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Interesting Tax Court Case about lodging and location of "tax home". https://casetext.com/case/soboyede-v-commr

I guess I am old enough now that I can "off the record" admit that I was not always perfect. Many years ago, I did not correctly include the premiums in W -2 Wages for more than one client. Frankly, what I did was classify the premiums as a M - 1 adjustment, then take the SEHI on the owners 1040. It always sailed thru with no questions. There now I feel much better.

If just the bank account was wrong, you just debit distributions and credit sales. But was she paying S corp expenses out of the S corp checking account? If so, where was the money coming from to pay expenses? Other sources of sales (cash, cc)? Was she transferring the square deposits to the S corp checking account? And why did she not correct as soon as it started happening? Sounds like she was nowhere near ready to go the S corp route.

I think what Jim is getting at is if you take the amount in box 3 (social security wages) and the amount in box 7 (social security tips) and add them together, then multiply by 6.2%, do you get the amount in box 4 for social security withheld? If you do, then you have no problem and that is usually the way that this works.

Ditto! There is a link on Scr 1 if you haven't found it. Why not a "got 'em both" check box?

I realize I live in an area that literally is called the Gold Coast, but I find it exceedingly rare for a recently graduated student to pay more than half his own support in his graduation year, even if he gets a Wall Street job, and especially if joining the military. Have the parents and child fill out the support worksheet, and keep a copy in your files for both sets of returns to have documentation for how the family files.

We would love it, too. When the COVID b/s is over, we will gather again, I'm sure. I'll keep you well informed about our antics! LOL

I am jealous. Would love to be in TN with the two of you. Tom Modesto, CA

I tell my clients that my "on time" deadline is March 15th every year. They ALL know me, and know full well that after June, I'm on a boat fishin' or in TN visiting @RitaB !

All CT returns are being rejected at the Federal level so CT is recommending to not e file until issue is corrected, as per ATX Blog. And I thought it was my fault getting a ridiculous error message that State submission must participate in Fed/State program.

Every year the bookkeeper gives me the health insurance paid for the H&W shareholder/employees. I tell them to report it to Paychex for H's W-2. This year with us all working from home and in different towns, we all forgot. Mathematically, it seems to be the same, right? Should've been on W-2, deducted as wages on 1120-S. Then income on joint 1040 but also an adjustment on 1040. For 2020 it's not on W-2, so does 1120-S still deduct it as employee benefit? And, then joint 1040 does NOT have extra income so will NOT have SEHI adjustment, right? Still same results on both 1120-S and 1040? I know the S-corp owner will NOT pay Paychex for correcting the W-2 and associated payroll reports. Do I have to do something like a distribution from the 1120-S? Thank you in advance for any help with this.

I would assume the prior preparer did it wrong, and move on.

It's fixed now!

Yeah, if a colleague were the other preparer... I think I'll fess up earlier rather than later to client and as permission to speak with his 1040 preparer...

Yes. DUH! Totally missed Line 25d. Long day.....

It took me several years to get to a good place on this issue. What I mean, is from the payroll perspective, accepting it is wages needing to be reported via constructive receipt. While not likely enforced, a freshly minted auditor could win an income shifting case if the amount is only added to the W2, and not handled via paychecks. The "subject to withholding" clause is also important, point out simply adding the amount to W2 is not enough (despite the arguments it will be a wash because of the deduction). I get questioned by all sorts of people claiming my interpretation is incorrect, because most argue based only on the 2008-1 direction to include on W2, ignoring the part about "wages" and "subject to withholding". Online searching will usually result in links for the tax prep perspective, and the proper handling through payroll aspect is usually never noticed, or is ignored. I always admit to being human, as there are no better options at present <smile>. I expect a new cycle of proving I am human begins today, as I await the birth of my first ipok tek (grand daughter) today.

And, Other Income -- Nontaxable. Oops, you got that. I was submitting when your post popped up.

What type of entity? If its a corporation, you have a M1 adjustment.

Bonnie, I am so sorry for your loss. I know this is going to be a tough and stressful tax season for you. If you need someone to listen, we are here for you.

One of the hundreds of spots ATX stupidly forces you to duplicate info already inputted elsewhere and the jump to feature doesn't take you to the place you need to enter it. On the 8889 Statement Page 1, which is where the jump to for Line 7 takes you and is the worksheet where you enter the HSA contributions, go down to line 7 and click through. That will take you to the Additional Contributions tab. Check off the two boxes near the top to apply to all months. Then it will allow the additional $1000.

I believe there is a schedule on the form that allows you to input the extra $1,000.

The title to this thread is somewhat misleading, since Oregon does not consider the stimulus rebates to be taxable income. However the calculation of Oregon Taxable Income can be affected in some situations. Oregon allows a subtraction for Federal Tax Liability capped at $6,950. Since the stimulus rebates are considered to to be credits which reduce Federal Tax Liability, some Oregon taxpayers may end up paying $ 300 or $400 more in Oregon Tax due to the reduction in their Federal Tax Liability. However many families whose Federal Tax Liability is zero due to EITC and or CTC wil not be affected. Also higher income taxpayers whose Federal Tax Liability is not reduced below the $ 6,950 cap will not be affected.

And, I have a client who didn't file 2017 due to COD (2) and is now getting threatening letters from the IRS. She called them and negotiated an extended 4 March deadline. I have partnerships and S-corporations to prepare! I'm hoping more than ever for a 15 July deadline.

July 15th would be welcome because right now I have 4 PPP Loan Forgiveness Apps to deal with plus 2 Second Round PPP Loan Apps to prepare and submit. I have told my handful of 1040 clients, no appointments until after March 16th.

When you do the worksheet for the primary exclusion on the 8949 - it would also calculate D/WI

I'd just a soon have the July extension. My inability to find quality help has caused me to already be far behind the 8 ball. I'm basically doing everything myself and have my kids helping file. So slowing people down would help me.

The sale is supposed to be on Form 4797, just like any other rental. The amount of Unrecaptured Section 1250 Gain is shown on page 2 of Schedule D, and is actually calculated on one of the capital gain worksheets. The exclusion should also be entered on Form 4797. https://www.irs.gov/instructions/i4797#idm139902460554688

^ what Abby said. All of it.

Exactly. My clients come in when they've been coming in for years, early for the big refund people and late for those who owe, typically. An extended deadline just saves me preparing a bunch of extensions.

Basic bookkeeping: Prior year net income (loss) always closes to retained earnings. QuickBooks and other accounting software does this automatically. I close total prior year distributions as of 1/1 each year to retained earnings so the books match the tax return retained earnings, and I can see that the books match the tax return beginning balance sheet without entering both numbers into a calculator. This also makes distributions start at zero for the new year. I know some accountants who don't close S corp distributions each year and they do a comparative balance sheet to see current year distributions but I'd rather see that beginning RE is correct at a glance. For partnerships, I also close partner capital contributions the same way I close distributions, except to each partner's separate capital account.

I can see this as a new revenue stream for Pacon: bookkeeping and tax preparation for casual gamblers. Flat fee plus % of winnings plus all the food and drink you want. Go for it !!

Some of mine are in earlier than usual and more impatient. Of course, I expect that the procrastinators will try to not gather their data until the beginning of July if the deadline is extended.

My clients dropped off/uploaded/mailed/FedExed/UPSed/faxed in mass about the MLK weekend/week, so I now have a huge backlog. And, I'll be working on entities through 15 March. So, that gives me only a month to prepare all the personal returns that dropped off last week. I really want an extension, don't want to stop to prepare extensions during my only month to prepare returns. I loved last year where I kept preparing returns until July and then had many fewer extensions to prepare. Tom: give your clients deadlines to get their info to you. Or, have progressive prices, and let your clients know, to encourage them to come earlier. Or, close/slow down your business when you want, such as 15 April, and not start up again until you want, say 1 September, to prepare those extended or just plain late. Let your clients know how your business runs, so they can schedule accordingly. Don't let your clients run your business.

I used to have a long time client with multiple businesses that always brought his tax info late and always expected me to have everything done quickly. For years I put up with that behavior although I did raise his fees well above my normal fee. Finally last year now that I am semi retired I told him 3 different times that I would have his return or project done a week later than he wanted. Thankfully he has moved on to inflict himself on another accountant. It just got to the point where the money didn't matter any more.

Plus, I have my full time assistant for the normal season. She spoils me. When I have to do all this on my own, I won't be so happy about the extension. It would ease my stress for the moment, though. We are behind on returns coming in as well. I hope that next year I'm working for somebody else... somebody who buys my business....

Well it seems people are taking it upon themselves to extend the filing season because they are coming in very slowly, and no I don’t want an extension.

Oh LAWD, let it be!

I have a better idea, I rent a bus, take them to the casino and I stay with them writing down their winnings and losses.

Excerpt from IRS Topic 513: "To be deductible, your expenses must be for education that (1) maintains or improves skills needed in your present work or (2) a law requires to keep your present salary, status or job. However, even if the education meets either of these tests, the education can't be part of a program that will qualify you for a new trade or business or that you need to meet the minimal educational requirements of your present trade or business."

There is a bill in committee that would make the first $10,200 of unemployment for 2020 not taxable. It is not law. IMO, it should have been passed last year or fuhgeddaboutit. But that doesn't seem to be the way some congress-vermin roll.

Correction to above re: the federal AFR. If creating a loan, the interest rate s/b the appropriate AFR when the loan was made, not the current rate.

The excess distribution will be closed out to retained earnings that will create a negative balance. That will happen when the shareholder has used up stock basis. Some others here may also suggest creating a shareholder loan, but I'd caution that this should be fully documented and make sure that is the shareholder's INTENT, including paying it back with interest that at least meets the current AFR. Also talk to your client about not using the S corp as his or her personal checkbook.

As far as I know, all unemployment benefits are taxable to the feds, normal and "additional."

Debit: AAA $1,000 Debit: Shareholder Draw (I would debit S/H A/R) $55,000 Credit: Cash $56,000

Absolutely agree. I’m only concerned about the possibility of a letter to a client. Always a time waster. There is no chance of getting paid either. I would hope IRS would not chase this rabbit. Waste of their time, too.

My return with 5329 marked 12 went thru and was accepted. I think the code is 12, but the input worksheet had 'b' as coronavirus related.

If the tax is right on the return, regardless of how I got there, I almost never amend the return.

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."

Could it be classified as repairs and maintenance?

I've received that message and still attached the file. I had no issue with it successfully going through. I would attempt to attach it and try e-filing.