Leaderboard

Amazing how all the sudden these dead beat kids of my clients are "miraculously" on their own and not a dependent anymore. Tom Modesto, CA

Haha, if only.... This is going to be a PITA. No one kept the letters, and I have some in the phase-out range. One older client swore over and over to me that he knows the first EIP was only supposed to be $600 and he has never been comfortable giving anyone, including me, and direct deposit info. Then he remembered getting a check but said any time he gets checks, he always makes a rounded-off partial deposit and takes some cash back as mad money. He refuses to use the internet! I looked up the date for him on the IRS site. Said he found a deposit for an even $2,000 on 4/29/20, so he says he either added some to the $1,200 from another account...or he got $2,400 (wife died April 2019, 2019 return filed on 2/11/20) and deposited only $2,000. On top of that, he definitely didn't get the $600 in Jan 2021, I'm filing his single return now with $1,200 and $-0-, and claiming the RRC for the $600. He's so stubborn about not using internet, he's one that walked into Walgreens and tried to get the vaccine without any application, then had to have a friend do it for him. Of course, loudly complaining about all that work just to find out there are no appointments anywhere near us at the moment. I wonder if friend is frequently checking back for him and monitoring emails. Just shoot me now because I already hate this tax season. I only have about a dozen in so far, and only three have complete data.

#goshimisseverybody

It could be! I had a client who had a side business truck that was indeed 100% for business. It guzzled gasoline like a fish, but was perfect for hauling large loads of supplies or heavy equipment to a job site without destroying his car's suspension. The guy never used it if there was any other way to bring the required items; he claimed you could watch the gas gauge go down while idling at a stop light.

For COS, remember to ask how much of the product purchased was withdrawn for her personal use. With that eliminated, she might not have a loss after all.

@PossiI think what Abby is saying is correct. For a hobby that is selling an item, the "Gross Sales Price Less the Cost of Goods Sold" is taxable. This goes back to the basic premise of tax law that only the accession to wealth is taxed. The expenses not related to the Gross Income follow the rules you posted above. This 2019 article from a CPA firm says it better than I can. "If you sell goods as part of your hobby, cost-of-goods-sold is deductible, subject to the gross income limitation. The TCJA suspended miscellaneous itemized deductions until 2026, removing the ability to deduct hobby activity expenses, other than cost of goods sold." To get to the proper reporting of the taxable income, and to reflect the full amount of the 1099NEC on the return, you would follow the procedure Abby outlined above, putting the full amount of the 1099NEC on the other income line and then backing out the COGS on the same line. Tom Modesto, CA

Yes, for TYs after 2002 the sec 179 can be revoked without IRS consent by filing an amended return, but the revocation is irrevocable. Revocation is irrevocable. I'm operating on little sleep today, and that phrase brought to mind the silliness of the "You Go Down There" segment from "Little Big Man". Sorry, couldn't help myself.

True, but you can make a tax return or extension payment for 2020 on IRS direct pay site. I would go with tax return for simplicity's sake.

If you're worried, get any documents that exist for the end of the year: doctor, prescriptions, letter from clergy, letter from neighbors, is kid's name on dad's lease, internet log of kid attending school, boarding passes/passport stamps/plane tickets, local transportation such as train tickets, GPS records on kid's smartphone, any paper that provides a trail.

I wouldn't take them normally, either. But now with COVID and being forced to work from home, I'll take it. Thanks for chiming in!

Here's the excerpt from the IRS webpage: Qualified expenses are amounts you paid or incurred for participation in professional development courses, books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. For courses in health or physical education, the expenses for supplies must be for athletic supplies. Qualified expenses also include the amounts you paid or incurred after March 12, 2020, for personal protective equipment, disinfectant, and other supplies used for the prevention of the spread of coronavirus. I don't know that internet or cell phone expenses actually qualify (maybe they fall under computer equipment :-)) as a deduction normally but given the COVID situation and the relatively small amount of the , $250, I wouldn't be overly strict. Maybe I let my personal feelings influence my decision but that's my thoughts.

As I posted in another topic in the Drake subforum, each year some returns are processed ahead of the official opening date and this could be the case with your amended returns too.

Anyone who doesn't know how much they got and can't look it up, I will assume they got the full amount. Everyone is entitled to screw themselves out of money, if that's the way they choose to live. I also looked mine up on my IRS account, BECAUSE I'M NOT A LUDDITE!

Well, we can bump it up, now, Sister! COVID working from home, and don't even ask! Internet... BOOM... there ya GO....

The IRS is. Don't know about ATX.

Wow, when I tell them it's up to $250, what did you actually spend? The range is $0 - $67.78. I must not have the shining stars of the educators.

There is a page where it's possible to see whether funds were paid to the taxpayer. It gives the date and type of payment - DD, check mailed, and I'm guessing debit card issued, although I haven't see that one yet. It does NOT give the amount. It requires logging in with SSN, DOB, street address, and zip code. It is by the individual TP, so a spouse would have a separate record. That page is accessed here by clicking on the blue button labeled "Get My Payment" There is another page to see the amounts, but that requires the individual actually set up an IRS account with the full i.d. verification, so we preparers would not have access to that. Pretty much a waste of time unless you want to tell clients the approximate date to look for the amounts in their banking records.

Yes, tax payer felt preparer was too aggressive in his approach to this. That an inquiry from NYS questioning the item didn't help.

IRS Regulation 1.183-1(e) says in part: “The taxpayer may determine gross income from any activity by subtracting the cost of goods sold from the gross receipts so long as he consistently does so and follows generally accepted methods of accounting in determining such gross income.” Tom Modesto, CA

Each year some returns are processed ahead of the official opening date, so probably this is why some of yours went through.

Very interesting, the 2019 Form 1040 that I efiled about 10 days ago was acknowledged by the IRS yesterday and by Oregon today?

Facts and circumstances. There are a lot of people who sell this stuff to get their own supplies at the discounted "wholesale" price. Then they sell some to friends and family, and once they take expenses into account, it's a loss for the year. There are a lot of people who go into it with a profit motive and take a few years to learn why everyone decries MLM schemes, and then give up as having had an expensive lesson. If she treats it as a hobby, then yes Sch C, back it out, then put the income on "the line formerly known as Line 21." Then she pays ordinary income tax on hobby income, because the expenses indeed go on Sch A except they don't usually have any effect with the new, higher, standard deduction. If she thinks it's a business that will at some point earn her a profit, then put it on Sch C and take the expenses and losses - and be prepared to demonstrate profit motive if the losses continue. I have one business client that has losses every year, and has been audited for that. I successfully defended the position - the statute says there must be a profit motive, and actions taken towards becoming profitable. The statute does not state the person needs to be competent! My client has a definite profit motive, and is merely incompetent at running a business. The agent I dealt with accepted my proofs, and accepted the "incompetence" defense with a bit of chagrin - but he accepted it. The years have borne it out; every year his overall losses are lower and I expected that 2020 would (finally!) show a profit, before the world went mad.

We live in a VERY small town. This letter is obviously legit and it doesn't ask for any information, only tells him to update his info with the IRS and doesn't tell him how to go about doing that so I'm pretty sure it's not a scam

If she is a single member LLC it is considered a disregarded entity and she will continue to report income and expense on Schedule C.

I am currently doing a training on PPP and if you think this is bad, many business did not need the PPP loan and they don't need to pay it back.