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The EIP payments 1 & 2 were advances of the recovery rebate credit that could be claimed on the 2020 return, and any advances received were treated as a reconciling item of that credit. The credit is still available to the taxpayer. The credit for 2021 is handled in a similar manner. This page should answer: https://www.irs.gov/newsroom/recovery-rebate-credit

Being the contrarian that I am, I made brownies yesterday. Actually I was too busy and it was the only lazy-way-not-from-scratch box mix in the pantry. They were really good.

8801 AMT credit is not allowed in years in which the taxpayer is paying AMT. As to your first question, check the data to see if the taxpayer's basis differs for AMT compared to the basis for regular tax purposes.

As Lion said, as the ERO you are REQUIRED to have the signed 8879 in your possession before e-filing the return, and you ARE REQUIRED to keep it for 3 years from the later of the due date of the return or the date the IRS received the return. You do NOT send it to IRS unless the IRS requests it. Also like Lion, can't help with OK.

You need to look up the filing requirements for BOTH the state of formation and any the state(s) in which they are operating. In general, that will determine the partnership's filing requirements and the K-1 information to be issued to partners. Those K-1s will alert the partners of possible state filings needed for the individual returns.

The ones I've seen have always been in the student's name and the student's SSN. Those are reported on the child's tax return, and any education expenses used to reduce the taxable portion of the distribution on the child's return are not allowed as education expenses for purposes of the AOC or LLC. It's best to run both scenarios - if it is better to allow the expenses to reduce the portion of 1099Q distribution that may be taxable to the child or to allow the parents to claim the education credit. In my clients' cases, the parents income was so high that they couldn't claim any education credits anyway, so those definitely were used against the 1099Q income.

Here's the whole article: Statute of Limitation for Tax Carryovers by David J. Holets, CPA, Indianapolis, September 1, 2015 It is not unusual for a taxpayer to make an error on a return that results in a misstatement of a net operating loss (NOL) or a credit that is then carried forward. In some cases, these mistakes might not be noticed until after the statute of limitation for the tax year generating the NOL or credit carryover is closed. Example: W, a C corporation, generated a $10 million NOL and a $1 million Sec. 41 research credit carryover in 2010. W could not carry back either amount. Each year from 2011 through 2014, W had taxable income. In 2015, W expects to use the allowable portions of its 2010 NOL and research credit carryovers. When preparing its 2015 tax return, W discovers the 2010 NOL carryover had been understated by $1 million and the research credit carryover had been understated by $500,000. The statute of limitation for 2010 is closed. Does W have any options to adjust the carryover amounts from 2010? Statute of Limitation: NOL Carryover The statute of limitation to assess income tax under Sec. 6501 is three years after the date a tax return is filed. The statute of limitation for filing a claim for refund under Sec. 6511 is the later of three years from the date a tax return is filed or two years from the date the tax is paid. Sec. 6511(d)(2) further prescribes that in the case of an NOL or capital loss carryback, the statute of limitation to claim a refund is three years from the filing date of the return that originates the carryback claim. The statutes do not, however, address what statute of limitation applies to carryover items. Although the answer initially might seem straightforward, case law and IRS guidance yield a different answer from what might be expected. One of the earlier cases to address how the statute of limitation applies in a similar situation, adjustment of a carryback NOL involving a closed tax year, is Phoenix Coal Co., 231 F.2d 420 (2d Cir. 1956). In Phoenix Coal, the taxpayer had NOLs in 1947 and 1948. The taxpayer timely filed NOL carryback amended returns to use the losses in 1945 and 1946. The NOLs eliminated all of the taxpayer's income in 1945 but only part of its income in 1946. After the statute of limitation for 1945 closed but before the statute of limitation for 1946 closed, the IRS recomputed the taxpayer's income for 1945. This recomputation did not result in any additional tax assessment for 1945, but it reduced the NOL carryback available for 1946. The court allowed the IRS to reduce the NOL carryback on the 1946 tax return even though the adjustment related to a closed tax year. The court reasoned that the statute of limitation for the assessment of tax does not apply until the year items are used against taxable income. This theory is raised again and more clearly stated in later case law, including Barenholtz, 784 F.2d 375 (Fed. Cir. 1986), in which the IRS was permitted to recompute taxable income in closed tax years to adjust NOL and charitable contribution carryovers to open years. As interesting as the results in Phoenix Coal and Barenholtz might be, they are of little benefit to taxpayers, as they address the statute of limitation only on carryover amounts for purposes of the IRS's assessment of tax. Another case, Springfield St. Railway Co., 312 F.2d 754 (Ct. Cl. 1963), allowed a taxpayer to adjust its NOL carryback amount absorbed in a closed year to claim a refund in an open one. The taxpayer recomputed its income in the closed year by applying an abandonment loss it discovered it had been entitled to, decreasing its NOL carryback in that year. The taxpayer correspondingly increased its NOL carryback amount for the following tax year, which was still open, resulting in a refund. The court concluded that the same statute of limitation for carryback items should apply to taxpayers requesting a refund as to the IRS when assessing tax. The IRS has consistently followed and agreed with this taxpayer-favorable interpretation. In Rev. Rul. 81-88, a taxpayer failed to claim a deduction it was entitled to, but did not realize this until after the statute of limitation had expired for the year the deduction should have been claimed. The IRS ruled that because the deduction increased an NOL carryforward to an open tax year, the taxpayer was allowed to use the NOL carryforward to reduce the taxpayer's income in that open tax year. The IRS continues to refer to Rev. Rul. 81-88 in Internal Revenue Manual Section 4.11.11.6(10), explaining that "errors in a closed year are corrected for purposes of determining the taxable income of an open year." Based on this analysis, in the above example, W can adjust its NOL carryover to 2015 by the $1 million understatement of taxable loss for 2010, even though the statute of limitation for 2010 is closed. However, it should note that the same rules apply to IRS adjustments of the 2010 NOL that might reduce the NOL carryover. Statute of Limitation: Tax Credits Later, in Rev. Rul. 82-49, the IRS expanded the application of Springfield to the investment credit. In that guidance, the taxpayer placed in service in 1976 property for which it was entitled to an investment tax credit, but it did not timely claim the credit. Although the statute of limitation for 1976 had closed by the time the taxpayer noticed its error, so that no claim for refund could be filed for 1976, part of the credit would have been available as a carryover to open tax years. The taxpayer was allowed to amend those open tax years for the carryover. Although this IRS guidance concerns the now mostly expired investment tax credit, it should apply to other credits as well. The investment tax credit is part of the Sec. 38 general business credit, so other general business credits, including the Sec. 41 research credit, should be eligible for a similar adjustment. Therefore, W in the example would be allowed to correct not only its NOL carryover from 2010 but also its research credit carryover from 2010. Closing Comments Although case law and IRS guidance establish the opportunity to adjust in open years carryover amounts arising from closed years, practitioners should be aware of a few important issues. First, none of the IRS guidance or case law addresses how to adequately notify the IRS of an adjustment to a carryover amount made for a closed tax year. If a taxpayer needs to file an amended return to claim the adjustment to a carryover item, disclosing the issue in the explanation section of the amended return should be sufficient. However, if the change is discovered before an amount from a carryover item is used, it is unclear what, if any, explanation must be provided for the change in carryover amount. It might be advisable to include a short written statement in the year the carryover item is adjusted, to explain the reason for the change. Second, state law might not necessarily conform to federal law. Although many states adopt the Internal Revenue Code, they frequently establish their own rules regarding tax return statutes of limitation. It is not unusual for a state to have a four-year statute of limitation. Furthermore, because the statute of limitation on carryovers is not formally established in the federal statutes, states may consider this an interpretation of the law and thus not conform to the federal treatment. Finally, currently, there is no guidance that would allow a passthrough entity to adjust an item of taxable income in a closed year. Using the previous example, assume W is an S corporation with one owner instead of a C corporation. Assume 2010 is a closed year for both W and its shareholder and that the carryover amounts for the shareholder are identical to those listed for W in the example. There currently is no clear precedent that would allow W to adjust or amend its Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc., for the closed 2010 tax year. The shareholder may not be able to adjust its carryover item without receiving a timely filed Schedule K-1 from W, including the full amount of the NOL and research credit. Businesses using loss and credit carryovers should take note of these rules. Taxpayers have an opportunity to favorably adjust carryover items from closed years, but they need to remember the IRS can use the same rules to reduce carryover items. Editor Notes Howard Wagner is a director with Crowe Horwath LLP in Louisville, Ky. For additional information about these items, contact Mr. Wagner at 502-420-4567502-420-4567 or [email protected]. Unless otherwise noted, contributors are members of or associated with Crowe Horwath LLP.

No, they should be amended. https://www.thetaxadviser.com/issues/2015/sep/statute-of-limitation-tax-carryovers.html There are 2 cases presented in the article that precedes this quote, but without a C&P of the entire article, the following excerpt hits the basic idea:

Yes, exactly!

For Dan and other readers, here is the NAICS lookup site: https://www.naics.com/search/ Dan, type in "golfer" in the search box on that site and the code "711219" comes up with the following description:

Now that the sun is up and thinking more clearly, that is what I was to suggest: to file all of the amendments correcting the loss carryforwards. I would also make sure to show the losses on an AMT basis even in those are all the same numbers. You don't want the IRS bouncing it because those calculations weren't included with the amendments. I'm going with the idea that this is similar to someone that has a cap loss c/o that is below filing threshold in the immediate following year and then a subsequent year does need to file again. That non-filed year doesn't mean that the loss c/o no longer exists, it only means that the calculation of carryover in the nonfiled year wasn't made. The loss still exists, and when filing again, is shown at the proper amount. In the case of Ringer's client, a figure was entered incorrectly that should be fixed, and the additional loss does exist which should be plainly evident when comparing the 2015 and 2016 returns as originally filed. I also see that the main error of carryforward occurred in the 2016 year and not in the 2015 year as I'd written above, so that buys about a year to hold TT responsible with its 7-year guarantee. With TT reps saying they can't find the return in the system, is there any chance that this same thing happened when the client tried to access the file and complete his return? I can foresee TT trying to wangle out of this by saying the the client had typed that loss carryforward number of $10K into its system and creating the error himself.

The waiver to repay the excess was for only the 2020 tax year.

No, use the new code cbslee gave you, and all you do is type the new code into the software

I'll post more thought on this after some more sleep and after the sun comes up.

This may not be a good idea considering the dollars involved. Unless the taxpayer requested an extension for the 2019 year, at a minimum the 2019 return needs to be analyzed to determine the effect of correcting the carryforward. Note - the 2019 original filing date was extended from 4/15 to 7/15/20 because of COVID, so there is a little extra time before the 2019 tax year is "closed" for any claim of refund. Anyway, the point is that there is not much time to amend and correct 2019. Ringers, also to consider: if your client wants to hold TT to their 7-year guarantee, that runs from 7 years starting with the date the return was actually filed, so if the 2015 return was filed prior to March 1 or today, depending on how you want to look at your client's notification to TT of the error, your client's guarantee period for the 2015 return may have already lapsed. Client may have to get an attorney involved in this. Sounds messy.

It is possible that the tax withheld will be for the exact amount of tax liability if the taxpayer works in the same jurisdiction that he/she works in or works outside of the resident jurisdiction and the employment jurisdiction has the same tax rate as where he resides, but that isn't always the case. It is also possible that the resident works in a jurisdiction that has a higher rate than where he resides, but he will not be able to claim the full credit but only up to the rate where he lives. All PA residents with earned income must file a local earned income tax return if their local resident jurisdiction imposes such a tax. Documentation must be attached (W-2s, Sch C, 1099, PA-40 and out of state returns for credits claimed, etc). Since I am right on the DE/PA border, many of my PA residents work in DE and have to rely on the out-of-state credit to cover the PA state and local liabilities or pay quarterly estimates. Either way, they are filing local returns.

By "net" , do you mean that is after subtracting the amount of reimbursement from the LTC contract, or do you mean something else? Which box is checked in box 3 of the 1099? Was it a per diem allowance or truly a reimbursement? Do you know if the contract is a tax-qualified contract or a non-tax qualified one?

Aww, thank you! ::blushes::

Within Drake, go to the state tab and open the PA area. From there, you'll be able to generate the W2WK schedule to explain any differences from the W-2 wages to the PA return. That schedule reconciles the Fed and Medicare wages to the PA wages. For a PY or NR, you may need to make a manual entry for wages earned (calc'd on the basis of what PA taxes) during the period of nonresidence. PA does not allow a deduction for retirement plan deferrals such as 401K contributions so those are an add-back on the worksheet, but it does not tax GTLI reported on W-2 box 12 as code C so that would be a subtraction. You'll notice on the W2WK worksheet that those 2 items already have predefined boxes in the appropriate columns for proper reconciliation. With some PY PA returns, I found that having the paystubs for year-end and the one immediately prior to moving in or out of the state to be extremely helpful. There have been times where I attached my own reconciling schedule as a pdf. If client has Sch D that is a net loss, that amount will show up on Sch D and will carry to the PA-40, pg 1, but it will not be included in the math total to arrive at taxable income because PA taxes income and doesn't allow losses. Cap gain dividends do NOT flow to PA Sch D but are included in the dividend line on the PA return. PA doesn't have itemized deductions, but some employment-related deductions are still allowed for employees that receive a W-2 and have unreimbursed job-related expenses. If your client is in a profession that may have those, such as salesperson, you may want to check out Sch UE, and those flow to PA-40 pg 1 and are shown as a reduction of the PA wages. PA allows a deduction for 529 plan contributions made by the taxpayer. Schedule O. Off the top of my head, I'm not sure exactly how this is handled for PY returns though, so if you have this, you'll have to check the instructions on that one. PA return, you'll need to enter the school district that the client lives in and the dates of residence. That's on the PA tab. For the local return, Drake has a separate tab for that. You'll have to look up the municipality and its rate. PA does allow a credit for income taxed in two states, if you have that situation, and the local return will allow that also, and that is calculated similar to the state credit but is further reduced by the amount that was already used on the PA state return. Also for the local, you'll need to get the instructions from the locality or collection bureau that they live in. Each municipality has their own rate, and you'll have to read the instructions to find out how it allows for withholding if the taxpayer works in a different municipality than where they live. I'll wish you good luck with the input. I find the PY returns particularly fiddly and feel like I always waste some time getting it to present properly even when I'm certain of what the outcome should be.

There are differences between superseded and amended returns for statute of limitations pertaining to assessments and also for refund claims. The following article has a good summary of the issue, and also the difference between IRS view and the Supreme Court view on this. https://www.thetaxadviser.com/issues/2021/jul/superseding-returns-statutes-limitation.html

I would also suggest filing, especially if including only the gross proceeds in income will put this client over the threshold. To do otherwise, the client may receive a CP2000 notice because IRS doesn't account for basis.

If you were on the same IRS page that TexTaxToo linked to above, those are .xlsx files that should open with MS Excel. I'm surprised that your computer doesn't have a new enough version of Excel to open it. All I had to do was click on the download and it launched Excel automatically and the file opened.

Two posts were moved to a new subject entitled COMPUTER BLOATWARE so this one isn't derailed.

Above 2 posts were moved from the topic about ATX crashing so not to derail that one and be able to continue this one on its own.

It's not pinned, but you can find the related posts by searching for "large address aware". Use the quotation marks in the search box to search for that exact phrase, otherwise the search will bring up every post with any of the three words. Look for the posts specifically by Abby Normal, but some are a few years old now and I'm not sure if those are still all valid or if the linked site to obtain the LAA is the correct one any more.