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I've been preparing tax returns for over 20 years. I grew up in the family business and watched my father do tax returns since 1979. I've been working in the office in some capacity since 1987. I know how tax season goes. Yes, I'm always vaguely aware of possible legislation but don't pay much attention until it become valid law. This though, is almost too much. Mid season retroactive changing tax legislation, during a pandemic year, with a later than ever e-file start date? I've already filed over 300 returns, probably well over a third of those with unemployment. I do 700-750 returns each year so I'm not even halfway through. I've never posted, and I'm just venting to actual tax preparers who understand (aka not my husband). I'm sure I will get through the tax season as usual. Kaiidth (Vulcan for "What is, is".)

Since the House votes tomorrow and the President hasn't signed the bill yet, I would put this return on the back burner.

Thank you, Fine Ladies. I am out of the office with my 97 year old mother who's in the hospital, hopefully getting settled in to our very fine Hospice facility today, Monday the 8th. Great ideas, and I was about out of them, not gonna lie. Appreciate your prayers.

Agree with cbslee. The Senate's amendment to the bill reads as 2020 only. It says this: As for Pacun's question about income, prior to the above amendment, Sec 85 of the Code said this: ... and now we will have item ( c) for 2020 from the amendment I quoted above so that gross income will include only that unemployment income in excess of $10,200.

Conceivably good if the TP can document the hours actually worked were low enough and the work would have a similar profit if someone else was doing the same job. On another point, if this is the only income source, the TP could be harming themselves and their family by having such a low SSA income, depending on their need to factor SS benefits if any injury, death, retirement need, etc.

Rita, so sorry to hear this about your mother but glad that you can be with her. You know prayers and supporting thoughts are with you and your mother from this group and more. Do let us know if we can be of other assistance. We are here to help each other. Remember to care for yourself, too.

First, Unemployment Benefits are not earned income for EIC purposes. Second, the $ 10,200 which is exempt from income tax will not be included in AGI, unless there is a specific adjustment to add it back.

Its amazing. I took unemployment out and ctc and eic all of a sudden showed up. Reckon these were thought out before hand?

Is there anyway in ATX to see who received a 1099G for unemployment without having to open every single return and check?

Why I don't already have one of these on my desk is almost incomprehensible. Would use it a lot when clients ask a question.

Tax Dome is somewhat similar to Canopy, but is less expensive. For $600/yr upfront, they provide unlimited E-signing a portal, a website, CRM, etc. It also integrates with Drake, Lacerte, Pro Series and a few others, but not ATX. What experience if any has anyone had with Tax Dome?

You can either late elect S status, or file a 1065 for 2020 and elect S for 2021. The question of 'open for business' is a facts and circumstances test. You can be open with no sales and it sounds like they were open.

Good article from The Tax Advisor specifically about when the S corp comes into existence. "An S corporation's initial tax year does not begin until the earliest to occur of the following three events: the corporation has shareholders, acquires assets, or begins doing business. The term "month" is defined as the period starting on the day within the calendar month that is numerically equal to the first day of the tax year and ending on the day before the same numerical day in the next calendar month (Regs. Sec. 1.1362-6(a)(2)(ii)(C)). Since most newly formed corporations do not begin their first tax year on the first day of a calendar month, the election deadline may not fall on the 15th of a given month." " "Practitioners will generally find that the earliest of these three dates is triggered by the legal incorporation process (the filing or registration date of the articles of incorporation with the secretary of state). At this point, even though the shares of stock may not actually have been issued, the corporation may be deemed to have shareholders and, therefore, be considered to have satisfied one of the three tests." There's much more in the article and worth reading. The 3/15/20 deadline assumes that the business was for a full year, so obviously a short year return will have had a different deadline. I am not entirely sure this business would qualify for the late election. Was there reasonable cause for missing the date to elect? Worth a try? Why do the owners want to be an S corp instead of a partnership?

BOOM! THERE it IS! It is in his divorce decree that he claims the children every even year. BUT.... since they don't spend over half the year with Dad/step mom, the 8332 must be used. And THAT says Dad claims them. Thanks for turning my little light on! IF the children actually spent half the year with Dad, and the 8332 was not necessary, THEN, step mom could claim them. Thanks for the chat, y'all.

Almost everybody in my list has 1099G since they got a refund from the state in 2019 and/or they collected unemployment in 2020.

Just because they have expenses doesn't mean they open for business ? I believe the path your propose must be done by March 15th.

Your post implies that you didn't prepare the 1120S, if so all you can do is advise them of the problem and what needs to be done.

Facts & circumstances. What did they do and how many hours did they work. It's possible it's totally OK

I was hoping that the "Other Income" column in tax warehouse would include unemployment, but it does not for some reason, even though that is how it is listed on the 1040.

Every month they will get a check from the IRS starting in July till the end of the year. The new name for the IRS is "Weak IRS" because with all the changes the organization will be very weak with the extra work.

Let's say you have a child and you $30K in earned income. and you made another $12K in unemployment. You are out of the EIC credit but if your income is reduced by $10,200, you will qualify. Another example, same person and same child: in this case the person made has 0 earned income for 2020 and collected $42K in earned income. This person doesn't now qualify for EIC even though last year his earned income was $18K. If you reduce his 2020 income by $10,200 then he can use his 2019 earned income and get an nice piece of the pie. I hope this is not the case because the money allocated for this stimulus will be short.

Kiddie Tax!

You will have to pay attention when the form gets updated (if it will be) and then you will have to see who gets affected by that update. The problem is that the update might be to form 1040 and you will not have that chance.

In ATX if you click on the W2 line a worksheet opens up wherein one may enter the amount deemed to be taxable scholarship. It then shows on the W2 wages line with the notation 'SCH' next to it.

In the sch E worksheet is the property marked 'complete disposition of passive activity'? If that box is not checked then the losses created by entering the negative 481(a) adjustment on the 'other expenses' line will not be allowed.

Try defaulting to Regulated Investment Company (RIC) on the 8a pull down.

6 is nothing. Imagine how many some of those tax shops have done already.

Unemployment compensation does have its own line on the return, so the IRS could easily do this. Certainly should be less work for them than processing millions of amended returns. Hopefully we'll get some news soon. Congress is supposed to pass the Senate version on Tuesday, so hopefully IRS will issue some guidance by the end of the week?

I really hope this is one of those times. One, I don't want to be amending returns in the middle of the season, but those are folks who won't want to wait for much needed extra refunds. And two, I hate to have to charge people who are hurting for amended returns that aren't their fault. Seems like the IRS would be able to flag and recalculate those returns pretty easily, albeit maybe not until summer.

I remember the IRS recalculating and issuing refunds, I think it was about 12 or 13 years ago, don't remember the details.

So many returns to amend..... because of course, many of these folks are the same ones due refunds, and so come in early. Anyone think there's a chance the IRS will say they can figure this for returns already filed, and automatically issue refunds? Our state does that some years, when the Legislature doesn't conform to federal tax law until May. But Don't know if i can recall the IRS ever having to do it. Either way, I'm sure they'll issue guidance in the next couple weeks. Kind of feel sorry for them, having to do another round of stim checks right in the middle of tax season.

I have a client who called Friday to set up an appointment, 19K unemployment, after an explanation, he decided to wait. But he also hasn't received his 2nd stim. check. My post was merely to show the poor treatment of NECPA's client received. I used to live in the "world" of unemployment, (construction), and they wouldn't even talk to you if you had a part-time job!

My stay at home mom worked one week in the church nursery for a little over $200. Two hundred dollars. She got over fifteen thousand dollars in unemployment. I do a lot of tax returns. I see this over and over. I too, was hoping the IRS would fix this and just send refunds, but then I woke up. They do not care about software or the very tax professionals guarding their gates, following their mandates, crossing T's and dotting I's with threats of penalties looming. We are the "good guys" and we are the ones getting kicked around... again. I'm sorry, but I have way too many clients to postpone filing tax returns based on "what ifs," and I'm sure many of us are in the same boat. This isn't the end of the world for me, it's just "another day in paradise." I have a job, and for that I'm thankful.

Oh, the tangled web we weave.

They're mad. The retroactive thing takes the cake. I too hope the IRS can just reimburse them. But probably not. I've printed out a list of those already filed, will check to see who got unemployment. Another list of those I've completed but not yet filed. I'll let them and the new ones coming in know ahead of time. They still have to make if final, IRS and software companies get updated. Then there's the states. I usually only deal with two, KY and OH.

Knowing that this is coming, I will encourage those still coming to wait to file, but I have already done so many it will be difficult to pick them out right now. I need to, but it will be challenging.

For others who have not figured it out. Correct, enter the 1099-R and when finish, scroll down and check "check box ONLY for Cornoavirus (CARES Act)...." that will trigger form 8915-E. On form 8915-E, enter the date of the earliest 2020 distribution to the left of the amount from 1099-R. If it is not from IRA, you click the box on page 1, and pay all taxes now. If you don't click the box, then 1/3 will be taxable. If client has returned money to the plan before filing (including extension), you enter that amount on line 10 FOR OTHER THAN IRA. IRAS have section III with the same choices but as long as you enter the 1099-R correctly the amount will flow to the correct section. Remember that you have to attach form 8915-E after signed for efiling.

I should know better than to rely on news reports for accurate information

This is pathetic! I saw a post somewhere of a wife who got a part-time job just as the (hold my tongue) pandemic hit. She made a couple thousand dollars, then collected close to 20K unemployment.