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I'm firing clients this year. If he can't answer questions to make me feel comfortable, I would NOT prepare his return.

I'd run from this clients as fast and far as I could!

How do you answer Q 15 on 8867?

"IRS opens free portal to file information returns; new electronic option can reduce millions of paper Forms 1099 estimated to be filed by businesses in 2022." "To e-file Forms 1099 with IRIS, apply for an IRIS Transmitter Control Code (TCC). Once you get your TCC, you can log in to IRIS." The lead up to this has been kinda misleading, because you still have to obtain a TCC code, which now requires that you go through ID.me.

@JohnH I will not be worried about employee living in NC or employer headquartered in MA. I will be looking at where end client work is being performed & that is exactly what respective states will look for. If in fact work is performed in MA then employee will be filing MA non resident & would take MA NR tax credit in NC resident tax return. I believe this is the safest approach based on facts stated. You should also check if NC & MA has any reciprocal agreement.

You'll need to wait until an executor or personal rep is appointed and then deal with that person. She is the surviving spouse, but I'm not sure how that matters to you. Some of the same questions are dealt with in this current thread

Taxpayer is a resident of NC,, working remote for a company with its HQ in Massachusetts. The employee occasionally travels to the MA office for meetings, etc. Total number of days in MA were about 26 in 2023. Many trips included overnight stays in MA, if that matters. Employer only withheld NC income tax per the W-2. I haven't yet found clear guidance on this, but can anyone tell me if MA is going to want to tax the MA portion of earnings as a Non-resident?

I thought about this briefly until I realized that it's been more than 2 yrs since I used the FIRE system directly and my TCC has most likely been inactivated by IRS.

I was going to ask if there is a will- and so there is. The will should have named an executor and been notarized.. If you can find out who that is, then you can send them a form 56 which will allow the executor to signoff on a 2848. When you have that you can then call PPL and fax them the forms along with the notarized will. The CT probate will have to confirm the person named in the will as executot unless there is some controversy involved.

Ditto!

Encyro. Handles signatures and is a secure client portal. Easy to use and not that expensive. Pennies per signature.

I think you nailed it. Thanks to everyone for the insights, especially at this time of year.

In this specific case, since the employer is in MA, probable more delicate than difficult. I suspect an oversight, maybe belief the pandemic rules were still in place, maybe new payroll person. Normally, I would pass. But this case, I would share the options with the potential client and let them adult. If they want to do it right, I would take it on.

That's the easy part. No need for an amended W2. The taxpayer reports the entire income on the NC return since that's their state of residence. Then they claim a credit on the NC return for taxes paid to MA on the MA income. (The credit is limited to the lesser of the amount actually paid to the other state OR the amount of NC tax attributable to the income reported to the other state, calculated at the NC rate.) NC provides a schedule designed specifically for this calculation. The more difficult part relates to what happens if the employer isn't pleased that the taxpayer opened this can of worms, as Medlin pointed out. That's probably my greatest concern in this entire matter. I'm thinking of declining the work based on that consideration alone. Thanks for the cites, Lion. That's very helpful, and I will probably call MA if I decide to do the work.

If the employee is a NC resident, doesn't he report ALL wages on his NC resident income tax return? Then, can't he take a NC credit for any taxes paid on the same income to MA or any other jurisdiction? (I have only one NC client, so those are questions and NOT facts.) You said your client worked IN MA, also. KPMG NOTE: Beginning September 15, 2021, employees working remotely outside of Massachusetts should have wages reported and taxes withheld to the state where they are physically performing services. Employers will want to make sure they are registered for payroll in the states their employees are working remotely, and able to handle the complexity of compliance for a mobile workforce. From the 2022 MA NRPY instructions: What Is Massachusetts Source Income for Nonresidents? The term “Massachusetts source income” is used throughout this booklet to describe the types of income which are taxable to a nonresident. A nonresident is only subject to tax on items of income derived from or effectively connected with:◗ Any trade, business, or employment carried on in Massachusetts (see the following section);...◗ All wages, salaries, tips, bonuses, fees and other compensation which relate to activities carried on in Massachusetts, regardless of where or when the compensation is paid;... I've had decent luck calling the MA DOR.

On quick look, the answer appears to be yes, MA wants their bite. I did not see any allowance for a certain number of days per year to be ignored. Pandemic created some exceptions, so look into those if they apply.

A lot of east coast states use "convenience of the employer" to determine tax home, but I don't know about NC. MA has survived at least one court challenge to it's telecommuter tax rule: https://www.twrblog.com/2021/06/supreme-court-denies-new-hampshires-challenge-to-massachusetts-telecommuter-tax-rule-convenience-of-the-employer-lives-to-see-another-day/

Both states will want personal and business income tax, as much as they can get. likely the employer did not consider the ramifications first, so it may require much back digging to apportion. The recent discussion on MTC’s suggestions for modern take on 86-272 is going to be a long lasting nightmare.

So he is paying SE tax with these credits, which will show on his Social Security earnings record.

Use the other payments line. I've put these kinds of payments as estimates or extension payments before, and the IRS will send a matching notice, even if total payments is correct.

I launched into my "get an estate lawyer" speech, but they've already done that and he's filed whatever CT courts need to appoint the co-administrators and alerted them to the wait for the court to act. It sounds like the deceased did have a will plus beneficiaries listed on her retirement accounts and credit union.

Years ago SSA sent people annual statements showing their projected benefits calculated on their past contributions and projecting their current income to stay the same for the rest of their working years. It's amazing how many business clients found religion and began showing more realistic profits. Like others, I would ask a lot of questions of this guy who supposedly supports kids on $12k a year in VA. He certainly doesn't need HOH status as single would yield the same result and prompt less suspicion. He can't supply more than half the cost of the household on that income. I'd have a heart-to-heart with the guy and disengage.

This reminds me of a client which I fired some years ago. She was a hairdresser filing HOH and her Schedule C Income magically hit the maximum EIC sweet spot every year?

I believe you are correct. If he was employed the SS tax would be accessed and credited to his SS account. He "paid" it by reducing his refund. A bigger question may be how is he providing for himself and child (or children) on $12,000 a year (that's about 4 bags of groceries these days ) . I would definitely ask some pointed questions and document the answers for due diligence.

Your previous post was misleading because your client paid SE Tax which was offset by EIC. Therefore timely filing is still required to update his SS Earnings Record.

Even at 12,000.00 there had to be some SS deducted, paid somewhere. if he was self-employed, It seems like the EITC and CTC would have eliminated any SE tax. With that said, the SE tax generated is the SS portion still credited to his SS account? Never thought about this before.

I accidentally sent this off before finishing it and editing. As noted she provides a notarized statement attesting to the son living with him. I this go around again reviewed this with him and he advised " I ain't worried my wife will swear to him living with me". I note on his return on line 5 of Form 8867 Notarized affidavit from wife and the Service has yet to raise any questions. And now he is off living with his latest femme fatal on a local lake. Some guys have all the fun.

I hate to be the skinflint in this discussion. Yes his Social Security tax was paid. By folks like you and me my friends and when he draws those soooooo sweet benefits his out of pocket contributions will for the most part been 0. There is not the shadow of doubt in my mind judging by his lifestyle he has unreported cash income from his business. He and wife are separarted for years but have a now 13 year old son who likely lives with Mama who has her mother living with her and so can claim HOH without the son. Every year she provides a signed nnotorized document attesting that son lives at dad's home even though I have repeatedly requested a better form of proof of residence.