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You would think. They're supposed to report what was paid now. Not what was billed, which didn't help us at all. But PAID seems to have different definitions to different colleges. Some report net pay after loans and scholarships, some subtract some things but not others, some cross year-end to report the semester/school year it applies to and not the calendar/tax year. You need the bursar's statement with dates and amounts and sources and often the parents/students adding up what they paid via check/etc. I expected better from institutions of higher learning.

Don't try to match up the 1098-T with anything, because they are often wrong. Use the bursar's statement for amounts. You need the 1098-T to document college enrollment and Box 8 "At least half-time student (if checked)."

I have way too much experience with this problem. Thank to the All Mighty that all of these clients have sold their businesses, retired or are no longer clients

It is a distribution. Tell them to stop being lazy and simply transfer the funds to their personal account. Warn them of the legal and tax implications, plus all the extra bookkeeping to enter all those personal disbursements. Then have a separate conversation about reasonable compensation. Document your conversations in your notes or a letter. If they don't stop, consider firing them.

STOP DOING THAT !! I use Distributions. And, educate the client. I've used Loan to Shareholder if basis is a problem, but want it under $10,000 and going down each year. Fire him.

I had errors in Drake the way I was answering the questions too. What I found out is that "C" must be checked, "No" to a will, the next 2 questions checked as "No", and "will distribution marked as "Yes". Then, the name shown as "in care of" must match the name on the 1310 of the person claiming the refund. The "in c/o" name may be your problem with it showing a mismatch error. iirc, I didn't attach anything and I was able to efile the return.

This came from Drake, but it seems that Microsoft has pulled the update because of other software being affected.

So sorry for your loss Rita and family. You’ve been a good daughter and great comfort to Mom.

I would deduct it due to both interest tracing rules and the fact that it is secured by a qualified home.

Please don't confuse home equity loan, HELOC (those are bank products), or second mortgage with deductibility. If the use of home equity loan or HELOC proceeds qualify as home acquisition indebtedness or home equity indebtedness as defined by the tax code, then the interest would be deductible within the limits allowed. Where home equity or HELOC interest isn't deductible (through 2026) is where the proceeds are used for something other than to buy, build, improve. So, for example, interest on a HELOC used to purchase a new car would NOT be deductible under the current law, but interest on a HELOC used to renovate a kitchen or build an addition would be.

Tom, thank you! That section has been updated since I quoted from it earlier in this post and another post! That's why we should wait for the final version to be signed into law and discuss pending legislation with caveats.

@jklcpa Thanks. Here is the answer (formatting is mine): “(c) Special Rule For 2020.— “(1) IN GENERAL.—In the case of any taxable year beginning in 2020, if the adjusted gross income of the taxpayer for such taxable year is less than $150,000, the gross income of such taxpayer shall not include so much of the unemployment compensation received by such taxpayer (or, in the case of a joint return, received by each spouse) as does not exceed $10,200. “(2) APPLICATION.—For purposes of paragraph (1), the adjusted gross income of the taxpayer shall be determined— “(A) after application of sections 86, 135, 137, 219, 221, 222, and 469, and “(B) without regard to this section.”. Tom Modesto, CA

I think it's deductible, with some of it subject to home equity indebtedness limits. Consider the following: It can't all be "acquisition indebtedness" because that does require that the loan be used to "buy, build, improve" the qualified residence securing the loan, Sec 163(h)(3)(B)(i)(II) however, It would fall under the definition of "home equity indebtedness" though, subject to those rules and limitations, because it was used to buy, build, improve a qualified residence of the taxpayer. Sec 163(h)(3)(C). Qualified residence is defined in 163(h)(4) and includes the principal residence and one other selected by the taxpayer for the year. I think it works like this: If there was an existing mortgage on the principal residence that was refinanced, the amount of the new loan up to that amount would be considered as grandfathered in as acquisition indebtedness, and then only the excess above that that was used for the second home would be considered home equity indebtedness. 163(h)(3)(F)(i)(III) and 163(h)(3)(F)(iii)(I) https://www.law.cornell.edu/uscode/text/26/163 Hope I got all the code references right!

Stick with your strengths, @Abby Normal !

I'll see what I can do, probably tomorrow. Need the daylight coming in the window to get a good picture.

I'm split between Lion and Possi. I'd give them a bill with their original documents, and not sweat it if they don't pay. But, if they don't pay it, I won't take them back. If they come crawling back, they have to pay the unpaid bill, and pre-pay my guess for the current year, before I'll accept new documents.

Rita, my deepest sympathies about your mom. Many, maybe most, of the hospice people are really superb and hope that is the case for your mom as well. I heard nothing but wonderful things from the wife of a client who just passed from cancer, about the hospice people. Went to the wake just last week. At least with hospice at home, there's no restriction on visiting, either. Don't know what the TN rules are at the moment but around here folks are way better off going home to pass, where their loved ones can come without strict limitations.

I've seen plenty of Bursar's Offices do things that, if done by a for-profit business, would be malfeasance at least and fraud very likely. Don't trust any of 'em as far as I can spit.

Treasury has long advocated this technique: https://www.treasury.gov/connect/blog/Pages/Helping-students-and-families-access-college-tax-benefits.aspx I use it all the time. You do have to insure the scholarship is unrestricted (Pell grants are always unrestricted). And if the amount of the scholarship is more than the qualified expenses, it almost has to be unrestricted, doesn't it?

My understanding is that even if the scholarship is used for tuition, if it's not REQUIRED to be used for tuition, you can essentially 'assign' it to other nonqualified expenses (room and board, etc.) and use the amounts paid by the taxpayer as the payment for qualified expenses. I have the bursar's statement, but I also needed the scholarship lingo to make certain they weren't 'tuition only' scholarships. I know it's a lot of work, but in this case, it's worth $2,500 to the taxpayer. (If my understanding is correct, that is. If not, I'm wasting my time and yours, and for that, I apologize.) I'm leaning toward filing this way; It just seems to good to be true, so I wanted to see what others thought. I appreciate all of your input!

Always get the bursar's statement. Forms 1098-T are notoriously inaccurate. (I don't know what that says about the colleges teaching our next generation.)

I was hoping to choose between TaxDome and Taxaroo before this season got underway but never managed to. So now it will be on my to do list for after this season's filing deadline. If the finish line gets moved, I may be able to look into these sooner. Thanks GGRNY for sharing your experience!

I am so sorry to hear of Rita's loss. Tax season is stressful enough without the added stress of losing a loved one. Please convey my deepest sympathy to Rita.

It should all be deductible. The portion of the refinance up to the amount of the original debt will qualify as home acquisition debt and the second home also because it is a qualified home. Below is a quote from Pub 936 as well. Next, note above it says "a qualified home" and under the tax law that is defined as a principal residence AND a second home that taxpayer chooses for that tax year. Pub 936 goes on to say this: The second home is a qualified home at the time of the refinance, but I used the above to make the point that taking the deduction is valid.

Oy. Mine crashes at least once a day this year, but I've been using it to remind myself to get up and move around, lol.

By the way, the "STOP DOING THAT !!" is what I say to the client. As Abby says, it costs him more to have us do the bookkeeping to move his personal expenses to Distributions and rebalance his books.

And yes this is possible to do. I was out on my own, working full time while going to school full time, starting senior year of high school. Graduated, and got through MIT - and used up my lifetime supply of all-nighters in so doing. NOT recommended. But definitely possible. Doing that with a wee one too... ugh. She has my sympathy!

Since it's a 1095-A, you have to subtract the premium tax credit to arrive at the amount paid for health insurance. You can't just use column A.

For a young kid who hasn't filed yet, I don't push to have him file when he/she has no filing requirement. Once a child has filed, I do push for him/her to NOT miss a year.

No, the IRS doesn't track your carryovers from year to year, even though they probably should. Prepare the return so you have the rollover for next year, just don't bother filing it... unless you're concerned about the SOL.

Had a very active trading client and asked him to check with TDAmeritrade--they do track wash sales and incorporate that into client basis.

Is a dual citizen. Came to US as a child. Lived here for 50 years. Got divorced, sold the family home, took his half tax free and moved back to the Philippines. Is living on that money, waiting until he can start on SS. Has no filing requirement. Tom Modesto, CA

The disallowed loss from a wash-sale is added to the basis of the replacement security. When it is sold, the disallowed loss effectively reduces the gain or increases the loss of that transaction.

No reason to fix it if users are willing to put up with these problems.

It looks like ATX still has all the same problems, it had when I left 3 years ago.

I just started using it this year. It's the first online tax portal I've ever used so I cannot compare to others. I like that they are constantly adding upgrades and seeking requests on ways to improve. My clients seem quite happy with it and getting their accounts activated has been very easy. I love how much more organized managing each client has been for me this year. No more One Drive expiring links, fishing for documents in various cloud portals, etc. I feel much more secure in my communications to clients and as they become more comfortable with this way of communicating, I think my days of SS# riddled documents in my email will be minimal. It took me quite a bit of time to understand how to use it and I'm still learning. I don't think I've even scratched the surface of what it can do. If you've already used a online tax portal the learning curve might be shorter. Also, keep in mind the unlimited signatures is true, but if you want KBA signature, it's $1 extra per signature request. I think as I learn to use it, I'll find it better and better. I haven't utilized the workflow feature at all yet. Mostly client communications, doc exchange, signature request and tasks communications. I look forward to post tax season learning about the workflow and pipeline features.

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.

I give them their papers back and wish them well. It happens rarely, and I do not take the client back. No judging... It's just how I roll.

Give them a bill. But if they don't pay it, don't fret. Give them back the documents they gave you and wish them well. You don't want clients who are shopping for the best outcome without planning with you before the year ends to improve their own outcome.

I forgot that was an option. I mod the tax subreddit and we rely on reports because there's no way we can review all those posts and comments even when it's not tax season. We made extensive use of automod features this year because we were getting buried with Robinhood posts, Only Fans posts and stimulus posts.

Yes, probably was something to due with the SS worksheet error in calculating taxable amount. If you already had the 8879 signed, keep in mind that you don't have to redo that if the change in tax < $50.

Thanks for the post, Judy. And thanks also for attempting to scrub the information. Moderator Extraordinaire!!

My beef is with the driver's licenses. In NY you have to put the document ID from the back of the license in to ATX. They can't print them any smaller! I probably have half of them input wrong. "is that a 6 or an 8? is that a capital I or a 1? is that an O or a D?"

I know, but I was a good straight man, walked right into that.

Congratulations Lion. We celebrated our 30th anniversary a couple days ago. Shrimp scampi for dinner. Sucks to have your birthday, spouse's birthday and anniversary all in a 4 week period during tax season. We try to make up for it in the summer. Tom Modesto, CA

I sure worded that in a misleading way! He is younger than I am, but not by that much. 27th anniversary this June.

He's only 27?! Rockin' that cradle!

Sounds like you're hitched to a really good guy, I'm sure you know that and are very happy because if you look around out there, there's very few of us left.

I provide a SASE with an identifying code only I know above the return address. I use Catherine's method, but also tape the envelope (w/postmark) to the back of the form. Again, I use Catherine's method, but also make the client initial the old date with the current date. Overkill maybe, but I'll be damned if they'll (IRS) penalize me after NOT paying me to do most of their work!

Yep, I do like Catherine and Judy. I have a few retired clients who mail back their signature pages, and lots who sign and then don't upload it/drop it off through my mail slot for days.