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The proper handling of this situation is to fill out the 1099R input with the distribution in box 1, the taxable amount in box 2a, and enter the rollover taxable amount in 2b. It is reported as if the taxpayer did a 60-day rollover. On the explanation tab, I state this was rolled over before August 31 per regulations issued under the Cares Act. That will show the distribution correctly on the tax return and prevent any future notices.

The code is on the 8949, and it's conveniently H.

Agree with those above. 5 minutes of your time in reporting it can save many headaches of having to deal with the IRS down the road.

Yes. You never know when a 1099S is out there. What Gail said. And, if they look at her return when she's 69 and disabled, will she be able to recreate the house basis? Just report it now and start the SOL. What Patrick said. Report it. Depending on your software, just one/two lines to report and claim 121. You don't have to charge her any extra if you don't want to. But report it.

I also believe it starts the clock for the statute of limitations in case there are issues down the road. Leave it off and the return is not complete so no running clock.

The advances were made based on eligibility on the 2019 or 2018 returns. The actual credit is on the 2020 return. The IRS has been clear from the beginning that qualified advances do NOT have to be repaid on the 2020 return; that the advances are reconciled with the RRC on the 2020 return, but not below zero, either zero or an extra amount of credit on the 2020 return. Don't worry about it.

A client I have cashed out a qualified plan to pay off credit card debt. She had operated a small business which she was unable to do because of merchandise supply issues so it looks as if she would not need to pay the 10% penalty. Of course, she being absent minded failed to have withholding set up. Oh well. Another client drawing significant unemployment insurance did the same darn thing. "They were supposed to have taken out federal tax". He never checked to insure they did. I can see not a few long faces this season.

A novel idea is much better than a novel coronavirus! Tom Modesto, CA

I don't believe that food stamps are included as income and the Sec. 8 housing does not usually cover the full amount of the rent, but apparently does in this case. If the support can be established, Mom can be still be claimed for HOH, even if she lives all year on her own.

I just re-input it in the other worksheet (not the original 1099R input sheet). And I put nine zeroes for the SSA1099.

"The IRS is advising taxpayers who received a suspicious incorrect Form 1099-G for unemployment benefits they didn’t receive to contact the state agency that issued it to ask for a revised Form 1099-G indicating they didn’t receive the benefits. Besides unemployment benefits, the Form 1099-G can also be for other government payments such as state and local tax refunds, agricultural payments, taxable grants and reemplyment trade adjustment assitance payments. Many state unemployment agencies have been overwhelmed with unemployment claims over the past year and have been slow to respond. The IRS said taxpayers who can’t get a timely, corrected form from their states should still file an accurate tax return, reporting only the income they received. “A corrected Form 1099-G showing zero unemployment benefits in cases of identity theft will help taxpayers avoid being hit with an unexpected federal tax bill for unreported income,” said the IRS. The IRS noted that it previously issued guidance that states had requested about identity theft and unemployment compensation reporting, specifying that no Forms 1099-G should be issued to those individuals whom the states have identified as ID theft victims. Nevertheless, incorrect forms have been going out anyway. The IRS added that taxpayers don’t need to file a Form 14039, Identity Theft Affidavit, with the IRS about an incorrect Form 1099-G. The identity theft affidavit should only be filed if a taxpayer’s e-filed return has been rejected because a tax return using the same Social Security number has already been filed. If taxpayers are worried their personal information has been stolen and they want to protect their identity when filing their federal tax return, they can ask for an Identity Protection PIN from the IRS. The IP PIN is a six-digit number that stops an identity thief from filing a tax return using the taxpayer’s Social Security number. The IP PIN is known only to the taxpayer and the IRS, helping the IRS verify the taxpayer’s identity when filing their electronic or paper tax return."

Just pick your favorite 1099R and enter that EIN. If they don't fix this, I'll try linking the EIN from the 1st 1099R to the line 25 worksheet, just to avoid the annoyance.

My client is 66, disabled, and receiving Soc Sec. He took $12k from his IRA. So far, he's not required to file. BUT, he sold his home and he didn't yet receive his second stimulus payment. So, I was going to file so that the 1099S won't come back on me, and to claim the stimulus. Should I?

If clients want you to review a prior return for accuracy, definitely charge. If they just want you to review the return to see how much you'll charge, you might want to decline. If price is their primary concern, you probably won't engage well on the things that are your primary concern. It sounds like these clients were trying to tell you how much to charge. Who needs that? We are in the fortunate position that we don't want any new clients and only take the few who are referrals from people we don't want to disappoint. When we get a phone call asking how much we charge, it's easy to say we're not taking new clients. The tough ones are people who went to their old preparer for like 40 years and always paid $200. When you tell them it will be more like $800, most understand that they have been getting a too good to be true deal and accept our engagement.

I agree and report it, claiming the exemption. A client signs a lot of paperwork during their closing and might not know they received Form 1099-S in their packet, or it might be mailed to their old address. It takes almost no time to report it and exclude it; but it takes a lot of time to answer the IRS letter, calm your client, and even figure out what happened in the past.

I have always reported it then claimed the exemption to ensure that my client doesn't get a letter, which I would have discuss with the client and respond to the letter.

As a practitioner I would go further and give my client a copy of the IRS Identity Theft Guidelines because what our clients need to do more than just get a pin: https://www.irs.gov/pub/irs-pdf/p5027.pdf I would also give them this link to the FTC's Identity Theft Resources: https://www.consumer.ftc.gov/features/feature-0014-identity-theft

A client couple advises they got EIP 1 for themselves and their 17 year old daughter (daughter's birthday is 8/20/2003) and EIP 2 for themselves and their daughter. The daughter was not 16 years old or less in 2020. I don't plan to do squat about it. If the Service did not check these kids dates of birth it's their problem.

What caught my attention was the wording of the ATX worksheet. My understanding was inline with yours.

Hey, I had a novel idea and READ THE INSTRUCTIONS so kindly posted above. Sorry for the dumb question!

I have requests rejected the first time and second time and accepted the third time. Try, Try and Try Again.

Please see this topic on the same subject.

When I skimmed over your post, I first thought $400 was what they wanted to pay. But then I thought, "sounds like $400 should be a reasonable fee for looking over that return (before declining)".

I have had many clients tell me they did not receive a 1099S but when I ask for the closing packet, lo and behold! there is the 1099S. I had an interesting one this week where the homeowner was deceased, and the mother was the sole heir (no will.) The 1099s was made out to mom, sole heir of son's estate and did not show any tax identification number! I had to call the title company to see whose tax id they actually reported this in - mom or the estate.

You may be in a situation where the taxpayer can meet Head of Household requirements but not dependent requirements. Meeting the 50 % support requirements may be a tough hurdle. You don't say anything about Mom's income and what it pays for.

Pick one, it's on the news everyday in your city: https://www.youtube.com/results?search_query=cbs+2+chicago+unemployment+fraud

For anyone that wants to confirm the number I provided, it is under paragraph 3, just after the SSA address. https://www.ssa.gov/OP_Home/hallex/I-01/I-1-4-2.html