Hahn1040

T/p does not have to use actual receipts, you can use the IRS chart for sales tax. It is based on income, number of exemptions and where you live. IRS has an online calculator: http://apps.irs.gov/app/stdc/stdc.html?_page=11&_cancel. OR use the worksheet in the program. IF they purchased a vehicle or certain other large ticket items, you can add that sales tax in addition to the amount on the chart. Be sure to add in for nontaxed income such as VA disability etc.that aren't reported on the return. The progran will add in the nontaxed portion of items on the return: social security, retirement, etc. Tax Saving tip: For some t/p that are subject to AMT, I use sales tax instead of state tax. If the deductions for taxes on the Sched A put them into AMT, then choosing sales tax or state tax may make no difference for Federal- But using sales tax will save on the state because it doesn't have to be subtracted. Also next year, if t/p has deducted sales tax, then you don't have to add the state tax deduction on line 10. OF course, generally if they are high enough into the AMT then the entry on line 10 doesn't affect the bottom line anyway. This doesn't work for everyone with AMT- but it is an easy comparison to make.

Clients had second home that they converted to rental because the market was too low and too slow to sell. Their income is WAY past that of deducting the rental loss (retirements income is $160,000 plus wages of $200,000) So if they sell after renting for 18+ months- can they deduct the loss on the sale of the house? No personal use since they converted to rental I tried this on three programs: ATX- no loss deductible PAL adjustment offsets loss on 4797, so zero loss on 1040 Taxwise gives the loss from the 4797 but none of the rental losses accumulated TRX gives both the loss from the 4797 and the rental losses (it eliminated the 8582) obviously I can't just choose the program I like the answer... thanks for your inout on this!

Is the income over $110,000 perhaps they don't qualify

The difference may very well be taxable. IF student is an undergraduate and the scholarship is greater than "qualified tuition expense" To enter on line 7: On the 1040 click the tab for line 7 and add the taxable amount on line 4 for Scholarship and fellowship grants not reported on W-2.

For IL resident active duty military How do I report my military pay? If you are an Illinois resident, you must file Form IL-1040, Individual Income Tax Return. Your military pay will generally be included in your federal adjusted gross income (AGI) on Form IL-1040, Line 1. What military pay may I subtract? You may subtract tax-exempt military pay that is in your AGI, including pay for duty in the armed forces, including basic training, pay for duty as a cadet at the U.S. Military, Air Force, and Coast Guard academies, as a midshipman at the U.S. Naval Academy, or in ROTC, and pay for duty for serving in the U.S. Armed Forces Reserves or a National Guard unit, including a National Guard unit of another state. For tax years ending prior to December 31, 2001, you may only subtract compensation paid for active duty. For tax years ending prior to December 31, 2007, you may subtract National Guard pay only if you were in the Illinois National Guard. You may also subtract all income of a person whose federal income tax on that income is forgiven because the person died in a combat zone or due to wounds, disease, or injury incurred in a combat zone. Residents, part-year residents, and nonresidents, do not subtract military pay or other income that is not included in your AGI on Form IL-1040, Line 1. What military pay may I not subtract? You may not subtract military income (such as combat pay) that you excluded from your AGI on Form IL-1040, Line 1; pay you received under the Voluntary Separation Incentive; pay you received from the military as a civilian; payments you made under the Ready Reserve Mobilization Income Insurance Program; or pay for duty as an offi cer in the Public Health Service. Which form should I use to subtract military pay? For tax years 2008 and after, you may subtract military pay on Schedule M, Other Additions and Subtractions for Individuals. 2007 and earlier, you may subtract military pay on Form IL-1040 see Publication 102 January 2010 Illinois Filing Requirements for Military Personnel

IL does not tax active duty military when they are stationed outside of the state most do not have state tax withheld and do not file for the state

Combat pay is not included in box 1; it is subject to ss so is a part of box 3 signing bonus is taxed (part of box 1) but is not subject to ss since the signing bonus does not appear on the W-2, you can't make the numbers add up from the info you have on the W-2

The qualifying rules for the foreign earned income exclusion are very specific. It is an all or nothing qualification. The first thing to consider is that he does not work for the federal government. If he works for a private company that contracts with the federal governement that is fine. One must first meet the tax home test. His tax home must be in a foreign country. Once that is met, then there are two ways to qualify: 1. bona fide residence. Very likely your husband would not qualify under this rule. He does not maintain a permanent home in the foreign county. 2. physical presence: this is where the 330 days in a 12 month period applies. The 12 month period does not have to be a calendar year. Thus, his 12 month period can be from 9/1/2008- 8/31/2009. As long as he meets the 330 day requirement, he can qualify for both 2008 and 2009. If he does not meet the 330 days in a foreign country, then all of the foreign earned income is taxed. If you read through the instructions for form 2555 they are pretty straight forward. I find the problem is with getting the program to put the figures in where I want them The partial exclusion applies only to the max that can be excluded: example: you have determined that you have met the physical presence test. To figure the exclusion: your qualifying 12 months is 9/08- 8/09 for 2008 the number of days of your qualifying period during 2008 is 90. Thus you can exlcuded up to: 90/366 x $87,600= $21,541. If the foreign earned income is less than this amount, then all of it can be excluded. IF it greater than this, then the amount above $21,541 is not excluded. for 2009 the number of days of your qualifying period during 200 is 245. Thus you can exlcuded up to: 245/365 x $87,600= $58,800 ( I don't know if the max changes for 2009 and I did not take the time to look it up) I hope this answers your questions.

Cients are 80+ year couple living in a Sunrise Independent living facility. Their lettter from Sunrise states that typically normal rent and fees do not meet the test to claim a medical deduction. However, if they have been certified as unable to perform (without Substantial assistance) at least two activites of daily living "ADL" then the resident would be deemed to be in the facility for nursing care. the wife had been feeding, bathing and dressing the husband most of 2008 because he was unable to do so. In 2009 they started having outside help come in to do these things because it was too difficult for the wife to continue to manage these chores. I asked if it is documented in his file that he was unable to perform at least two ADL. I have another client who lives in a different Sunrise Independent living facility and his letter from Sunrise states that 30% of his living expenses are considered to be for medical care. I would appreciate some input from others concerning their experiences with this issue. My question is: if Sunrise staff certifies that the husband required help with at least two ADL, and it is the wife that is providing this help, does that meet the IRS qualification to be considered need for medical care? Certainly for 2009 when they have outside help coming in, it will qualify. Then his half of the rent and fees will be deductible as medical expense. My other question is why one Sunrise independent facility gives a percent to be used for medical and another does not. Are there varying degress of "Independent living"? Thanks for any input you can give.

I generally try to avoid NOLs, but I think I have one here...but I may be off track... Elderly t/p sold home in 2007 resulting in $260,000+ taxable gain (purchased home in DC area in 1955; lived in it 35+ years after husband died so his stepped up basis from 1971 didn't help much towards her basis) lived independently all of 2007; standard deduction. Nursing home in 2008; $60,000 medical expenses. Investment income plus taxable ss= $23,000 AGI Net is $42,767 NOL does this qualify for NOL to carryback? 2006 she had no tax- 2007 tax $38,131

I always select "create efile" before putting in the date, that way I know it will not actually create the efile. But it assigns the DCN and it gives all of the reject messages. The goal is to have only the message that you must enter the date. I log the client in my DCN log so I have a record of the number. That way the forms print with the DCN and I know it doesn't have any reject issues that must be addressed. (Obviously not all because you can still get them after transmitting) When I have my signed forms, then I put in the date and anything else still missing, Select modify DCN and put in the DCN previously assigned. Then I hit create efile. Then it creates the file with the correct DCN.

I have never done a farm before. This year I have two clients who are "farming". the one owns land: 6+ acres. They pay someone to cut the hay. He keeps the hay for his own use. They pay $100 they hay is worth $300. Can this go on a schedule F? Can I use the interest and taxes on the land prorated for the percentage of hay land to total land? There is no building on the land- so does not qualify for second home. The other one owns land 65+ acres. He allows a farmer to graze his cattle. No money changes hands. The farmer does some work in return: repair fence/ cut hay. My understanding is that this goes on Sched E. Is it subject to the same passive activity rules as a rental house? His income is over $150,000- so no deduction for his two rentals.