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Often when a person gifts his home to the kids the transfer docs state he has the right to live there for life. This is called a retained life estate. If there are no such docs, but the person lived there and paid the bills, taxes, etc., there is an implied retained life estate. In both cases the full value of the home is counted in the person's estate when he dies, and the heirs get step-up basis. If the parent didn't die but permanently moved out (like to a nursing home), then you have to calculate the value of the retained life estate and the value of the gifted portion using actuarial tables the IRS publishes. It's complex! The state will do it if the parent applies for Title 19, and the value is included in their assets. Give more details. Is the parent alive? It was a "two flat house." Did the parent live in one flat and brother and another? (In which case the flat that was not the parent's primary residence gets the parent's basis at time of gift while the other half might get retained life estate treatment.) This is not the type of issue you need to be dealing with during busy tax season. If your client is just wondering what the gain might be, tell him to talk to you in May.

Is the backhoe all serviced and ready for action?

Perhaps we need to try home visits and interrogation! We all know that when you walk in a house, you can tell if children live there! Look each child in the eye and ask: where did you sleep last night, last week, last month..... so what if she is 8 months old... read what her eyes are saying!

it's only February, and Rita's hugs have started.

Proving my point that the main effect of new rules & regulations is merely to change the details on how to get around them....

This is very interesting. So, exactly what documentation could there possibly be to prove a child's actual residence??? I personally find this as almost impossible to prove. Agree with Catherine, sometimes we have to go with exactly what we see. Maybe people should start having their electric bill in the kid's name and have the kid pay for it so now they could prove residency. Oops, wait a minute, I guess we could still have the kid living with grandma and paying mom and dad's electric bill. We spend too much time making our selves crazy over things we really cannot prove. Furthermore, it is ridiculous for the IRS to think we can do this. All we can do is make a good effort for our own peace of mind. I would like to see a court case where a preparer was penalized because he/she failed to prove residency for dependent child, and what evidence the tax court would use against the preparer. I mean really.

I downloaded the free program callled MouseJiggle (56KB size on computer after installation) in December and have been using it to defeat the annoying 30 minute log-off rule that IRS has imposed on all tax software distributors. It works great and has no adverse effects on startup time, computer stability, etc. What it does is constantly move the mouse pointer about 1/16 inch back and forth on a 45 degree diagonal, which does not greatly affect mouse usage even if the program is left on 24/7. Last night I left my 2016 tax program (ProSeries) open with a client loaded and left MouseJiggle open also. This morning the tax return was still open and I had not been logged off. I assume it will also work in all of the other tax software. I won't be running the program 24/7, but I do intend to run it during the hours I would be working on returns and not have to worry about breaking for meals, tc and getting shut down.

Maybe she needs to buy additional property. Just sayin'...

My guy that just picked up? It was TORTURE getting any document out of him with kids' name and address. Forget year. I had to explain to him that a SS card does not have an address on it. And that IRS actually already knows their SSNs, no kidding, they actually know that one, amazing, huh? He was back and forth three times. Last time he came in, "I don't know if this will work..." I snatched it out of his hand and said, "Perfect." It was something worthless for this purpose. When he picked up just now, he said, "Well, I can prove they live with me if they ask, no problem." Y'all know what I wanted to do, don't you?

my daughter is going to graduate school in France. It is an eligible institution. It has the magic code from Dept of Education. anyone want to wager the chances of her getting a 1098-T at all! (figured I would give everyone a good laugh!)

Forgive me if I'm wrong, but I think IRS gave the educational institutions another free ride for the 2016 tax year as it had been the year where they were coming down on the institutions and making them report on a calendar year basis rather than their school year. As usual, IRS relented and now have set 2017 as the new deadline for calendar year reporting. If my memory serves me correctly, then IRS will be well aware that the 1098-T's aren't worth squat for 2016 other than proving that a person was a student for the Fall Semester of 2016 at least.......

When it comes right down to it, HOW can you prove the kids lived with the parents? They might live with grammy and grampy three blocks away, and still go to the same school, see the same doctor, have Sunday school at the same church, heck even get their mail at the parents' house. At some level, we have to be able to believe what we see. Or close up shop and go home. Hmmm..... y'know, if we ALL (every preparer in the country, not just our little forum) did that, for one tax season, we'd collapse the tax system. Ooh, tempting!

Actually, I think SaraEA's statement gave me a good laugh.

1095's are very often worthless in the case of parent's that are not together. Many times the non-custodial parent has to provide health insurance. Most report cards around here don't have addresses. I am so glad that I take very few new clients and no one that just calls me out of the blue. It's tough enough to prove this for people that I already know.

And maybe getting that EIN. For God's sake, we gotta be sure our worthless form comes from a legit institution, not a pretend institution. So our useless number there might appear to have some cred. It's really ironic that our institutions of higher learning can't be trusted to do a little bookkeeping. I mean c'mon.

Agree, go back to 2015 and do both years correctly. Yeah, the amount billed has always made me laugh, and it includes billing for part of the next year. It's so screwed up. I do believe IRS looks at it for some purposes, however. My client I mentioned earlier got a letter because she paid amounts billed in 2014 in 2015. They picked right up on the fact that payments exceeded billing. Complete PITA for a credit of $292. I faxed letter with the Bursar's statement showing payments. Probably get the all clear by the time the kid's children go to college. Hope the 1098T is usable by then.

Forget when the scholarships were applied by the school's software. Most of these bursar's records are a nightmare to read. Drill down to what the parents actually paid for tuition and fees in 2016. And forget the 1098T. I have been to several IRS liaison meetings where agents told us exactly that--the IRS does not consider the numbers valid and will not rely on them as proof of anything. Request the records for 2015 and re-do that return to see if anything changed using real figures. With that much in tuition, I doubt it. The culprit is that "amount billed" box, which never should have been on the form. When the form was first required, the schools whined that they couldn't possibly calculate the amount paid for only qualified tuition and fees in the two years lead time they had. So the IRS said they only had to report the amount billed (useless info). For 2016 they were mandated to report the amount paid, but they still weren't ready (what, 15 years later?) so got an additional year reprieve. Next year our problems will be over.

Tax practitioner's information soon be available at IRS website The IRS alerted tax practitioners that it will soon be publishing their registration information online. The information was previously available only on a CD-ROM for a $35 fee for those who submitted a request to the IRS. The information will be available without cost. The Freedom of Information Act requires the IRS to release certain information about people who hold preparer tax identification numbers (PTINs) and enrolled agents. The information includes the PTIN holder’s name, business name, mailing address, phone number, website, email address, and professional credentials (see the IRS webpage, “FOIA Awareness for PTIN Holders”). The IRS told PTIN holders that they may now use P.O. boxes for their business mailing address. It also said that if a practitioner used a personal address instead of a business address, or used a street address instead of a P.O. box, he or she may want to change it. It also advised practitioners who receive unwanted solicitations to report the problem to the Federal Trade Commission. According to the IRS in a Jan. 26 email from the IRS Office of National Public Liaison, the Freedom of Information Improvement Act of 2016, P.L. 114-185, enacted June 30, 2016, requires agencies to “make available for public inspection in an electronic format … copies of all records … that have been requested 3 or more times.” The IRS said it is now working to implement downloadable versions of the PTIN holder and enrolled agent lists in its Electronic Reading Room on irs.gov, and that the lists will be updated twice a year and be available at no cost. The IRS will provide an update when the lists are placed on the website. —Sally P. Schreiber ([email protected]) is a JofA senior editor During a time when hackers are actively seeking practitioner's information, this helps how ??? Especially liked the advice that we might want to make sure that we change our address to a P O BOX !

Can't we stop this??? I hate it. grrrr

I saw this yesterday and am so very annoyed. I really don't want the additional expense of a PO Box to finish a couple more tax seasons. And I really don't want anything being mailed there so I have to check it. If some of us do resort to a PO Box, does that change our official address for our efin? Grrr... Retirement may be accelerated. Oh, and thanks IRS for the great lead time to consider and make any changes. Uh, when, exactly, is 'soon'?

I would keep the seller happy while still under a loan contract with the seller. Issue a 1099-INT.

The 1098-T just tells you the person was a student. Your client, usually via a bursar statement and their own cancelled checks and letters re what the scholarships/grants apply to, must provide you with payment amounts and dates. Report what actually happened and keep your notes/documents/whatever. Do you think the IRS can interpret the 1098-T with their crystal ball any better than you can?! Tell your client that the IRS cannot interpret the 1098-T in isolation, and not to be alarmed if a letter arrives from them. Just notify you immediately so they can provide additional information under your guidance if the IRS asks.

Definitely a good one for an extension. You'll probably need the divorce decree, also. Did the rental go to her as part of the property settlement in the divorce? If so, the adjusted cost basis on that date came with it. So, she could file Form 3115. And, include 2015. (She's not trying to amend prior MFJ returns.) But, you need to start with the IRS letter, and her prior tax returns. Extension.

Sometimes I think the proper term is autoINcorrect!

I agree with Terry D. There are just too many unknowns here to make an informed decision - or even a WAG for that matter. I would put this whole thing aside until you have had a chance to review all of the parts. The path to go then will probably become abundantly clear.

Changed the hydraulic fluid and everything.

Oh, I think we have lurkers from the official forum that either choose not to join or read without logging in. We also have, or had, at least one IRS agent as a member. I haven't seen any posts in a while from that person though.

I've been using this to the link the dates between 1040, 8879, state return, and the state e-file authorization. That way I only need to change the date in one place, and it auto-populates my entire tax return for me or changes the date if needed.

I can see why the colleges don't want to do bookkeeping on a calendar basis when they are on a fiscal year. But, they have to do calendar year for their own payroll. They are not unfamiliar with calendar year reporting! I try to get the financial transcript from the beginning of the calendar year that includes the freshman year to match up "due" to "paid" and then highlight when by parent or student loan as opposed to scholarship/grant. Sometimes, it works out best for the student to have taxable scholarship money on her return at a low tax rate in order for the parents to claim education benefits at their higher tax rate -- but that's a separate topic than the messed up reporting that colleges do.

Ever notice how they relent when it's a case of big institutions with entire departments dedicated to accounting that get the "relented" - but when it's poor schmucks like preparers and/or the general public, we just have to deal and if it's too much too soon with too little notice well that's just too doggone bad. Grrr.....

Me too - about $110 to $125. Exactly right. You can charge what you want. It's up to max $6,269 EIC (MFJ/ 3 kids/ earnings $14-24K). Add $3K CTC + all W/H back & you're pushing $10K. The used car dealers are rolling in dough.

Can Uncle Joe not pay it and the student or parent use it? Not that Uncle Joe would do that, but I figured it would be ok.

Agree with my esteemed colleagues. You might as well chuck the 1098T. Keep proof of everything, cause even though it is worthless, IRS may send a letter cause they don't think the student had net expenses. Just happened to one of mine. Paid more in 2015 than was billed in 2015. (Paid expenses billed in Nov 2014 in Jan 2015. You count them in the year paid.)

I have been dealing with this for 5 years with my kids. We have them download the transactions on their account every year and keep them for backup in the file to show actual payment dates and dates the scholarships were applied to the charges. The transaction history page is really helpful. Tom Newark, CA

You also need a statement from the Bursar's Office of charges and payments, *and* the clients' proof of payments made (to show it was parents who paid, and not Uncle Joe or whoever). That will give you the info needed to put in the proper charges and get the proper credit amount. You might also want to attach those other two as pdf's to the return. But just the 1098-T is utterly insufficient for proper calculation of those credits. And far too many of them are candidates for the Great American Novel, as well.

In my office, that 1040-A-MA return would be $175-$225 (or more), depending. Depending on what? Well, lots of stuff. The big one being, did they give me everything at once or did I have to email them multiple times asking for the same %$#@ information? And even that simple return might be harder than it looks - was the A interest and property tax only, or did they contribute to 23 charities that have to be investigated for political contributions mixed in with the list? Did they refinance a mortgage and take out extra to buy a car? Did they have one job all year or were there five W-2's from temporary jobs plus unemployment? Did I get the Mass. 1099-HC along with the 1095-A? I won't give a price without seeing the prior-year return, and even then it is estimated high and given with the caveat that the price is subject to revision (up *or* down) if the situation is substantially different. And I'm sure we've all had folks call asking for an estimate with "my return's pretty simple" (uh, no, or you'd be doing it on ttx online) - and then they "fail to mention" the three rental properties or day-trading as a hobby - and then get miffed when you tell them the fee is going to be more than the original quote.

"What do you mean! We owe tax! The attorney said we could do this! and avoid probate if he died!" Sheesh. Rich

SWEET. Please don't post this on the other ATX board. I don't want ATX to know about it. They might pass the info on to the IRS. Tom Newark, CA

I'm a bit confused which is nothing new. To change the filing status you would have to amend the return. Not sure how they were filed but if they were MFJ you can't amend to MFS. The 3115 would definitely be used to correct the depreciation but would affect the original MFJ return if the return was filed using the MFJ status. I looked at the form 3115 to try to find some place where the filing status would change and I am pretty sure that form is not used to change filing status. I'm going out on a limb here so it sounds like your client wants to amend or change the filing status of the originally filed returns to correct the depreciation or take the depreciation that wasn't claimed in an attempt to leave out the ex-spouse to try to offset the 20K owed. I definitely would want to see that letter before I suggested anything. Again, I don't know what filing status was used on the original returns. Assuming it was MFJ then no amendment to MFS is allowed. The only possibility of this type of change is amending the return prior to the filing deadline which in your case is long past. .>>>>>>My question is, can I just jump in there and do the 3115 in her name only? Grab the depreciation and get on with my bad self?<<<<<< I am going with no here but it still depends what filing status was used on the original return.

Darn autocorrect, I hate when that happens.

No apologies necessary. The scholarships are listed on the Spring 2017 Term Statement but the effective date is listed as 12/8/16. It looks like this has been screwed up since the student started college in Fall 2015. For example The Spring 2016 statement has billing applied in 2015 and scholarships applied in 2016 so no doubt last years 1098-T didnt follow the calendar year but we had no way of knowing that last year. I dont have the beginning Fall 2015 Statement but from the l statements I do have it looks like 2105 included tuition & scholarships for 2015 plus tuition for the Spring 2016 semester. Hence, the screwed up from the beginning.

Yes

I thought if Uncle Joe paid the tuition, that was all figured in total support but whoever provided over half the support and claimed the exemption got the tuition credit. Is that not correct?

I do, too. But *everyone* sees the full charge on their bill, and then the discount. Sometimes that discount is based on nothing more than me seeing how tight their finances are; sometimes it's based on how thorough they were in their preparation for me. But everyone loves a discount! I have gotten thank-you letters over the discounts. But that's some of the reasons why I charge by forms and set that bar high: so that I can give a break where needed, and not have to pad a bill to compensate me for not "Rita-hugging" a PITA client.

I try not to give prices over the phone. That Schedule A could be mortgage interest and property tax or it could be unreimbursed employee expenses where you have to teach them about business mileage/clothing/lunches. Or "charities" as Catherine said. And oh yeah can you compare MFJ vs. MFS? I just rent out my Cape home when I'm not there, don't really try to advertise or anything, don't make any money on it anyway. And, I don't make any money selling cosmetics either. My wife and her girlfriend sell clothes but don't make any money on it, so you won't charge extra for that, right; yeah, they did form an LLC together. And.... If they ask, I say returns start at $500. That gets rid of most of the shoppers. If their real question was what can you do for me/help me with/plan with me instead of how much does it cost, then the conversation usually continues and the final price might be much, much lower.

When someone asks "How much do you charge for a tax return," I tell them that most returns are $100 to $500. They hear $500, and most don't pursue it further. If they ask how much, they are shopping. Someone once told me "That's pretty steep--last year I only paid $15." Maybe they wanted someone who woud only charge $10. .

Lynn, You may not be off base....But, he is....

Illmas I think one reason people don't complain about the big box company fees is because they are getting refunds larger than their withholdings due to EITC, CTC, etc. - it's not their money to begin with, so what difference does a higher fee mean when in the long run they still have more $ in their pocket. If I am totally off base here, please call me out on it.

All I know is that I don't charge enough, if big box companies can charge XXX and people don't complain, makes me think I don't know how to run a business.

Client of mine got married. Her new spouse sent me a 1000+ word text (I've never met him previous to this) about doing their tax return with 6 questions that culminated in wanting to argue about the tax code of MFS. I informed him I don't do MFS returns - you need to go elsewhere. He replied with accusations and wanting to argue about it. I'm exhausted already with this man - buh bye.