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Reviving this b/c I was surprised to see one of my long-retired clients qualify for the EIC this year. He receives a state fireman's pension of $1,500 each year that falls under the IRS ruling that these plans are "length of service award programs" (LOSAP) and are like deferred supplemental wages to be reported on Form W-2. So, a usually fast and easy return now has the 8867 and due diligence questions and documentation with it and will require some hopefully brief explanation to this client. We will be seeing some strange returns again this year with the double dipping on some of the credits with no payback and other occurrences from law changes having some unintended consequences like this EIC.

Correct. IEP3 does not have to be repaid.. Advance child Tax credit doesn't have to be repaid if the person who received the monthly payments makes less than $40K. AND the person claiming the exemption this year can claim the EIP3 since it didn't receive it in April. The advance child tax credit depends on other factors. For example: You claimed a child from your current marriage. You receive $1,500 in advance. This year you don't claim that child but it is your turn to claim a child from your previous marriage who is 15 years old... Even if you make only $10K in income, you will have to "repay" those $1,500 by virtue of loosing the $1,500 that you would otherwise get for the child that you didn't claim last year.

Wow! With 62 years of marriage, you must have been a cradle bride. I've know only one other couple married that long - they made it to 74 years before the groom passed away. Heartiest congratulations! We just celebrated 43 years but have been together for 50 this fall. You are so correct that it isn't always easy but, for many reasons, we keep choosing each other.

Margaret, it sounds like you have what few do: Enough. You don't need to make the big bucks, or hustle for more and more clients, or earn 80% in the market each year. You have what you need and are comfortable with, which is enough. Good for you. This concept came from Warren Buffet before he was richer than God. He was at a party with many zillionaires and someone asked him if he wasn't a bit envious. He replied no, because he had what none of them would ever have, Enough.

The IRS has suspended the automated mailings of more than a dozen letters, including collection notices and notices pertaining to unfiled tax returns. If there are plans to extend the filing date beyond April 15, hopefully they communicate that sooner versus later. https://www.irs.gov/newsroom/irs-continues-work-to-help-taxpayers-suspends-mailing-of-additional-letters IR-2022-31, February 9, 2022 WASHINGTON — As part of ongoing efforts to provide additional help for people during this period, the IRS announced today the suspension of more than a dozen additional letters, including the mailing of automated collection notices normally issued when a taxpayer owes additional tax, and the IRS has no record of a taxpayer filing a tax return. These mailings include balance due notices and unfiled tax return notices. The IRS entered this filing season with several million original and amended returns filed by individuals and businesses that have not been processed due to challenges of the historic pandemic and is taking this step to help avoid confusion for taxpayers and tax professionals. “IRS employees are committed to doing everything possible with our limited resources to help people during this period,” said IRS Commissioner Chuck Rettig. “We are working hard, long hours pushing creative paths forward in an effort to be part of the solution, rather than the problem. Our employees continue to expend every effort to balance a confluence of multiple, unprecedented demands − including successfully starting the filing season, working our inventory of unprocessed tax returns as well as looking for additional ways to minimize burden for taxpayers, tax professionals and businesses. “Our efforts are not limited to suspension of these additional letters and the possibility of similar actions going forward. We have redeployed and reallocated resources throughout the IRS and have implemented innovative strategies in an ongoing effort to provide a meaningful reduction in our inventories,” Rettig said. These automatic notices have been temporarily stopped until the backlog is worked through. The IRS will continue to assess the inventory of prior year returns to determine the appropriate time to resume the notices. Some taxpayers and tax professionals may still receive these notices during the next few weeks. Generally, there is no need to call or respond to the notice as the IRS continues to process prior year tax returns as quickly as possible. However, if a taxpayer or tax professional believes a notice is accurate, they should act to rectify the situation for the well-being of the taxpayer. For example, the IRS cautions people with a balance due that interest and penalties can continue to accrue. In addition, IRS employees may in select circumstances issue notices to particular taxpayers to resolve specific compliance issues. The IRS does not have the authority to stop all notices as many are legally required to be issued within a certain timeframe. The IRS will continue to assess other changes and system modifications that the IRS may be able to implement to assist taxpayers on an array of issues. The IRS will continue to make information available to taxpayers throughout the filing season. The IRS encourages those who have a filing requirement and have yet to file a prior year tax return or to pay any tax due to promptly do so as interest and penalties will continue to accrue. Visit IRS.gov for payment options. The suspended notices include: Individual Taxpayer Notices Notice/Letter Number Title Description CP80 Unfiled Tax Return This notice is generally sent when the IRS credited payments and/or other credits to a taxpayer’s account for the tax period shown on the notice, but the IRS hasn’t received a tax return for that tax period. CP59 and CP759 (in Spanish) Unfiled Tax Return(s) - 1st Notice IRS sends this notice when there is no record of a prior year return being filed. CP516 and CP616 (in Spanish) Unfiled Tax Returns – 2nd Notice Request for information on a delinquent return as there is no record of a return filed. CP518 and CP618 (in Spanish) Final Notice – Return Delinquency This is a final reminder notice when there is no record of a prior year(s) return filed. CP501 Balance Due – 1st Notice This notice is a reminder that there is an outstanding balance on a taxpayer’s accounts. CP503 Balance Due – 2nd Notice This notice is the second reminder that a there is an outstanding balance on a taxpayer’s accounts. CP504 Final Balance Due Notice - 3rd Notice, Intent to Levy The IRS sends this notice when a payment has not been received for an unpaid balance. This notice is a Notice of Intent to Levy (Internal Revenue Code Section 6331 (d)). 2802C Withholding Compliance letter This letter is mailed to taxpayers who have been identified as having under-withholding of Federal tax from their wages. This letter provides instructions to the taxpayer on how to properly correct their tax withholding. Business Notices Notice/Letter Number Title Description CP259 and CP959 (in Spanish) Return Delinquency IRS sends this notice when there is no record of a prior year return being filed. CP518 and CP618 (in Spanish) Final Notice – Return Delinquency This is a final reminder notice that we still have no record of a prior year tax return(s).

How many of you have noticed an increased number of divorced and/or separated couples this year? I am getting a lot of them along with the usual arguments about who gets to claim the children, etc. My head is spinning and we are only in our second week. On the bright side, I am also seeing several marriages between clients. Let's hope they stay together. I, personally, have 62 years coming up in a few months. Nobody ever said it was going to be easy, but plenty of people said that it would never last. Ha!

I just prepared my own return and was so surprised to see that we qualify for EIC! I didn't recall that now over 65 can qualify so read up on it. We seem to meet all the requirements given that so much of our SS isn't included and we live off of much savings. In 2022 my husband begins his retirement draws so surely can't happen again. Most of my IRA RMDs go for QCDs but I am just a bit uncomfortable thinking something must be wrong. Can it be real?

It means that your client's tax return requires manual intervention to resolve some processing issue or problem. As of late last month there were still 6 Million unprocessed 1040 tax returns . All you can do is wait.

I can't recall that smoothing income and expenses is a tax principle. It certainly wasn't part of my CPA Exam or my Enrolled Agent Exam. However, it's certainly become part of what CFOs of publicly traded corporations do at the end of every month, quarter and year.

As long at it was oversight and missing distribution is taken before filing return, they won't assess the penalty. From 5329 instructions: Waiver of tax for reasonable cause. The IRS can waive part or all of this tax if you can show that any shortfall in the amount of distributions was due to reasonable error and you are taking reasonable steps to remedy the shortfall. If you believe you qualify for this relief, attach a statement of explanation and file Form 5329 as follows. Complete lines 52 and 53 as instructed. Enter “RC” and the amount of the shortfall you want waived in parentheses on the dotted line next to line 54. Subtract this amount from the total shortfall you figured without regard to the waiver, and enter the result on line 54. Complete line 55 as instructed. You must pay any tax due that is reported on line 55. The IRS will review the information you provide and decide whether to grant your request for a waiver. If your request is not granted, the IRS will notify you regarding any additional tax you may owe on the shortfall.

Can you give an example of what you are talking about?

Ha! We’ve only been married for a little over 5 years, but this is the best out of 3. And we only got married for tax reasons, lol!

I found the 2802C to be the most humorous. After all, how can they know there's a withholding problem if they haven't processed a return? Seems to me the only time this notice would go out is after a return has been processed and the under withholding is known, so why suspend it?

Yeah, I found it interesting that they double counted by counting the same notices twice once in English and once in Spanish.

Correct, as precisely stated in the post, the IRS suspended more than a dozen letters. That's the precise quote.

To be precise they suspended a few automated notices. Most of them will continue to be sent out.

Ask to see her Military I D, then you will know.

Ultratax, which costs our firm $16k a year, also does not have approval on our company's state and who knows how many others. We can do the calculations but can't efile. In the past our state has always been available almost immediately after the federal approval, so this has never happened before. It seems the states are causing the lag (but it's all our fault).

I use Drake, and we're still waiting for approval on those forms in Drake as well.

Thanks, Sara, for these words. Yes, we have enough. Enough to be comfortable with a paid off house and no debt. We have always lived pretty far below our means which, at times, annoyed our son. But, at 41 now, he is the same way. He maxes out his 401k and Roth every year. We still have fun (my dive trips, husband's golf) and share with church and many organizations because we live with older clothes, furniture, cars, etc. that still serve us fine. Funny, I don't even know what you mean by 'earn 80% in the market' so guess I don't! The best thing is that all our final arrangements are paid for and we believe that our son will have to provide nothing for our care. Unless we happen to live to about 125 or so. We tease him that he might have to choose the home but not pay for it. Actually we are hoping to move to a single level home within a year or two so as to make it the last one. Time will tell!

Sara EA, thanks for your concern about my rates but I have only about 45 clients, work only during the season, all 1040 with just a sprinkling of rentals or small Sch. C's. I downsized from businesses and payrolls, etc. about 10 years ago when my other CPA retired. I make enough money to cover expenses and pay for dive trips and a little extra. I take no new clients unless referred and are maybe extended family members and lose about as many as gained annually, usually to simpler returns. At 75 with a license expiring end of this year, I just may call it. Or not and go for 3 more years. I enjoy the 10 or so weeks of work and keeping the little gray cells somewhat active. And I love my clients. The biggest reasons for the low income last year are tiny home office deduction, nearly all free CPE from online webinars, QCD's from my RMDs, living off savings while my husband waited to begin his RMDs this year, and very little taxable SS for us. As I mentioned, 2022 will be a killer year for taxes as his income shoots way up and 85% of our SS will be taxable. We will never be in the EIC situation again which was why I questioned it. I agree with your other observations about Medicare, etc. Some things, well, a lot of things, just don't make sense - like me qualifying for EIC when we actually have a lot of nontaxable income in SS. But I will follow the recommendation and add to my Roth. One of them return 23.86% last year and the other was 18.36%. I'll go with the higher one knowing that past performance is no guarantee of future returns. Since inception in 1999, it has an 8.94% average so I'm okay with that!

I love that Retirement Savers Credit. If you work it right, you can almost get as much back as you put into an IRA.

The expanded EITC is for 2021 only. If congresspeople can stop making faces at one another long enough to get some work done, they may choose to extend it. Actually, now that full retirement age has been extended to 66-67 years for some cohorts, another thing that needs changing is the age for Medicare. Hey congress, people are still working at age 65 so why shouldn't they get EITC like 64 year olds? Many employers make employees go on Medicare at 65 and the work plan becomes secondary insurance, an unnecessary hassle because people have to write checks for their Medicare because they aren't yet collecting SS. Margaret, if you are a CPA making little enough to qualify for EITC, you really have to raise your prices!

Free money - well, our taxes are going to really jump this year so a one time thing, i guess. Adding to my Roth is a good plan with unexpected money. Thanks for affirming this is correct.

Yes it can. Also, consider making a Roth IRA contribution, including Spousal Roth, to get the Retirement Savers Credit. I have an older client who works just enough each year to max out the Roth, just so they can get the credit. It's hard to pass up on free money!

Yeah, my youngest daughter and her husband are divorcing. They just slowly drifted apart and stopped talking to each other. Unfortunately, my two grand kids age 2 & 4 have no idea about what's going on.