thoughts, which may be all screwed up. Tom Modesto, CA

Thanks. I got it.

There was nothing earned. It was only there for a minute. And yes, it was never deducted. Was it "coded" incorrectly? Or is there an exception code I'm missing for the 5329? Or, maybe I should be using the 8606 to take it out of being taxed all together? Thinking out loud. Of course I use the 8606. None of it is taxable. Geez Thanks so much for the light switch flip. I advised him to withdraw it because there is a penalty for funding a traditional IRA if you don't have earned income. He was getting hit for it. Am I wrong?

Glad it worked for ya!

I believe the SALE of mineral rights is treated as the sale of Section 1231 property. So I think they get capital gain treatment using Form 4797. But I haven't had any actual experience with it. The instructions to 4797 indicated that it is used for the sale of oil/gas properties.

And, we ARE obligated to ask more questions if we feel anything we receive from a client (paper or verbal) is not complete, correct, or otherwise leaves us needing more information/leaves us with more questions. The "known or should have known" proviso. I, too, do NOT take on new clients if my gut tells me they are not telling me the whole story. And, I work to rid myself of such current clients when my gut acts up. Women might be better at trusting our instincts. But, we all see clients bare their financial souls to us, so we also get a feel for when clients are holding back.

Lady came by today; package in hand; we've been doing it for years (has retirement benefits, savings interest, farm rental, taxable social security, needs 1099). Says she's decided to do it herself (been looking around online I suspect), but she's going to let us e-file it for her (gosh; thanks a bunch). She did mention that she "might need a little advice" because "the forms don't seem to look like last year's." She was crushed when I said "We don't do that." Going to be crushed even further when I tell her the fee (up $50) isn't like last year's either.

It isn't our job to verify the income. It's completely reasonable for tip income to not show up on W2s as not all tip income is required to show up there. You aren't liable if the client lied to you. It's not wrong to refuse to do their return. As Catherine said, if it feels bad in your gut, don't do it. You aren't under an obligation to work for them. When I hear someone wants to file MFS so that they can avoid making payments on a loan does the same thing for me.

They’ll come back knocking at the door for help when they start receiving notices, I was once told by a former client that I charged too much and he was going to prepare them himself, I said fine, no problem. He did call me, however I was under extreme pressure during that time I was not able to assist him with the notice he received.

We're not responsible to verify it, are we? If the client freely provides the information, great. If the client does not provide the information and we inquire..."did you make any tips?" and they say no, that's the extent of our "verifying?" No? I understand this situation is a bit different in that the client provided the information after the fact. I'm just looking to ensure we have no obligation to verify anything beyond making general inquiries to satisfy us?

John thanks for the link. The article is similar to others I have read. Guidant claims an 80% success rate, but it makes me wonder if they are cherry picking their clients. I think the 50% success/failure rate probably includes businesses that were purchased as on-going concerns and the actual failure rate of start from scratch businesses is a lot higher. Restaurant and contractors have about a 95% 5 year failure rate. The scariest part is the IRS. There are quite a few pitfalls that can sink the entire investment. The IRS draws a good picture of this. https://www.irs.gov/retirement-plans/rollovers-as-business-start-ups-compliance-project Investing in one's new business is always a risk and ROBS is the only way to use retirement funds, without being taxed, and there are the risk takers and doers that are willing to do it .

Regular 1040 for taxpayer with US w2 & Canadian income to be included & foreign tax credit for Canadian part of income taxes paid from income in Canada. Have them file Canada tax return first to figure out foreign tax credit.

Max: Here's an eye-opening article. It's from 2014 and some of the interesting data from IRS dates back to 2010. But a 50% failure rate should make anyone think twice. PLUS, it seems that IRS considers these arrangements low-hanging fruit because there are so many ways to blow the plan up. https://www.newsweek.com/2014/08/15/rollovers-business-startups-401k-cashing-your-401k-using-401k-start-business-262633.html

Sorry for being obtuse. If someone made a request like this, I'd tell him "I'm not touching it."

I wouldn't think twice about doing this return for him. My first thought is "I'm not touching it." So no need to keep thinking...

For many, if not most, situations, the acronym says it all. More seriously, I've evaluated several of them over the years for clients contemplating doing this for franchises and rental property. Every situation was filled with landmines and my recommendation was "if you do it, you'll need to find another tax preparer."

Roberts, I know folks who have done all 3levels in one year. Level 1may be done online. Level II is in person, and could be done in the summer at NTPI Las Vegas. Level III at NTPQI Orlando in November. It ‘s doable .

FYI - form 4137 is used by the employee for unreported tip income.

THANKS.!.. i meant to say he did not report them to the employer.. i was leery of doing this return.. I want to help and be kind but picking up $ 14,000 in other income that I knew would be part of a loan approval decision made me concerned.

DITTO!!

This is what he gets for avoiding taxes on the tips he made, but did not report. His employer is going to tell him to take a hike. It would cost the employer money, to change the W-2. His avoiding tax puts him AND his employer at risk with the IRS. You did good!!

For the following discussion, I assume that the taxpayer remains a U.S. citizen while she is a Canadian citizen. To be able to take the foreign earned exclusion on Form 2555, the taxpayer must meet either a (1) bona fide resident test, or (2) physical presence test. Under the bona fide resident test, the US taxpayer must be a bona fide resident of Canada for a full calendar year. She can apply first in 2019, and if she does, her bona fide residency period can extend back into 2018. If you need a full 2019 to qualify, you can request special extensions to file the return by January 31, 2020. Under the physical presence test, the US taxpayer must be outside the US for 330 days out of a 365-day period. If she is in Canada not returning at all to the US, you can probably find such a period beginning in July 2018. You would need to extend her return until after the qualifying 365-day period ends in 2019. If the taxpayer doesn't meet the qualifications for income exclusions, she can claim tax credits on her US return for Canadian taxes paid.

From Publication 970, Can You Claim the Deduction? Generally, you can claim the deduction if all of the following requirements are met. Your filing status is any filing status except married filing separately. No one else is claiming an exemption for you on his or her tax return. You are legally obligated to pay interest on a qualified student loan. You paid interest on a qualified student loan. I think your response is right if the student is the only person legally obligated to pay the interest, but if the parent is legally required to pay, and does pay, he meets the requirements.

See? This is why I always print everything to PDF first.

The rental safe harbor is just that...a SAFE HARBOR. facts & circumstances can also make rentals qualify for the 199A deduction. Just like 3 years of losses does not automatically make a business a hobby. You have to look at things like profit motive, experience of the owner, etc. Not to mention that case law is on the side of trade or business designation. As someone on another board put it, “when was the last time you put the sale of a rental on Sch. D?”

with the new regulations, he will only benefit about $200 if he makes 14K in 2019, if ANY. He will need to marry that lady and then he will benefit. The year is young, why don't you suggest your client to send her to work and make 15K, which is not hard to do and then he will have no motivations to claim any one.

I have ruled them out for 2018. If they live with him all of 2019 and the couple remains unmarried I don't see how he would qualify for any tax advantage such as the CTC, EIC, and the like but time will tell. I am hoping she will just take a powder before then. With my luck she will still be hanging around. He has a real penchant for these winners.

Go to Pub 17 - it will walk you through the qualifications - He should only claim himself.. not related, not all year, etc. 2017 - page 27

Go right down the dependency test. I think you will find that they are not related to him and did not live the entire year with him. Game over.

"This form transfers the burden of responsibility from the taxpayer to the paid preparer.'' That's the real problem. While the IRS should certainly go after those preparers who make a business out of preparing bogus returns, there have always been laws to do that. Shifting the responsibility, on every return, from the taxpayer to the preparer, is IMHO not only morally wrong but also totally counter-productive. Preparers are not and should not be unpaid IRS employees. Yes, you have to be alert to the occasional bogus TP, but this "solution" is just plain wrong.

My whole beef with this driver's license info is that it has to be entered in the federal filer's info tab (at least with ATX and my understanding is Federal is optional for now) and it gets transferred to the NYS EF form with the exception of the document number. The IRS's systems have been hacked 3 times (tax info, PIN system, and now FAFSA filing system). It's really comforting to know that if anyone hacks the IRS now not only do they get name, DOB, SSN, and address, but now they'll get enough info to put together a fake NYS Driver's license and slap their own picture on it.