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I would file the return for the child. IRS is not good at picking up cost basis on stock sales. I think we have all seen the letter from the IRS with gross proceeds and no basis added to a return when a client "forgot" to tell us about stock trades that produced no income or a loss. IMHO, you will be doing the clients a favor by filing the return. You may be dealing with a letter in a year or so if you don't. And it may come back as a letter to the parents on why they did not include the gross income as kiddie tax on the parents return. I would also only charge a very minimal fee for filing the return and add it to the parents invoice. But that is just me. Tom Longview, TX

Kiddie tax, if it applies (it would not in this case), would go on the child's return. The parents may elect to include the child's taxable interest and dividends on their return, but not capital gains. On the facts presented, there is no filing requirement, but Tom is right that filing could prevent a letter, especially if basis was not reported to the IRS for the stock sale.

I don't give them a choice. For the ones who whine, I tell them that most of those questions are ones we're required to ask, and that they don't have to fill out the wage/int/1099-R pages, just check to be sure they're giving me each of those forms. A few try the "but I have a spreadsheet" route, but I tell them that if II have to transfer that to the organizer I'll charge them.

I do about what Tom does, file a return for the child. I too have seen IRS letters based on Proceeds, even though the major brokerage reported Basis to the IRS. It's so much faster and easier to file the return for a child than to respond to an IRS letter. Filing for children (and the elderly) also can prevent ID theft, or in one case with a client, uncover ID theft early. Even though if it's only interest/dividends and can go on the parents' return, it has saved my clients a bit when reported on the child's return. Years ago in my HRB days, we got an IRS letter looking for a child's return when the interest had been reported on the parents' return where the child was a dependent. Time-consuming to deal with. And, unhappy clients getting an IRS letter! I charge a flat amount for children, sometimes separately and sometimes on the parents' invoice.

Everyone needs from time to time to refresh their knowledge about the kiddie tax. Clients have never heard of it and occasionally try to shift income to their minor children to avoid taxation. Tough scenarios to explain and/or calculate.

I opened the storage area to where they all are and said someday I'll get to those. Closed the door and did something else. I've probably done that each time the topic has come up over the years. Today is the day! . . . maybe.

While it seems a bummer that mechanics can't deduct the cost of their tools, don't forget that they own them and can take them home or to their next job or sell them. Many mechanics are fervent about their tools. My husband was never a professional mechanic but started working on cars when he was a boy. Today he has this tall chest of tools and can tell you when or how he acquired most of them, specific jobs this one or that one is good for, and tasks from way back when one or the other saved the day. When one of our sons neglected to put a screwdriver or whatever back where it belongs, he got in more trouble than if he was beating up his brother. So while tools are an expense, they can also become part of a person's identity.

Definition of gross income: https://www.law.cornell.edu/uscode/text/26/61

Aw shucks, i'm disappointed. According to the IRS: "Inherited Roth IRAs Generally, inherited Roth IRA accounts are subject to the same RMD requirements as inherited traditional IRA accounts. Withdrawals of contributions from an inherited Roth are tax free. Most withdrawals of earnings from an inherited Roth IRA account are also tax-free. However, withdrawals of earnings may be subject to income tax if the Roth account is less than 5-years old at the time of the withdrawal." "Designated beneficiary (not an eligible designated beneficiary) Follow the 10-year rule"

8606

I used to send an organizer to everyone. Over time, this has dwindled only to those requesting such. All clients receive a cover letter, yes/no questions and engagement letter.

Preferences, Print, Print without zeroes. One of the first things I check every year.

At first glance I would agree, but aren't most client's current standard deductions larger than if they were able to itemize including the 2% misc itemized deductions.

IMO, this is one of the saddest changes in the tax law. With the exit of the 2106 form, many employees are shot in the foot. I particularly notice it with OTR truckers who are employees as opposed to SE owners. This issue of mechanics and tools is also huge.