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exactly! We all know that this college kid is seriously in the business of coaching: Head coach: do you want to coach these little kids... I'll give you 50 buck college kid: OK (do I have to get up before 11 am to do it?) and certainly it is a SSTB: endorsements, personal appearances all of that

I have SO much sympathy for the poor programmers! Not only do they need to understand how this is SUPPOSED to work (with all the special situations, phase-outs, cut-offs, and more), but they then have to CODE that for the feds - and THEN wait for the states to figure out what they want to do, so they can code the state portions. All the while, we are agitating for them to finish so we can file our returns! I would offer to share my whiskey, but I think they'd drink my supply dry in a nanosecond.

"Employer" and "1099" do not mix. Whatever amount is legit, go through the process of getting a corrected W2, which puts the "trouble" back where it belongs, incorrect classification by the employer. For your client, I "think" (it has been more than a decade since I did one like that, and I no longer do tax returns other than my own) you can file with the information as is, adjusting wages as needed (and telling the IRS why the 1099 is wrong, and what the correct wages should be) hopefully without waiting for contact from the former employer. The employer will eventually get a nasty gram to fix/dispute their incorrect reporting, and the resulting penalties, interest, and make up taxes on the amount not properly reported as wages. Apologies if I have the steps wrong, but I hope I expressed my thought well enough to trigger whatever the current procedure is. It is a personal pet peeve when employers cheat their de facto employees, and I have no issue with "sticking" them with the unpaid taxes, or even if they somehow win a dispute, the cost of defense.

If there is anything taxable it goes on Line 21 (or whatever this year's equivalent is - one of the sub-schedules).

It might be practical to report the full amount of the 1099 on schedule C, back out the convention expenses as T&E, then enter an adjustment to the amount allocated to equipment as an "other" expense with an explanatory note attached. If the total overstatement is $6K, then there's a pretty good chance it will sail through with no questions asked. That way you've disclosed everything and the chances of a CP 2000 are minimized.

We are used to blaming the US congress when they change the tax law in late December and IRS and the software programmers have to revamp everything. This time blame the state legislatures. They have been trying to assess how the new code will impact their revenues (an impossible task that those of us trying to assess how it will impact our own clients can't even get a handle on, and we're dealing with individuals, not a whole state population). Some states are decoupling with this or that provision, some are still hemming and hawing (see another thread about VA still figuring it out). Once each state passes their own law the programmers have to try to make the software follow it, and bear in mind that there are over 40 states they have to re-program. This time I wouldn't be so quick to blame the software companies. Tell your clients to call their state reps. The federal law was passed in Dec 2017 and they took this long to decide what to do.

I have done that. The last time, I didn't realize until the wife was buying real estate and the schedule C went to her husband so the SSA didn't have any income for her. Luckily for me, they made about 60K together and they didn't owe any extra when I amended.

Gee, here I thought I was the only one to occasionally attribute something to the wrong spouse, or leave something out! (not) I even build in a three-day window between completing a return and reviewing it before printing; I've found that if I review too soon, I see what I *expect* to see, not what's there. Still I occasionally miss something. One year, forgot the clients' mortgage interest (or was it real estate taxes... either way, they paid the two separately and I forgot one of them). Of course, those amounts were not IN the papers the clients sent me, but it was still my fault. Yes, it was - because I *allowed* them to rush me (they wanted to leave for vacation and file before leaving) so I missed it totally. The difference, months later when we amended? $74 refund, federal only. And they were so ticked I lost them as clients. Considering how ticked (and nasty) they were and how hard they had pushed me to rush to finish, they left about a millisecond before I would have fired their behinds. Go easy on yourself, Possi!

Goodness! Ask about other expenses: Room and Board, books, computer (see page 52 Pub 970) before you go to the trouble of calculating the taxable portion. The designated beneficiary generally doesn't have to include in income any earnings distributed from a QTP if the total distribution is less than or equal to adjusted qualified education expenses. If there is a taxable portion, it is reported on line 21 Schedule 1. Some software have a worksheet to calculate and report.

OMG! You are not perfect? My world just shattered. Take a look at my thread last year where I missed a quarter million dollar sale of stock on a client's return. When you get to my level of screw ups, I will buy you a drink and we can commiserate together. And I think you have 3 times the number of clients that I do. If we are keeping stats....your success rate puts you in the Hall of Fame. Fix it and move on. $h1t happens. Tom Modesto, CA

Home office deduction is a deduction attributable to a qualified business, so it does reduce QBI. It can be a specified service business if it falls under the category of "consulting". The regs define consulting as the provision of professional advice and counsel to clients to assist the client in achieving goals and solving problems. The performance of service in the field of consulting does not include the performance of services other than advice and counsel, such as sales or the provision of training and educational courses. Facts and circumstances used in making the determination include, for example, the manner in which the taxpayer is compensated for the services provided. Performance of services in the field of consulting does not include the performance of consulting services embedded in, or ancillary to, the sale of goods or performance of services on behalf of a trade or business that is otherwise not an SSTB if there is no separate payment for the consulting services.

Margaret, I think (I hope) I just uploaded the spreadsheet I use into your message box. I've never tried to do that before. Please let me know if you don't get it, and I'll try again. Hope it's helpful.

I take this back. The amount of wages properly allocable to QBI is the amount taken into account under Regs. Sec. 1.199A-3 (Reg. Sec. 1.199A-2(b)(4) . So if only 30% of your wages are used to determine QBI, you would show 30% of the W-3 amount.

go for it

Documentation requirement is what crosses the line and makes us auditors rather than just due diligent preparers. Indeed if the IRS comes calling, they only need to ask for documentation and this serves as audit papers for the taxpayer. In all honesty, they couldn''t care less about tracking down a taxpayer - if they are in your office asking for documentation they are interested in a preparer penalty. Going across the tracks to find someone whose car is up on concrete blocks with broken glass in the street and screen windows torn is NOT why they came to your office.

It's a waste of time to battle over 1099's. As JohnH suggested report the full amount and back out any excess.

I am not in the office yet, but you can reconcile between book vs tax depreciation on the M-1 and should work.

Congratulations on having a governor to sign the bill! I think?

Did he return the equipment when he left? If your client still has the equipment, then I agree it would be at FMV when he left.

This stinks, former employer is probably including the full-cost of the equipment, which he also benefited from, your client should of received the FMV of the equipment, not the full cost. I would report the FMV of the equipment he kept as other income and not subject to SE.

The first improvement is a free version has not taken your money for nothing... My personal definition of "damage" during AV issues is when an AV software removes or blocks a program the end user trusts (and in fact, may actually be good) without the end user having any practical way to stop this. Most AV programs have settings to give a user a way to ignore the warnings, but the default settings - the ones most will use - do not make this clear. The result is messages like these: "Your software stopped working", "Your software disappeared", "Your software is dangerous", etc. The first call is always to the software vendor harmed by the AV mistake. Imagine if you are at deadline day any your AV program stopped ATX (or whatever you are using) from working! it could happen. We (computer users) have been conditioned to accept these mistakes (such as the earlier comment about knowing to disable the AV system when installing certain programs - which is a crock of you know what), but I say why accept bad guesses? Not that I always favor the big guys, but think about this. There is no company in the world who needs or has more financial incentive to protect your computer than Microsoft. (Plainly, so you do not contact MS for support for any reason at all.) Thus, it makes sense, and also is a reality, that the AV system provided by MS is an ideal one to use for live protection from stupid actions. (I still maintain, as do others, that self control and diligence makes AV protection not needed.) For cases where you have concerns, there are free online test tools you can use as a second opinion (virustotal is currently scanning with nearly 70 AV vendor's daily updates). Yesterday, only one vendor of about 70 thought I was a baddie, and today, using the same file, I am magically good again. I was also magically good yesterday by simply not compressing my files - this is the real lesson, how easy the AV guessers can be fooled!!!

Well, we got the basic structure from Congress when the law was enacted in December 2017. There were so many open questions at the time that needed IRS guidance, it was hard to move ahead with confidence. Mid-2018, the IRS came out with methods for computing W-2 wages for Sec. 199A. Then we got proposed regulations in September that answered a lot of questions, but IRS was asking for comments, so it was open to change. It was enough to do some effective year end planning for 2018. The final regulations were released in mid-January 2019. That's when I really started studying the various provisions. The final regulations accepted some suggestions from practitioners, but rejected many more that were basically a wish list from practitioners. At the same time, we got the real estate safe harbor in an IRS notice. So, it has been on my radar screen all year, but my intense learning has been over the past month.

Eric, you have got this 199A down pat. Have you been studying this all year long? Thanks for your comments.

The election to aggregate activities for Sec. 199A and the choice to group rental activities to meet the 250 hour safe harbor are two different things. The choice to group rentals under the safe harbor is one you can make and not have to disclose in the annual statement required by Notice 2019-07. There is a consistency requirement, though, and taxpayer may not vary the chosen treatment year to year unless there has been a significant change in facts and circumstances. The aggregation election under the regs under Sec. 199A is for the purpose of accumulating the QBI, W-2 wages, and unadjusted basis for application to the aggregated group of activities. This also has a consistency requirement. There is an annual disclosure of the activities that are being aggregated. That reporting must be consistently reported in all subsequent years. In a subsequent year, if there is a significant change in facts and circumstances such that if the prior aggregation of trades or businesses no longer qualifies for aggregation under the rules, the activities cease being aggregated, and the taxpayer must reapply the rules to determine a new permissible aggregation, if any.

There is a worksheet for figuring this in Pub 970. I use it all the time. It is even better sometimes to add back the amount of the taxable distribution to taxable income to take the credit.

On a return last year for long-term clients, I missed the fact that they did not give me his W2. She had changed jobs, and the income was less, (yes, I used the comparison, so don't even go there) but I knew she was unemployed for a period of time, and he had failed to print the document (which wasn't mailed, supposedly), and I gave them the return, they signed, I filed --- fast forward to November and IRS and State want $$$ and not an insignificant amount because it messed with credits, bracket, phaseouts, etc. Of COURSE I knew that he had a job. I amended, got checks from them for the tax, mailed separate checks from my account for interest/penalties, told them I was sorry, and moved on. Most clients will give you grace when you admit the error readily and acknowledge being human. It is no additional cost to them than it would have been originally without the mistake if you pay the penalty/interest, so they actually got to keep their money a little longer! Love ya, Possi! You 'da bomb!

Always tough for a software vendor. Some will take the no vaporware approach, and never announce something until published. This was actually the best in the last century, since most computer users were also computer experts, and understood. As time passed, most computer users are not experts, and want some idea in advance, which even when given as an estimate, is usually something the consumer holds the vendor to. For IRS forms, they used to have a projected release date, but no longer. You can see the actual release dates here: https://apps.irs.gov/app/picklist/list/formsPublications.html;jsessionid=KlwQmyNPDevcx81Q+EYROA__?sortColumn=postedDate&indexOfFirstRow=0&value=&criteria=&resultsPerPage=25&isDescending=true and the draft versions here: https://apps.irs.gov/app/picklist/list/draftTaxForms.html

For me, black/white mistakes are no worry, since there is a black/white fix. Maybe they go down hard, but they are not worrisome. I have made enough of those to tire of beating myself up (unless it was a repeat).

I should not have to do ANYTHING different. The FACT that I can EASILY work around what the AV vendor says is nefarious, points out how useless this AV software really is. I am not spending all my time working around detection, which extrapolates to the pros (the baddies) having no issue beating AV software... BTW, I tried 5 different compression methods, with many different compression sub sets of each. This is something I have had to deal with since the birth of AV software selling WAG's (snake oil).

We try to get the 1095C from the client. It kills two birds with one stone. It shows the Health Insurance requirement was met, and it shows the dependent name, last 4 of the social, and the address of the taxpayer is on it as well. Not perfect, but I now can answer truthfully that I have seen a document that I relied on to prepare the 8867. Tom Modesto, CA

You want to match the FICA/Medicare to the right spouse, too. But yes, we all make mistakes under this kind of deadline pressure. There was only one perfect person, and we crucified him! I wake up in a panic trying to remember if I did this or checked that, and get up and turn on my computer. But in my sleepy state, I probably don't do any better than I would waiting until the morning. Except that I wouldn't fall back asleep and would lay there with a knot in my stomach. (I guess a home office does save me time.) And then, I'm even more sleepy due to that middle-of-the-night working or due to that middle-of-the-night worrying, either way. It's only February, and I'm already sleep deprived. Hang in there. You're doing fine.

This is the kind of thing that keeps me up at night, and the reason I like to check and question every line on a return. Yet, I've still done the exact same thing and even had Sch C going to the wrong spouse. Clients usually appreciate when we admit a mistake and take responsibility for it, and get it fixed for them.

I love retired couples on Medicare with fat investment accounts! I wish them a long and healthy life.

I don't have a list - I'm using Possi's method (below) I'm even getting envelopes with the kid's name and parents' address if possible, but all that crap they want - "Did you ask...blah, blah, blah, and did you document his/her response..."; hell, no, I'm not recording or transcribing some jerk's "yes; no; maybe" - it's just impossible. Like you said, I get something, anything, some piece of paper, but's it's all just such a mess; tedious for us, & annoying to clients who ask me why I want evidence - many say that others (big-box franchises) don't ask for anything except name, relation, DOB, SSN. I wonder; does TurboTax make them answer anything? Are we (independents) the only ones that risk serious fines? Ain't it the truth? I lost one over ten.

I do use the comparison, and I'm sure I looked at it. They had 3 W2's and I thought it was his. I really did check it, and thought it was his. I always compare year to year. Oh well, clean it up, and move on. Like you said, it's an easy mistake to make. When you are doing the volume I do, there will be an error or two. But no error is ok with me. None. I need to pull myself out of this funk. I can't let this defeat me today. Thanks for the input. I appreciate it.

It is my understanding that even with form 8332 signed and sealed, the custodial parent can revoke it by claiming the child and the parent with whom the child spent more than half of the year will prevail. Otherwise the first rule of tie breaker would be: 1.- Parent with signed 8332 from custodial parent 2.- Parent with whom the child spent most of the days, etc. Remember, we are not lawyers and we only do taxes, let's keep it at that level and let the courts decide. In any event, most of the time the custodial parent claims the child outside the agreed years is when the other parent is failing with the court order somewhere else. ie is late with child support payments, is not picking up the child on the specified days, etc.

the point is that if the student has an additional $2,246 of qualified expenses, there is enough to have $4,000 for the AO credit and all of the 529 is tax free. $9,000 for the 529 + $4,000 for the AO credit= $13,000 the student already has $10,754 for tuition. an additional $2,246 in qualified expenses will free up the $4,000 for the AO credit. Possibly/probably/potentially the student has rrom and board, books, equipment, etc. BUT if the student lives at home and is not at least a half time student, then no room and board and no AO. Still the $9,000 is less than the tuition so none is taxable.

Possi, you are correct but you don't have to assume that the custodial parent will get HOH. Nights spent wins EIC, dependent care AND CTC. To clarify my position... think about this scenario. My daughter gets divorced and moves with her son to the PACUN tower for which I provide everything, including but not limited to mortgage, food, gardener, maids, etc. My 26 year old daughter earned 20K and her son slept at the PACUN tower with my daughter 184 days. Regardless of what the court said and regardless of who claimed him last year, my daughter will file as single and get EIC, Dependent care (if any), and CTC.

Lion is correct. I do it all the time. Going back to the original poster, I would say NO, in your situation, one of them has to claim the exemption and then you see if that ONE parent qualifies for HH. I am assuming they both are the parents of the child. MCB39 you should amend both returns... I have a family of 5 people and NONE of them are students. Father makes 60K Mother makes 100K Brother 22 years old make 10K Sister 20 years old made 17K Brother 15 years old makes NADA. Sister will claim 15 year old brother and will get EIC and ALL other goodies that come with the teenager's dependency. If all of them claim the 15 year old, then the parents will prevail. If parents don't claim 15 year old, AND both siblings claim him, the female sibling will prevail.

room and board are qualified expenses for 529 funds but not for the credits So if you use the 529 for room and board and some of the tuition, you can potentially have $4,000 out of pocket for tuition and books to use for the credit. Example: Tuition $10,764 Books $250 = $11,014 Room and Board $2,000 total expenses $13,014 paid with 529 Room and board $2,000 + tuition $,7000= $9,000 out of pocket for AO credit: $4,014 of course, the $4,000 has to be out of pocket, not paid with tuition or other tax advantage plan if they don't have enough room and board to "use up" the $2,000, they can choose to pay tax on some of the 529 funds.. Since only the earnings are taxed it would be a small amount. And if there are scholarships, they can choose to pay tax on the Scholarships to free up the funds for the AO credit. The Scholarships are taxed to the student not the parent. Yes, Pub 970 has good examples

The tie-breaker rules are used when two people BOTH claim a child.

Watch out for these two questions, you can no longer just click NO on every line like before (in most cases).

And that is acceptable? What point is there using AV if you have to turn it off? In your example, I doubt many would believe Intuit was spreading anything nefarious. Unfortunately, not everyone is Intuit, and as every minute goes by, computer users become less expert or interested in understanding what happens "behind the hood". If the AV company was doing what it is selling or saying, they would test against the big software (at least). Which reminds me, there are AV companies who simply white list certain software, which really is no protection at all since at any time a wayward employee could insert something nefarious into a white listed program... The only semi good thing to come down the pike in the last decade is the "virus total" system. Anyone can very quickly test and desired program or wen site against 60+- current virus signatures from different vendors. In THEORY, the AV vendors have access to the results, and can use the results to keep their offerings from having false positives. In my case today, out of the 68 (IIRC) testing in virus total today, only the one is saying my offering is suspect. 1 hit out of all tested is 99.9999999% odds of a false positive (which in this case, it is a false positive). The BIGGER deal is I did not have to change anything in my setup file, other than to not zip (compress) the files in the setup. This shows how foolish it is to rely on the AV programs (and at least in my opinion, PAY for any such program) as such a simple thing can make something they "thought" was bad magically be good.

The parent with whom the child lived over half the year (where the child laid his head) wins the head of household filing status. If the divorce papers say they alternate claiming the child, and one parent is the primary custodial parent, that parent signs the 8332 giving ONLY the exemption to the non-custodial parent. HOH wins EIC and dependent care credit while the "exemption" wins the CTC. I always get an 8332, and if I can get one signed for "every other year" or "every odd (even) year" or "EVERY FOLLOWING year" I do. Whatever the initial papers designate.

It will come down to the one who can prove the number of nights spent at their home. That will be the only tiebreaker. Whoever has the best paper trail for nights the child slept in their home will get to claim the child. Support is meaningless, as is AGI in this scenario. Custody means the child spent more than 1/2 of the year under that roof. And the IRS could care less what the divorce decree says. Tom Modesto, CA

Yes. If the deduction of formerly suspended losses reduces taxable income enough, 20% of taxable income may be less than 20% of QBI, limiting the benefit in that way.

Of course you are right. Only I copy and put the "evidence" in a manila folder and don't charge more because in the poor South they'll leave you over twenty bucks. I know this because they'll sell Grandma for fifteen. Seriously, I've been very diligent with new clients for years. Existing clients not so much. I'm doing better, and apologizing for asking them for evidence that this kid I see with them on FaceBook everyday is really theirs, but I have no problem telling them why I'm doing it. I still think there's more to that NATP story than we know. Also, I just wish they'd push DIY a little more. /s

I thought you had only to compare the amount of the refund vs the standard deduction. So if the refund was $2,000 and the standard deduction was $9,350, as long as the itemized deductions were more than $11,350, the whole refund was taxable. I normally only overwrite that box.

If you choose ADS (Alternative Depreciation System) under Sec. 168(g), farm property can be depreciated straight line over 10 years.

That's not the way it works for me. If your software is making you do that and you're sure you're getting the right result, fine. But at upper income levels, whether in the phaseout range or above that range, you will get a different QBI deduction if it's a service business rather than a regular qualified business.