Leaderboard

Your client should take this up with his or her employer if its felt that the W-2 is inflated. I wouldn't necessarily assume that it is or try to argue the point with the IRS. Are you sure the W-2 is wrong or that the employer doesn't know the % that is shared to the bussers and runners so that the correct amount is included in compensation? This seems unlikely if, as you say, most of the payments are via plastic as opposed to cash. Also, what proof does your client have to document the shared tips? Is there a tip pooling or sharing arrangement that the servers have agreed to participate in? You might want to check state regulations on tip pooling or sharing and read up on the amendments to the FLSA for this that occurred back in 2018. https://www.touchbistro.com/blog/tip-pooling-laws-in-restaurants/

Early but here it is. Tom Modesto, CA

Your wife is a lucky woman.

Did you already use AOC for four years? Do you have the bursar's statement? I might chance it on the bursar's statement showing a 2019 payment plus the 2018 with 2019 expenses billed. But, make sure you didn't use 2019 check on 2018 return. In fact, without the 1098-T, I'd review all the way back to freshman year to make sure you took paid and not billed and didn't use the AOC on four returns and...really do your DD and keep copies of 2019/2018 info. Explain to client the risk of receiving an IRS letter and to keep all documentation and returns from freshman year forward, and let them make decision, if you are willing.

This is just me.... but that, for me, has been a high audit area. I must have the 1098T AND the full Bursar's report (a detail from the student's account) in order to take the education credit. We'll see if anyone else chimes in, but it might be just us today. I did go to church this morning... just sayin', y'all.

Europeandeli dot com; it's in the post, above the picture. We buy them by the *case* - a case of six boxes lasts us a couple of months. There are also chocolate covered cherries, assortments, and milk chocolate. Direct link, for those who will click: https://europeandeli.com/products/asbach-squares-in-large-gift-box?_pos=4&_sid=a61037d45&_ss=r

I've never once signed (with a pen) a client's copy of the return and I don't think I've ever seen a copy delivered from a client with an actual signature. My name is printed on the line with my preparer information. I think you are required to provide to them a completed copy of the work. The format is up to you. (wait, I do sign if we are mailing in the return)

Sometimes with mutual funds the loads (either front or back) are such that you don't make any money if you cash out quickly, which it sounds like he did. But a good reminder to look out for that!

Thank you Rita. Yes that is what I did. I entered Code 12 on the 5329 which removed the penalty. Also yes as to new client. I misspoke on my original post. His contribution was in 2019 and also withdrew in 2019. He has changed jobs frequently during the year ( 4 w-2's ) and apparently withdrew after leaving one of his employers. You are correct the market was on an upward trajectory but he must have cashed out on a down day. At any rate, thank you for your assistance.

Yes, I just found it and you need to enter Code 12 on Line 2 of Form 5329. I was thinking about this yesterday, and I try not to answer questions that are not asked, but here, hold my tea. If this is a new client (and you don't have prior year returns), I would suspect that this client made withdrawals from this account in the past and forgot to tell you. I say that because almost all my folks hold mutual funds in these accounts, and the market has been going up since March 10, 2009 or thereabouts. Not straight up, but up. I am wondering how he managed to lose money. I do know that some people defy the odds and pick exactly the wrong day to withdraw funds, or he may have invested in a loser. You said he contributed in "prior year," and I'm not sure that's "a" prior year, or "the" prior year. So, just thinking out loud, and never mind, carry on.

thank you.. this type of straddling years has always been tricky in my mind and the 1098-T can lack clarity

I think I figured this out. Entering the distribution and contribution on the 8606 didn't remove the penalty but entering the contribution on line 2 of the 5329 did remove it, Since the contribution was greater than the total distribution penalty amount went to zero. Thanks

So I asked my wife if a porterhouse steak was close enough to heart shaped to qualify as a valentine? She said sure! My wife is the best! Tom Modesto, CA