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I agree with you, Terry. Just a few miles south, I believe SC still recognizes common law marriage. My (very simple, country born and bread) Daddy, John, lived with Myrtle... for a little too long, and she declared them married... Bought herself a very lovely wedding ring set, and so it was. It passed every Common Law rule. She was thrilled.... Daddy cried for a while... then she fried some more chicken, slapped some biscuits together, and he felt better about it. Truth.

It's actually part of the Constitution - in Article IV, where contracts set up in one state are enforceable if the person moves to another state. That's also why you can't skip out on selling your car, or alimony/child support payments by moving over state lines: continuity of contracts. It's also the tactic that was used to get same sex marriages accepted in all states.

I get my yard mowed several times a year without asking. So I mark them as though I was paid.

Thanks Catherine, No you're not. I'm right there with you. Only under my breath is the holy crap comment.

I worked up a short question sheet re EIP's, foreign bank accts, Virtual currency and some state issues. It was sent as an email attachment. I prefaced it in the email by saying that these were questions that the IRS required to be answered and would they please circle the Yes or No and to please sign and date it. It worked perfectly. Now I have a written record in their file, so if they have reported the wrong EIP, there will be no argument.

Looks like it is it's own separate tax return from their 1040?

Interestingly - that's the 3rd time I've heard that not-so-common word this week!

Virginia also does not recognize common law marriages that occur within the Commonwealth. In the past, if couples volunteer such information and I tell them that i cannot file them as MFJ, they just go somewhere else and keep their mouth shut so the question of what to do about prior years does not arise.

I think I side with Dan; in some ways this is like winning a prize. Not expected, not predictable, no for-profit motive.

I am the only one that cringes with someone says my wife (and they are not married), my nephew (and it's their cousin kid) or when people say my baby daddy or baby momma.

IRS got their banking info from SSA.

Wow! A case could be made for either of those; but I would lean towards other income. She was not in the business of "offering to help out" and did not have a profit motive that would subject her to SE tax. So I see an argument against NEC. There is certainly not an issue of an employee gift vs bonus here. However, while there is an element of gratuitousness, the payment was in recognition of her efforts for the company in charge of the winding down process. Since the payment was made in recognition of her efforts; at a minimum I would call it other income with out further research.

Given the abundance of "we forgive you, you don't have to pay back the error" approaches Congress continues to pass in our tax code, does anyone think that the CTC advance payments will likely be forgiven anyway come 2022 tax season? I mean it's like a carbon copy of the APTC, and I've got a number of clients who are getting away with murder in that area. Just my Saturday morning thoughts...

Why would you cringe

Yes, it is, and the client does need to file the 709 for that gift.

I set up a question on my tax organizer that asks how much they got for EIP1 in April/May of 2020 & EIP2 in Dec2020/Jan 2021. Having the dates there as a reference seemed to help most remember to go back and check their bank statements for the amounts.

Add in $1 of interest income, and see if that works. I run into this all the time with foreign-dwelling clients 100% of whose income is excluded with FEC. If there is no taxable income (before deductions) you cannot e-file. Add in that $1 of bank interest, not excluded under FEC - and bingo you can e-file. Very important tactic, especially for those clients living in countries where the mail service is nearly guaranteed to be pathetic at best. (Australia, most of South America, central/eastern Europe, some Asian countries - send a tax return in from there, by mail, and it's nearly 100% guaranteed never to arrive.)

This bit is key. Does she have emails to/from the new owners, expressing her surprise, or offering to help settle the affairs of the defunct company specifically making it a FREE help offer? Get those, and save them to pdfs, with the headers and date information etc, now. Then if/when a letter comes, that helps show it was an offer out of her goodness, and the money was an unexpected surprise.

I am 100% with you on the first and the third, but less so on the second. I have several friends who were only children, and I am "aunt" to those now-grown kids and refer to them as niece or nephew. It's a courtesy title. Interestingly enough, in centuries past, "niece" or "nephew" was used as a euphemism and familial acknowledgment for an outside-of-wedlock child. It was especially commonly used by members of the Catholic clergy, who were not allowed to marry.

I have never heard of a situation like this addressed before. I can't think of a case to compare it to. I thought about that, but at first was thinking more along the line of a "nonprofessional" fiduciary or PR. However, there is a difference here since the former employee was paid for her professional skills, whereas a PR can do very little for big $$$. I can see factors against SE including: 1. she did not expect to get paid, therefore no profit motive. 2. it was a one time sporadic activity. 3. she did not make any billings, track her hours or otherwise carry on the activity in a business like matter. But on the other hand it could be argued that: 1. after three months the activity was conducted in a continuous manner. 2. although there was not an agreement, it was likely she entertained the possibility of some compensation for performing work of critical importance to the company. 3. in the end she was rewarded for her professional skills. I am not sure how likely the $50,000 will trigger an IRS letter, but I would sure document the facts and circumstances regardless of what position the taxpayer chooses to take. It seems crazy that the company would pay out $50,000 and not issue a 1099. It is hard to imagine that the payment was not deducted on their end, but that is beside the point. I would not hesitate to report it as other income after explaining and documenting the SE aspect to the the client.

Ah, but how many times have you heard the word "contumelious"?

Not too many years ago I had a client who had a Espresso Drive Thru Stand Business a C Corporation with 8 locations. She ended up selling off the locations piecemeal, 4 different transactions, since she wasn't able to sell the whole business in one sale. Three of the transactions involved personal non compete agreements reported as Other Income on her 1040. The IRS via letter contested the Other Income as reported, fortunately my client had just enough documentation to counter the IRS. My point is that reporting this amount of money as Other Income not subject to SE Tax will quite likely prompt a letter. How do you respond to the letter with nothing to document your position?

Max, would you share your email attachment? Just let me know how, if you want an email from me so you just hit Reply and attach or... I still love you if you don't share!

Great idea!

Yikes. Best guess: Lots of work. Invalid joint election and lots of extra steps when amending. IRM 21.6.1.5.7 I have never had this occur, so I am NOT speaking from experience. Eager to hear what others have to say. I'm also interested in whether past invalid filings actually triggered the start of the Statute of Limitations. I'm thinking the answer to this question would help determine how far to go back? This could be an interesting discussion.

Withhold their Christmas and birthday presents until you are paid up!

cbslee. I did not ask, they volunteered the information. As far as your other question, NC will recognize the common law marriage of a couple from another state as being legally married. I believe they do this because a precedent was set in the other state. I did read this but can't remember the exact wording.

Are you talking about the change to allow more PTC, and PTC for those over 400%? Those changes only apply to tax years 2021 and 2022. The change to allow PTC for anyone getting unemployment applies only to tax year 2021. I doubt there will be a form revision for 2020.

ARPA only provided the exclusion "In the case of any taxable year beginning in 2020"

There are a number of companies that provide software for tracking and calculating cryptos - Koinly, TaxBit, CoinTrack, Cryptotrader.

yes, if you have filled in the payments when paid under accounts receivable tab in return manager. then you can sort by amount paid column and the zero come to the top of the list, them mark the box and print marked list.

Robin...I'm just curious, why do you feel the need to show it as "unpaid"? Maybe I'm missing something but I also prepare my returns and my children's returns (both full time students) on ATX and show that I am the paid preparer. I keep sending my kids invoices and past due notices. I'm going to have to get a collection agency involved.

And, my envelope opening fee, unfolding your documents fee, getting the pages in the right order fee, calling you to get the even number pages that you didn't fax fee,...

I've been amazed also at the people who can't remember. But I nag them a few times to check their bank records, and if they still maintain they didn't get it, or didn't get the max, I put it on the return that way and just warn them that if they're wrong, it will hold up their refund while the IRS gets the correct amount. Now I see the IRS is planning to send out letters, so cue a wave of calls.....

The law says the $10,200 has to be added back to MAGI for the taxable Social Security calculation. The worksheet instructions do not clearly say that, but they have already been changed once.