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Alright. I sent three returns for clients who didn't want to take advantage of reporting the early distribution over three years. I used Form 5329 only. They were accepted. THEN I happen to read on the ATX Form 5329, under Part I, that we don't use this Form for coronavirus related distribution. I noticed just now that the IRS pdf for 2020 Form 5329 does not have that instruction against using the form for coronavirus distribution. Just throwing this out there. No idea if we that used 5329 should amend to include 8715-E or not. I have three others that I will hold onto and use 8715-E. And yes, I have tried to dissuade folks from shooting themselves in the foot by not spreading the income over three years. They have already shot themselves in the foot by taking distributions they didn't need while the market was down. There's no helping these folks: "Oh, your hours were cut causing your income to be 4,000 less. It makes perfect sense to take out 90,000 from your 401k. Ok."

Looking for your topics? - All stimulus-EIP topics are in the COVID forum All e-filing issues, including e-filing prior years, are in the E-File forum All posts related to the health insurance marketplace, 8962, splitting the APTC between returns, etc - all are now in the ACA forum

I got that message a couple times earlier this year but not recently. I just ignore it and keep working.

You mean you're not deducting it already! Those are standard office supplies.

Definitely unethical and illegal for a child/student to claim his own dependency, get EIP/RRC, etc., IF HE CAN BE CLAIMED BY ANOTHER. As you point out, a high earning child could be providing more than 50% of his own support, so it is possible, ethical, and legal IF YOU KNOW HE CANNOT BE CLAIMED BY ANOTHER. Have parents and child fill out a support worksheet with you, and keep it in your files to document the outcome. I have one coed angry with me, because "all her friends are doing it." But her parents are happy to keep the education and other credits, and they DO qualify to claim their daughter. Don't forget that the student can get the AOC WITHOUT CLAIMING HIS OWN DEPENDENCY if his parents do not claim him, even when qualified to claim him. He won't get the refundable part of the AOC, though. I have high-income parents who can't claim education benefits but have a college kid with a tax liability who can use the nonrefundable AOC. That is perfectly ethical and legal. We don't write the laws, but we do have to work within them.

Ok, when all else fails read instructions. I guess that is correct, not sure why but it is.

YAYYY! I'm a ROCK STAR for a moment!

Correct.

I just had a similar situation with a different twist. New client filed w/o dependent in 2019 but actually was entitled to claim since lived in house hold over 1/2 year. E-filed 1040x yesterday and was rejected because dependent already claimed. So off with a paper 1040x we go.

Years ago (don't remember the software company anymore) I was told to do exactly this with the $1 income. On the state, if the software won't allow income less than tax withheld, enter it as a tax payment made on the state return. I did this for several years in the late 2000's and never received a letter from the state or IRS on it.

NEVER SURRENDER!!!

If your client is using the poverty figure for a household of 2 people, that figure is $16,910 according to the 2020 instructions, so 400% of that would be $67,640. The $68,960 you referred to is based on this year's poverty numbers of $17,240 for a 2-person household.

Alternately, you enter 1 for wages on the W2 screen and IRS is cool with the efile. Then you just have to handle the state withholding.

No

Oh good grief. Can they do one thing right?

Per my reply above, I had one for 2019 accepted January 31, 2021, the same day created, transmitted to EFC and accepted by Agency. Do you think the tech was saying no acceptance for 2020 amended returns?

I love extensions; I hate breaking stride to work on extensions, calculate payments, e-file, etc. Wish the extension was truly automatic. Wouldn't mind too much the payment date of 15 April as long as no actual extension had to be e-filed. Although, I'd like it even better if the payment date were later, May, June, or July would be great. But if I were king of the world, there would be no new tax laws during the year in question; laws messing around with 2020 taxes would've had to have been law by 31 December 2019. Let us help with year-end planning. Give us time to learn the new laws. Lockdown Congress and make each one prepare his/her own tax returns with pencil and paper and maybe a calculator with the instructions and wait for forms that aren't final and instructions that haven't been revised. Don't unlock the building until everyone is finished. Staff, interns, everyone.

Rita, I really like your insight on all the stuff we deal with

You can override line 3 on the worksheet, until they get it fixed.

Copied from Pub 596: "Income That Is Not Earned Income: Examples of items that aren't earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. Don’t include any of these items in your earned income."

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

Rechecked one this am and still incorrect.